Dive Brief:

• New York lawmakers earlier this month passed five pieces of legislation that impose new requirements on the Long Island Power Authority (LIPA) and its service provider, PSEG Long Island.
• The bills require LIPA and PSEG Long Island, a subsidiary of Newark-based Public Service Enterprise Group, to conduct an annual stress test of the system's reliability, and to disclose executive salaries and lobbying expenses, among other things.
• The measures are an outgrowth of continued frustration on the part of state lawmakers over a large-scale power outage last August on Long Island. Final enactment remains uncertain, though, with no indication yet whether Gov. Andrew Cuomo will sign the bills, according to their main sponsor, Assemblyman Fred Thiele Jr.

Dive Insight:

Assemblyman Fred Thiele Jr., an Independent whose district is on Long Island, championed the LIPA bills. Thiele announced on June 16 the bills had cleared both the New York State Assembly and the New York Senate and now must be transferred over to Gov. Andrew Cuomo and then signed in order to go into effect.

Thiele, chair of the Committee on Local Governments, called LIPA's performance during tropical storm Isaias last August "a catalyst for action on all these bills."

That storm, which hit Long Island on Aug. 4, resulted in 420,000 customers losing power for several days, according to Thiele.

The large and lengthy outage was "avoidable," Thiele contends, writing, in a description of the bill, "proper oversight by the Long Island Power Authority would have revealed the failures of PSEG's system prior to the storm," according to a summary of the legislative package on Thiele's official website.

"The failure of PSEG's outage management and communications systems led to prolonged outages, confusion, and misuse of resources," the summary states.

A key part of Thiele's legislative package, which he worked on with other lawmakers, would require "service providers of the Long Island Power Authority to successfully complete an annual stress test of all outage management and communications systems." Service contractors that fail to do this could be hit with penalties, that, in turn, would be paid out to customers in the form of rebates.

Another bill in Thiele's package requires public utilities in the state to disclose executive compensation. While LIPA is already required to do this as a public agency, PSEG-LI, which has the service contract, would be required to do so as well on an annual basis for its executives.

LIPA would also have to provide "a detailed description of all expenses of the Authority which are related to advertising and lobbying," on a semi-annual basis, under the recently passed legislation.

Another part of the legislative package would allow for the Utility Debt Securitization Authority to issue "additional securitized restructuring" to pay for upgrades to LIPA's transmission and distribution systems. Improvements are needed to "harden and protect this essential infrastructure from rising flood levels, increased wind speeds, and unpredictable storms," according the summary of the legislation, enabling LIPA "to take advantage of the current low cost of borrowing."

Thiele teamed up with state Sen. Todd Kaminsky, a Democrat whose district is also on Long Island, to pass a bill to "facilitate the development" of Community Choice Aggregation programs in LIPA's service territory, which was also part of the same package of bills. The legislation aims to give Long Island communities the ability to move forward with these efforts which enable "local municipalities and their residents to pool their resources together to purchase electricity from an alternative provider," potentially yielding savings or a greener mix of power, according to the summary of the legislation.

Addressing the issues raised in Thiele's recently passed bills, a spokesperson for PSEG Long Island said the company has "completed a successful end-to-end test."

Other tests included "one simulating up to 90% of the customer base reporting outages over a 24-hour period," said a spokesperson for PSEG Long Island, in an email.

"PSEG Long Island has worked tirelessly since last August to make improvements to our systems and processes, and has been responsive to recommendations from LIPA, its consultants and its Board of Trustees, and the Department of Public Service," the PSEG spokesperson wrote.

For its part, LIPA is currently reviewing whether it should continue to contract with PSEG to run its electric system or look elsewhere.

One option LIPA is exploring would involve replacing PSEG Long Island with one or more contractors. The authority is awaiting the results from a request for information it sent out to various firms.

Another options LIPA is exploring would have the authority convert into a municipal power company, running its system directly, according to a LIPA spokesperson.

In a letter last fall to stakeholders, LIPA's CEO blamed the issues that PSEG Long Island experience during tropical storm on "one root cause – mismanagement."

Concurrently, LIPA has also filed a lawsuit in state court seeking $70 million in damages from PSEG Long Island.

Still, the flurry of bills pushing big changes at LIPA face a final hurdle, requiring the signature of New York's governor.

Thiele said he has received "no indication" whether the governor will sign the bills passed by the Legislature.

The assemblyman sees the bonding bill as the one most likely to win favor with the governor.

But Cuomo may have months to make up his mind, with state legislative leaders not required to present him with the bills until the end of the year.

The current system, under which LIPA contracts out to PSEG, was forged by the governor more than a decade ago after service issues in the fallout from Hurricane Sandy.