LIPA's future remains uncertain
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“What they said to us is, look at the storm performance of PSEG as compared to National Grid and Con Edison,” McKevitt continued. “They believe the PSEG storm performance is the best.”
At a crossroads
According to McKevitt, both potential methods of restructuring LIPA — privatization and municipalization — come with complications. McKevitt said his ideal solution would be to privatize LIPA. However, he added that the biggest potential problem with privatization would be dealing with the authority’s $7 billion debt.
According to the Moreland Commission, LIPA’s assets are valued at $3.5 billion, meaning that LIPA ratepayers would be responsible for repaying the remaining $3.5 billion in “stranded debt” following any sale.
The debt, McKevitt explained, is directly attributable to the Long Island Lighting Company’s decision to build the Shoreham Nuclear Power Plant in the early 1970s, a facility that never became operational. “We are still paying for the sins of Shoreham today,” said McKevitt. “And we’re still going to be paying that for many years to come.”
In 1998, LIPA acquired LILCO’s electrical transmission and distribution system, as well as certain other assets, and inherited its billion-dollar debt.
McKevitt said that many members of the State Assembly feel that granting LIPA full municipalization would be the best option. But he disagrees, saying, “I don’t have the faith and the confidence that LIPA can do that job. Their past history has showed that they have failed and they have failed miserably.
“You have a group which shows they make mistakes and were unable to do something right,” McKevitt continued. “So now you’re going to give them even more resources to do it on a more massive scale?”
A third recommendation from the Moreland Commission called for the New York Power Authority to assume ownership of LIPA, which the commission said NYPA could accomplish by purchasing it for as little as $1 and maintaining it as its legal subsidiary. Electrical systems and revenues from Long Island would be kept separate from existing NYPA funds, and each entity would have separate classes of debt.
A NYPA spokesperson declined to comment on the Moreland Commission’s recommendation.