The next time LIPA petitions the State Public Service Commission for a rate increase, the contractor that manages its supply system will have to disclose its payroll, including executive pay, as well as fees paid to contractors and consultants.
A bill sponsored by State Senator Ken LaValle and Assemblyman Fred Thiele requiring that disclosure was signed into law by Gov. Andrew Cuomo last week. LaValle and Thiele put the bill forward after PSEG-LI, the contractor that manages LIPA’s system under a 12-year contract signed in 2013, refused to disclose executive compensation for its 18 top officials, claiming that such information was exempt from state scrutiny or public disclosure under the LIPA Reform Act of 2013.
The new law amends the LIPA Reform Act of 2013 to require such information be made available for public scrutiny in connection with any rate increase petition. It would also give the Department of Public Service-Long Island the right to review the information and make recommendations to LIPA about the reasonableness of such compensation and costs.
The 2013 LIPA Reform Act, enacted in the aftermath of Superstorm Sandy, which caused widespread and prolonged power outages across Long Island and prompted a fierce public and political backlash against LIPA, gave PSEG-LI authority over the management of the operation and maintenance of Long Island’s utility system. It froze electric rates for three years and for the first time required state public service department review of proposed electric rate increases.
The act empowered DPS-LI to make recommendations to LIPA about rate petitions, after a rate proceeding. LIPA’s appointed nine-member board of trustees has sole responsibility for setting electric rates based on recommendations by the DPS after a rate proceeding.
The management contract between LIPA and PSEG-LI is for a term of 12 years. PSEG-LI earns around $58 million for management of the LIPA grid and another $9.2 million for hitting performance targets set by LIPA, according to LaValle and Thiele.
In March 2015, when seeking a three-year cumulative revenue increase of $441 million, PSEG-LI refused to make public the executive compensation for its 18 top officials, claiming that such information was exempt from state scrutiny or public disclosure under the LIPA Reform Act.
“The Department of Public Service will now have the proper tools to adequately request and secure information that is related to the cost of supplying our power,” LaValle said. “We should not be paying inflated executive salaries and high-priced consultants without scrutiny. This law forces LIPA and PSEG-Long Island to comply with our requirements.”
Thiele called the amendment a “first step to restore transparency and accountability to the electric ratemaking process on Long Island.”
LaValle agreed. Ratepayers who are charged “some of the highest electric rates in the country… have a right to complete transparency,” he said. “Our families deserve to know where LIPA is spending their hard-earned money.”
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