SUFFFOLK CLOSEUP: PSEG'S Lobbying Effort And LIPA

SUFFOLK CLOSEUP

By Karl Grossman

“Opportunity Lost: Governor Kills Path to Better Electrical Service at Lower Cost” is the headline of an essay by former Long Island Power Authority Trustee Peter J. Gollon in the just-out issue of L.I. Sierra Club News.

Gollon, on the LIPA board from 2016 to 2021, cites the process existing for decades now for LIPA to “outsource its operation,” to have a third-party contractor run the LIPA grid, currently, he notes, “a subsidiary of PSEG, a New Jersey utility.” He adds “LIPA is limited to supervising PSEG, which gets paid a highly profitable fee of at least $80 million annually.”

PSEG, he says, did “a barely adequate job until the August 2020 train wreck of Tropical Storm Isaias, when PSEG lied about its own incompetence being the root cause of the delayed power restoration.”

“Multiple studies found that the current outsourcing structure is flawed and that the interests of any outsourcing company operating the system cannot coincide with those of the utility’s customers.” writes Gollon. The state’s Legislative Commission on the Future of the Long Island Power Authority “has reached the same conclusion and drafted legislation to allow LIPA to operate the grid itself, with no outsourcing required. PSEG heavily lobbied Governor [Kathy] Hochul and many state legislators to kill the bill and keep the present structure.”

“Thus, the well-thought-out bill got no traction in the [State] Legislature. Nor with Governor Hochul,” he says, “who insulted Long Islanders by remarking, ‘If I get a bill put on my desk, I will examine it.’ That’s polite for ‘I don’t give a damn.’”

“Stuck with the present model, LIPA CEO Tom Falcone started planning for a new outsourcing contract to begin in 2026, with terms that would ensure better performance,” he relates. “Then,” says Gollon, “Governor Hochul replaced the LIPA Board of Trustees chair and appointed three new [board members]. They seemed to neither know nor care about LIPA’s past troubles with PSEG or fixing them.”

Gollon says, “The new Board Chair Tracy Edwards set such a hostile tone that Falcone and [LIPA] COO Mujib Lodhi resigned; more will follow. Without its most competent staff, nobody will be left to design a contract to attract bidders who could make the most of LIPA’s unique and convoluted structure.”

“PSEG’s massive lobbying succeeded but at the expense of the LIPA ratepayers and top-notch service,” declares Gollon.

“They could continue to get their annual $80 million management fee. A weakened LIPA staff will have a harder time integrating the coming offshore wind generation with LIPA’s grid or adding additional local renewables to meet the renewable energy goals of the [New York’s] Climate Leadership and Community Protection Act.”

Gollon is not a lightweight on these issues. He has a Ph.D. from Columbia University in nuclear physics and engaged for years in “radiation safety work” at the U.S. government’s Fermi National Accelerator Laboratory (Fermilab) in Illinois. He is former chair of the Energy Committee of the L.I. Sierra Club. He is long a Suffolk County resident, living in Huntington for more than four decades. He was appointed to the LIPA board by the speaker of the State Assembly upon the recommendation of then Assemblyman Steve Englebright of Setauket, who has now returned to the Suffolk County Legislature and has been among the most environmentally committed lawmakers ever on state and Suffolk levels.

Gollon’s comments need to be taken most seriously.

In an interview last week, he told me that “I don’t think the governor understands what public power is” and has been swayed by lobbying by Newark, Jersey-based PSEG. In 2011, her predecessor as governor, Governor Andrew Cuomo, arranged for PSEG to run the LIPA grid.

In testimony last year before the Legislative Commission on the Future of the Long Island Power Authority, Gollon spoke of how “inefficient” the system of a third party running the grid is, “despite the outstanding efforts of LIPA’s CEO and staff to supervise and direct PSEG.” He said this “model for a large municipally owned utility does not exist anywhere else in the other forty-nine states. Nor anywhere else in New York State, either.”

He called for LIPA to run the grid itself. “LIPA staff is perfectly capable of directly running the utility,” testified Gollon. “I believe, and I strongly urge you to conclude, that LIPA should be set free of this unique and uniquely expensive and inefficient structure and be allowed to directly manage its own electrical system for the benefit of us, its ratepayers.”

The commission, co-chaired by State Assemblyman Fred W. Thiele, Jr. of Sag Harbor, fully agreed and in its final report called for LIPA to run the grid itself. That, emphasized Thiele, “will save the ratepayers money” and enable “more transparency, more accountability” than the “third-party structure.” The report said cutting out PSEG would provide a saving of $50 million to $80 million a year “by eliminating the fee paid to PSEG” and “allow LIPA’s board of trustees to lower rates or mitigate future rate increases, upgrade grid structure, invest in climate-friendly green initiatives” and “support struggling residents and businesses.” 

PSEG’s contract with LIPA is facing expiration. If that doesn’t happen because of PSEG lobbying—on which it has spent “millions, says Thiele—and LIPA still not allowed to run its own grid itself, that indeed would be “opportunity lost.”

Karl Grossman is a veteran investigative reporter and columnist, the winner of numerous awards for his work and a member of the L.I. Journalism Hall of Fame. He is a professor of journalism at SUNY/College at Old Westbury and the author of six books.