New York Gov. Andrew Cuomo, in his State of the State Address delivered on Jan. 9, said the electric power grid and the structures that control it must undergo a fundamental redesign that improves performances and protects ratepayers.
Those recommendations come, at least in part, from a Jan. 7 interim report issued by the Moreland Commission established by executive order in November 2012 to investigate the response, preparation and management of the state’s power utility companies with major storms over the past two years, including Hurricanes Sandy and Irene and Tropical Storm Lee.
According to a Jan. 9 statement from the governor’s office, based on the Moreland Commission’s recommendations, Cuomo proposed giving the state Public Service Commission (PSC) the regulatory and enforcement authority it needs to improve oversight and regulation of the state’s utilities.
“We must harden our utilities and really get ready for the next storm and have a PSC that’s going to require the utilities to come up with a real plan,” Cuomo said during his address. “We need to redesign our power system. We empowered a Moreland Commission, which said basically, and I quote, put real regulatory and enforcement teeth into the public service commission, which has for too long been a toothless tiger. When it comes to the Long Island Power Authority [LIPA)], it’s never worked, it never will [and] the time has come to abolish LIPA, period.”
As reported, the Moreland Commission’s interim report recommended possible privatization of LIPA. That commission identified three options for consideration:
- The disposition of LIPA’s assets to a qualified Investor Owned Utility (IOU) that would serve as the sole utility manager and operator to the existing LIPA service area. This privatization would place the new service provider under the stronger regulatory environment recommended by the PSC, as opposed to remaining a self-regulated entity.
- Full public ownership and operation by LIPA of the transmission and distribution system. This “public power” model would integrate all vital functions into one entity.
- Full public ownership and operation by the New York Power Authority of the LIPA electric system. In this alternative, which would keep the LIPA assets in the public power arena, NYPA would assume direct responsibility for management and operation of LIPA’s transmission and distribution system, with LIPA maintained as a separate subsidiary within NYPA.
“We ought to privatize the Long Island service, which will be regulated by a new and empowered PSC, 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, so there will be no increase to the ratepayer, there will be a better regulator and there will be a better provider,” Cuomo said.
LIPA said on Jan. 9, “We will continue to cooperate with the state to do what is in the best interest of Long Island’s electric customers.”
Cuomo also noted that in relation to Sandy, $60bn has been requested for federal storm aid for New York and New Jersey, adding: “So far, Congress has appropriated $9bn. My friends, that is just too little and it is too late.”
Cuomo added: “Our message to Congress is clear: New York is united; deliver the aid we need and deserve. Do not play politics with the state of New York; do not bring your political Washington gridlock to New York; do not play politics while people need to be back in their homes and small businesses need money to open their door. Remember New York because New York will not forget, I promise you.”
While the challenges are daunting, he said the state has an “extraordinary opportunity to not just rebuild, but to build back better” and “get control of utility companies that have been out of control for too long.”