Company InformationA Message from LIPA President & CEO
January/February 2008
In developing our operating budget for 2008, our biggest challenge was the dramatic increases anticipated in the cost of fuels used to generate electricity and the cost of purchased power – the electricity we buy from suppliers. In 2008, we are projecting these costs to total more than $2 billion, a 10% increase over the previous year’s projected level and representing 55% of our entire operating budget.
To help offset the impact of these non-discretionary cost increases, we have put in place a “smart management” approach in budgeting our discretionary costs, effectively eliminating more than $8 million from our operating budget.
The net result of these actions will be a modest increase in our power supply charge back to the rate that was in effect at the start of 2007. This amounts to a modest 2% increase, or approximately $3 per month, on the typical residential LIPA bill.
We appreciate that any increase in electric costs, no matter how small, is a burden for Long Island residents and businesses. That is why I instructed my management team to be aggressive in looking for ways to cut our discretionary expenses. Our 2008 budget incorporates many cost-saving measures, including a reduction of over $5 million in outside legal, lobbying and consulting fees; the elimination of three upper management positions; a reduction in advertising, sponsorship, travel and conference costs; the hiring of new employees at lower salaries than the individuals previously in those positions; and cutting expenses not deemed central to LIPA’s core mission. Overall, our cost-cutting efforts – even in the face of record-setting increases in our non-discretionary fuel and purchased power costs – will keep our operating expense increase to 2.9%, which is below the change in the consumer price index.
While we will continue to look for ways to cut our operating expenses to help mitigate the rising costs of fuel and purchased power, we realize creating an energy efficient Long Island must also be one of our top priorities. In 2008, our plans in this area include increased funding for our renewable portfolio standards program; increased funding for our array of energy efficiency programs, including a major increase for our Solar Pioneer program; and more money to support our low-income conservation program.
These programs will all help create a greener, more energy efficient future for Long Island. The most effective way for you to manage your electric costs today is to make energy efficiency a priority in your home or business. A good place to start is by replacing all your incandescent light bulbs with new, compact fluorescent bulbs. They use 75% less electricity and last ten times longer. When it comes time to replace appliances like dishwashers, washing machines and clothes dryers, make sure you purchase ENERGY STAR®-qualified models. If you own a business that is expanding or relocating on Long Island, our Clean Energy Initiative’s Commercial Construction Program offers rebates and incentives on the installation of energy efficient technologies and fixtures.
Finally, I have called for an Energy Master Plan in 2008 and will be seeking public comments on the scope of that plan later this year and I look forward to hearing from you. Check our Web site frequently for updates on the Energy Master Plan or for more tips on how to use energy more efficiently, or call our Energy Infoline at 1-800-692-2626. Working together, we can create an energy efficient Long Island.
Wishing all of you a very Happy New Year.
