Jul 112011

Please read what Mr. Sackstein, a former LIPA Trustee, Co-Chairman of the Suffolk County LIPA Oversight Committee, and currently the Board Chairman of Action Long Island has to say about the privatization of LIPA. While I agree with him regarding the MSA, there is also a case for the fact that perhaps private industry can accomplish what government cannot.  I believe that private industry would have a vested interest in supporting sustainable, alternative  energy sources. Additionally the means to cost effectively clean up the currently contaminated, “dirty plants” now exists. That remediation would make the plants saleable. Isn’t that what we want?  Why isn’t anyone acting on this?  What does it take?

Not LILCO again, Long Islander’s can’t afford it-

Or, Long Island ratepayers- Fool us once…..

Sheldon R. Sackstein, C.P.A.

ALI (Action Long Island) has been at the forefront of Long Island’s energy issues since 1993, when we started the effort and called upon then Governor Mario Cuomo to take over LILCO.  But when Governor Pataki cobbled together the LILCO takeover “transaction” in 1997, ALI changed its position and opposed the deal.

Our original vision of a ratepayer controlled electric company had been destroyed.  The deal was now structured in such a way that: 1) ratepayer’s (rather than LILCO bondholders and shareholders) were saddled with Shoreham’s debt; 2) the power plants were sold-off to a private corporation; 3) ratepayers were given the responsibility/liability for an upstate nuclear power plant; and 4) ratepayers paid the cost for repairing LILCO’s outmoded transmission and distribution system that the PSC at the time called “inadequate and in a state of disrepair”.  All the benefits went to private parties and ratepayers got stuck with the bills.  Clearly, with hindsight and experience, ALI’s decisions have been proven to be the correct ones to protect ratepayers. LIPA rates have not come under control, in fact as we all know; they have gone up constantly.

In recent years, LIPA ratepayers have put billions of dollars into upgrading the LIPA transmission and distribution system. Former National Grid executive Bob Catell has called this system “gold plated – the best in NY State and perhaps in the country”. Should our public investment now go into private hands, where a private corporation will reap the benefit of every LI ratepayer’s investment?  This question will be answered as LIPA’s trustees choose whether the utility should be in public or private hands.

ALI voiced concerns and objections to LIPA’s original Management Services Agreement (MSA) since the outset of the Pataki Administration’s “transaction”. We believed the MSA was not in the best interest of LI ratepayer’s and LIPA awarded the MSA illegally, by not putting it out to bid. Additionally, we believe LIPA has extended the MSA illegally.

Most LIPA ratepayers don’t understand how our electricity is provided under the MSA.  Do you know who is responsible when the lights go out? Who reads the meters, sends out the bills, collects the money, purchases fuel for the power plants, overcharges customers for losses in the transmission of electricity and for storm costs? Most ratepayers would respond – LIPA. But the correct answer is National Grid provides all these services and more under the MSA.

Our current position, stated in open forums and in the media, demands that signing the new MSA, which is a long term commitment, be slowed down. LIPA is scheduled to sign-off on the new MSA this September, if not sooner.We do not want the potential of a municipal option to be precluded or hamstrung, nor do we want a decision of privatization unduly enhanced, by the quick signing of the new MSA.

The awarding of the MSA at this time to a private company could put them in a favored position to offer ratepayers the privatization of LIPA option, to the exclusion of other potentially better offers/bidders.  What if – at a later date – other responsible LIPA bidders were not comfortable with the terms and conditions of the MSA (which had been already been awarded) and therefore chose not to bid?  What if a ratepayer owned fully municipalized LIPA was the form of choice, but the already awarded new MSA made the deal unworkable?  Does the quick awarding of the MSA have any benefit to the ratepayers in a municipal setting?

We are once again faced with another potentially horrible “transaction” being rammed forward, where the option for Long Island ratepayers to choose the best operating structure for LIPA could be foreclosed by immediately signing a new MSA. We are not asking to “extend the MSA bidding process” but to stop the rush to sign off on the deal.

ALI now calls upon Governor Andrew Cuomo, the NY State, Nassau and Suffolk Legislatures, NY State Comptroller Thomas DiNapoli, and other concerned organizations and ratepayers, to join us in an effort to slow down the awarding of the new MSA.  Keeping the process open is essential so that a reasoned decision may be made on the future structure of LIPA.

© 2011 Street Smarts Publishing, Inc.