Friday, June 27, 2008

Legislature Passes Bill Requiring PSC to Review LIPA Rates

PSC to Review LIPA Rates
When the Long Island Power Authority (LIPA), a public authority, took over the Long Island Lighting Company (LILCO), there was an immediate reduction in rates because of the cheaper public financing of the legacy costs of a nuclear plant that was licensed but did not operate, and because there was no need to pay LIPA an investor's return on investment. Since then, LIPA customer bills have risen, particularly since 2000 when the advent of the NYISO markets began to influence electric rates. See PULP's chart of typical bills showing that LIPA bills are second highest in the state, after Con Edison.

LIPA raised its rates significantly, through surcharges analogous to the mechanisms Con Edison uses to pass through the cost of power purchases in the wholesale markets. Court actions and petitions to the Public Service Commission (PSC) were unsuccessful in obtaining independent PSC review of the reasonableness of the new and increasingly higher LIPA rates.

When LIPA was created, it was generally exempted from most provisions of the Public Service Law (and hence exempt from PSC rate regulation), subject to several exceptions which do not include PSC rate review.

In response to consumer concerns, on June 18, 2008 both houses of the Legislature passed a bill (A 6164/S 3410) that would make LIPA subject to PSC rate review. It awaits approval by the Governor. Assuming the bill is approved by the Governor, it would then take effect in 180 days.

A Neglected Issue: Customer Protection
As the PSC gears up for regulation of LIPA rates, it should also begin to pay attention to the complaints and Hotline calls from LIPA consumers. Under current practice, the PSC simply refuses to assist LIPA customers with complaints and calls to obtain or preserve service, and denies them the benefits of its complaint handling procedures and toll-free emergency Hotline (1-800-342-3355) in situations involving imminent or recent shutoff of utility service.

Sectioon 1020-cc of the existing Public Authorities Law, however, required LIPA to adopt regulations to provide "its residential gas, electric and steam utility customers those rights and protections provided in article two," which is the Home Energy Fair Practices Act (HEFPA). HEFPA, in turn, requires the PSC to provide hotline and complaint adjudication services to customers. LIPA, however, does not provide customers with notice of their rights under HEFPA, e.g., PSL Section 43, to obtain independent PSC review of LIPA decisions affecting their bills and service.

The PSC routinely denies Hotline assistance and complaint adjudication to LIPA customers, and thus, LIPA is being allowed to decide customer complaints against itself without PSC review.

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