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Fight The Power: The Problems With LIPA and National Grid

“National Grid does the day-to-day operations on behalf of LIPA and our 1.1 million customers. But that contract is going to be up at the end of 2013. So with that happening we have to be at a position by the end of this year so we know who the service provider is going to be because there has to be a transition period,” she says. “We want to ensure that it’s a smooth transition…so our customers won’t see any difference in the services they’re receiving.”

Indications are that the “shotgun marriage”—as one Long Island energy expert characterized it—between LIPA and National Grid may be heading soon for a divorce, and that could be one reason LIPA is eager to tie the knot sooner rather than later with either Con Ed or PSE&G. National Grid is “going to lose” the lucrative services contract, this insider says.

“Look at the headlines: They tell the tale. They’re an inferior utility compared to Con Ed and PSE&G. After they took over KeySpan, most of the people retired or were let go. It cut down American employees and inserted a British management philosophy that doesn’t work too well in the United States. The bottom line is: They don’t know what they’re doing.”


Asked to comment about the evident strain between the British-owned utility and LIPA, particularly in light of recent charges of overbilling, its spokeswoman says: “National Grid will continue to follow practices outlined by the PSC rules and regulations. We review issues on a case-by-case basis and work to resolve them with our customers.”

Certainly more oversight would help, and that might require a brand new arrangement. Says Hervey of LIPA: “We know what we’re paying National Grid but we do not know what their profits are from us. We know what we pay for, and we know we’ll get the services we pay for, but how much profit is built into that we can only estimate.”

But Matthew Cordaro, co-chairman of the Suffolk legislature’s LIPA oversight committee, doesn’t buy that rationalization.

“The lion’s share of the blame has to be with LIPA because that’s who you write your check out to,” explains Cordaro, whose experience spans LILCO and public utilities in California and Tennessee. “They own the customers, they have the responsibility. They didn’t have the resources or the expertise to oversee the operation of the Grid, and the Grid has gotten away with an awful lot.”

To Gordian Raake, executive director of Renewable Energy Long Island, the “much bigger issue with the greatest long-term impact on Long Islanders is the power supply agreement,” he says, adding that he’s afraid LIPA may “bet on the wrong horse.”

Recently, the utility issued an RFP for delivery of 2,500 megawatts, and is now evaluating some 42 bids, with a “couple of renewable energy proposals in the mix,” he says. Of course, the majority are for energy generated from fossil fuels.

“The developments in the renewable energy sector just in the last few years have been such that it’s now very clear that renewable energy sources such as solar and wind are approaching very quickly the point where they are cost-competitive, if not cheaper than conventional fossil fuel and nuclear, too,” continues Raake. “There will come a day relatively soon when it will be cheaper to generate electricity from solar panels and wind turbines than from oil or gas-fired power plants. That raises the issue that if LIPA selects fossil-fueled proposals and signs 20-year agreements then we’re stuck with them.… From my perspective that would be a real shame.”

Back in the 1980s, Long Islanders took to the streets by the hundreds, if not thousands, to protest the Shoreham nuclear power plant. Here, decisions are about to be made that could also have lasting effects on Long Island’s energy future and set the tone for decades to come, but the protestors are long gone.

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