Utility ‘should be privatised’ after Sandy failings

The Moreland Commission, which was launched last year by New York governor Andrew Cuomo, has recommended the privatisation of the Long Island Power Authority. The utility was heavily criticised for its Hurricane Sandy response.

The Moreland Commission has recommended the privatisation of New York’s Long Island Power Authority (LIPA), a non-profit municipal electricity provider which owns the retail electric transmission and distribution system on Long Island and provides electricity services to 1.1 million customers in Nassau and Suffolk counties and the Rockaway Peninsula in Queens.

The Commission was established in November last year by New York governor Andrew Cuomo to look at the storm preparation and response of utilities in the New York area. This followed a number of high-profile weather events to strike New York in recent years: an ice storm in December 2008, Hurricane Irene in August 2011, Tropical Storm Lee in September 2011, and – most notably – Hurricane Sandy in October last year.

In a presentation, it was stated that a “dysfunctional management structure” at LIPA had led to an “operational and communications disconnect” between LIPA and the UK’s National Grid and an “inadequate response”. The Commission also found LIPA guilty of failing to implement past state recommendations to upgrade its Outage Management System – without which it allegedly cannot cope with large storms – and changing its communication systems so it could provide better information and restoration estimates.

The Commission concludes that “the only option for change” is a “complete overhaul of LIPA and how power is delivered on Long Island”. It posits three possibilities: a purchase of LIPA’s assets by a qualified private utility which serves as sole utility manager; an expansion of state authority so that LIPA manages its system and operations (currently there is a separation of the two); and responsibility handed over to an existing public authority such as the New York Power Authority.

The Commission has come down on the side of privatisation as the “best option”, saying that – among other benefits – this would offer better integration of operations, resolve accountability issues, imrove decision-making processes and be more cost-effective.

LIPA was strongly criticised over its response to Hurricane Sandy. Despite charging high rates compered with the national average, more of LIPA’s customers lost power post-Sandy and it took longer before power was restored. The utility was also criticised for a lack of communication to its customers.