Cuomo calls for privatizing LIPA
Originally published January 11, 2013
New York Gov. Andrew Cuomo called for selling the Long Island Power Authority to an investor-owned utility. "We want to privatize the Long Island service, which will be regulated by a new and empowered [Public Service Commission]—that will happen simultaneously—and we want to do it in a way that protects the ratepayers and freezes the rate for a period of years," Cuomo said in his Jan. 9 State of the State speech. However, credit rating agencies questioned whether privatization would produce any benefits (see story below).
LIPA has "never worked and it never will," Cuomo said in his speech and an accompanying report. "The time has come to abolish LIPA."
An interim report by the Moreland Commission, which was created to examine utilities’ storm response and regulation, "found that potentially hundreds of millions of dollars in synergy benefits could be achieved in a privatization to offset privatization costs, including efficiencies in the areas of operating and maintenance costs, power supply, fuels management, and contractor fees," the governor’s report said. "These ‘synergies’ could be used to keep rates after a sale in line with currently projected rates."
In addition to the proposals to sell LIPA and beef up the PSC, Cuomo outlined steps to make New York the leader "in the clean economy," and called for immediate action to address climate change.
In a section of the report on responding to crises, he said "the electrical power grid and the structures that control it must undergo a fundamental redesign to ensure that customers do not face catastrophic power losses every few years. That means protecting power generation and transmission lines from flooding. But the electrical system is particularly susceptible to interruption from weather; entire above-ground wire networks in heavily wooded areas spelling disaster in virtually every storm, yet little is being done to rectify this obvious vulnerability."
LIPA is an agency of New York state. It began serving electricity customers on Long Island in 1998, after the Long Island Lighting Co. incurred billions of dollars in debt to build the Shoreham nuclear plant. The plant was built to completion, but never operated because of public concerns about safe evacuation of Long Island if an accident occurred at the plant.
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