By MARK HARRINGTON
Updated August 31, 2014 10:09 PM
The Long Island Power Authority’s decadelong spending spree on a portfolio of long-term, high-priced power sources locked out competition, enriched a handful of politically connected developers, and left ratepayers on the hook for decades of exorbitant contracts, utility officials, energy experts and lawmakers say.
A sometimes withering analysis of LIPA’s power decisions since 2005 was undertaken by PSEG Long Island at LIPA’s request after PSEG took over management of the electrical grid. It laid out what many had been alleging since the authority began its aggressive pursuit of power: that a utility with among the highest rates in the nation couldn’t afford and didn’t need much of that new power.
In fact, as Newsday reported in 2010, LIPA in 2008 was replete with so much new power from the recently constructed undersea Neptune Cable that it paid Caithness Long Island Energy $102 million to delay completion of its Yaphank power plant project for a year. LIPA has said the move ultimately saved ratepayers money.
PSEG’s analysis found the problem went back much further than that. For each of the past nine years, LIPA had an average 528 megawatts more capacity than the state required — the equivalent of a power plant and a half. In 2011 alone, the excess above state requirements hit 972 megawatts, PSEG found, with an estimated cost that year of $131.2 million. The nine-year total cost was $641 million, according to PSEG.
LIPA’s justification for the capacity was based on a formula to reduce the likelihood of a one-day outage of the system to once in 1,000 years, compared with the statewide standard of once in 10 years.
“It was either incompetence or political agendas being played out that benefited very select parts of the public,” said Assemb. Steve Englebright (D-Setauket), a co-sponsor of the LIPA Reform Act, which restructured the agency. PSEG’s findings “confirm what many analysts from the outside have been concerned about, which is that the driver for more and more power plants was something other than need.”
Rick Shansky, managing director of LIPA’s Power Supply Long Island division, defended the practices. “LIPA’s planning standards resulted in a high standard of reliability of power over the past years to ensure that we have not been short of capacity and energy . . . even during abnormally hot summers and increasingly stringent” state planning requirements, he said.