By MARK HARRINGTON
Updated March 3, 2015 9:31 PM
LIPA and PSEG Long Island’s power to increase a new service charge beyond a proposed 4 percent rate hike has no cap, an official said Tuesday at state hearings.
LIPA finance chief Tom Falcone said in testimony in Hauppauge that the mechanism, known as a delivery service adjustment, can go up or down depending on factors such as storm costs and debt service refinancings.
Asked if there was any limit on the measure, Falcone said, “there isn’t a cap.”
Ratepayers at a public hearing Monday in Riverhead raised concerns about the service charge, given the planned increase and other potential cost increases.
“It’s basically a blank check for any of us to sign,” said Chris Reilly of Coram.
Customers would benefit if charges for debt, storms and National Grid plants come in lower than predicted, Falcone said.
Wayne Brindley, deputy director of the Long Island office of the state Department of Public Service, questioned “cushions” he said LIPA built into the plan.
“I see a risk mitigation device built in every single line of the income statement,” he told Falcone, referring to cost recovery mechanisms. “Almost every single line has a built-in cushion.”
Asked later if DPS felt LIPA had built too many such devices into its rate plan, Brindley said, “That’s what we’re looking at.”
PSEG spokesman Jeff Weir defended the adjustment measure as merely a “cost tracker” — a charge that follows fluctuations in costs — that all other state utilities use. And he suggested a lack of revenue to pay the costs might ultimately force LIPA to borrow if cash is short.
The service charge would let the utilities recover costs through new charges should unforeseen costs arise during the course of the rate case.
Seven people spoke at the Hauppauge hearing, including Alfredo Spera of Smithtown, who urged the utilities to reconsider the 4 percent rate increase.
“When does it stop?” he said. “Some place we have to draw the line.”