LIPA Selects PSEG to Operate Electric Grid

Nationalgrid linemen, Bryan Bruce,left, and Michael Burek prepare to replace a utilty pole in a swamp area damaged by Tropical Storm Irene on Knox Cave road in the Town of Knox N.Y., Thursday, Sept. 1, 2011. Utility companies continue to bring New York electricity customers back on line, but almost 182,000 are still blacked out four days after Irene pounded the state with drenching rains and high winds. (AP Photo/Hans Pennink)

The Long Island Power Authority‘s board of trustees selected New Jersey-based Public Service Enterprise Group (PSEG) on Thursday to run the daily operations of the Long Island electric grid.

The 10-year contract says PSEG will take over day-to-day operations starting January 1, 2014. The utility has created a Long Island-based company that will focus its attention on LIPA customers, LIPA’s Chief Operating Officer Michael Hervey said in a letter to ratepayers that was featured on the company’s website.

The selection of PSEG means National Grid, the operator of the electric grid for the past 13 years, will no longer handle daily operations once their contract expires.

“Choosing a service provider to move forward with LIPA’s operations for the next decade was a long, rigorous process,” Hervey said in a statement, “and we are confident that PSEG’s proposal offers the best overall value for LIPA’s customers while ensuring LIPA maintains an experienced and dedicated workforce on Long Island.”

After Tropical Storm Irene knocked out power to more than half a million homes and businesses in Nassau and Suffolk Counties in August, LIPA and National Grid received a chorus of complaints from ratepayers and public officials who demanded better communication.

In October, LIPA’s board of trustees approved the restructuring of a new business model that calls for improved customer service and to more effectively manage costs with “greater accountability and transparency,” according to the Hervey’s letter.

Also on Thursday, LIPA approved its 2012 budget, which comes with a 1.5 percent rate increase, which is expected to go into effect on March 1, 2012.

When LIPA first proposed the increase, the utility said the hike would work out to be about $2.24 extra per month for residential customers.

Hervey said of National Grid’s work with LIPA: “National Grid and its predecessor have worked hard serving LIPA’s customers for the past thirteen years. We thank them for their commitment and look forward to working with them toward a successful transition.”