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Thiele: LIPA's Privatization Proposal Is Déjà Vu All Over Again

The Long Island Power Authority, as currently constituted and operated, is a monumental failure.

We did not need Hurricane Sandy or a State Commission to inform us of the obvious. Long Islanders have known for many years that its power company was unaccountable and lacking in transparency, controlled by the Albany political establishment. The result: (1) continued high rates because of a substantial and growing debt, (2) poor service because of years of lousy management by political appointees, and (3) the lowest customer satisfaction in the nation.

The proposed answer from the same Albany establishment: sell LIPA to a private company, depend on the State Public Service Commission (PSC) to protect Long Island, and run for the hills.

Has everyone forgotten that it was a private utility, the Long Island Lighting Company (LILCO) and the State PSC that got us into this mess in the first place? The State PSC allowed the irresponsible management of LILCO to saddle Long Islanders with a $6 billion liability in connection with the Shoreham debacle. LILCO was even forced to settle a Racketeer Influenced and Corrupt Organizations (RICO) lawsuit in connection with Shoreham.

It sounds like déjà vu all over again. We know that the substantial federal tax benefits of a public utility would be lost with a private utility. We know that the new private company would be accountable to its stockholders, not the public. We know that not a word has been uttered about the current $7 billion LIPA debt. We are told to just trust the Albany establishment and rates will be frozen for the next few years.

I didn’t believe the promises when the original LILCO deal was cut. I didn’t believe it when the National Grid transfer was approved. And I don’t believe it now.

The original intent of LIPA, a true public utility governed by Long Islanders, has never been fulfilled as it was envisioned when Governor Mario Cuomo signed the LIPA legislation in 1986. It has never been governed by Long Islanders, and it has never been a “real” utility. It has never been more than a “shell” corporation operated by political appointees who then contracted out operations to another private company. The predictable result of this “Rube Goldberg” contraption: a disaster for Long Island.

I will await further details about this proposal. However, if history is any indication, it won’t add up. We should be looking at other alternatives.

Here are just a few:

1. LIPA Trustees should be elected by Long Islanders, not appointed in Albany.

2. If Albany doesn’t want to continue LIPA as a State public utility, then permit local governments to operate true municipal power companies, as is the case upstate and in places like Greenport, Rockville Centre, and Freeport on Long Island.

3. Require LIPA to sell its 18% interest in the 9-mile point nuclear facility to defray part of its current debt.

4. Finally, the issue of energy policy on Long Island will never be truly addressed until the existing $7 billion debt of LIPA is resolved. Long Island’s economy will never be truly competitive while this liability hangs over us.

This debt was not created by hard working Long Island residents but by a corrupt, incompetent, private utility and a lax State regulatory structure.

In the last five years, we have seen government intervention in the banking and financial industry and in the automobile industry because they were “too big to fail,” while the perpetrators of the worst recession since the 1920s escaped responsibility.

Innocent Long Islanders have been equally victimized by corporate greed and lack of regulatory oversight. Long Islanders have paid the price for years with some of the highest utility rates in the nation. There is no relief in sight. Aren’t more than 2.5 million Long Islanders also too big to fail?

The LIPA problem will not be solved by simply kicking it back to the private sector. Furthermore, Long Island cannot create a sustainable and viable energy future or a competitive economic climate until the LIPA debt issue is resolved.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Jusef January 15, 2013 at 03:45 PM
Gosh, it sure is comforting to know that a life-long bureaucrat-lite and an entrenched, fully unionized bureaucratic nightmare of a pseudo-municipal blob are working together to make sure we're protected for the next time.
muskrat January 15, 2013 at 07:45 PM
I've been to LIPA board meetings over the years as they are open to the public. Each time it was abundently clear that it was too big and cumbersome and that most members did not have a clue about what was on the agenda or the issues at hand. Some spent the meeting looking off into space as they were utterly uninterested, others desperately rifled through their board packets trying to get a handle on things, only a few ever seemed to be engaged, up to date on the issues and know what was going on. It is no wonder LIPA is in such a mess with such a poor quality board running it. Most of its members are there simply to collect salaries as political pay off. I say fire them all because they have failed us miserably! It is high time for LIPA to have a smaller, more efficient and professional board. I am not convinced an elected one would be much good, but that may be because I am all too familiar personally with elected officials here on Long Island and I know how good many are at fooling the public into thinking they are doing their jobs well when in fact they are putting in a minimum effort. Fred Theile excepted.
Kathleen Furey January 15, 2013 at 08:50 PM
You said it, Yogi! The last thing that can remedy the power insanity on LI is privatizing it.
North Fork Bob January 17, 2013 at 04:52 PM
After Sandy it took Greenport one hour for all the electric to be restored.Municipalities should look into establishing there own facilities. In regards to the debt we didn't create it why should we pay it.
Ralebird January 18, 2013 at 09:56 AM
So, Fred, what have you done to makeover the Public Service Commission? And where is your legislation that would enable Long Islanders to choose among electrical power suppliers as in other states? "Innocent Long Islanders have been equally victimized by corporate greed and lack of regulatory oversight". But what of legislative intransigence? Talk is cheap, Fred!

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