FAQs - Proposed 2010 Operating Budget

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My Account | Proposed Budget | Power Supply Credit | Understand Your Bill | Electric Service

What are the Highlights of LIPA’s Proposed 2010 Budget?

  • The proposed budget is a fiscally conservative budget that holds the line on controllable and administrative expenses
  • The proposed budget includes a 4% reduction in the Power Supply Charge
  • The proposed budget maintains the Delivery Charge at current levels despite a 7% increase in property taxes
  • The proposed budget includes an enhanced commitment to Efficiency and Renewables Programs
  • The proposed budget includes a new Efficiency and Renewables Charge that is consistent with all other New York State electric utilities
  • The proposed budget includes a new New York State Assessment that has been levied on all New York State energy utilities
  • The proposed budget results in a modest bill impact of $2.25 per month for the typical residential customer compared to our current rates (which were reduced in May 2009). This change is primarily a result of increased taxes. In comparison, a typical residential customer will pay $2.86 less on their monthly bill than they did in January 2009.

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What is the Power Supply Charge?
The Power Supply Charge recovers the cost of the electricity LIPA buys from various electric power producers on behalf of its customers. The biggest part of the Power Supply Charge covers the cost of fuels (petroleum and natural gas) that LIPA buys for use at power plants on Long Island owned by National Grid to produce electricity as part of Long Island’s overall electric supply. This charge also includes the cost of power bought by LIPA from Independent Power Producers both on and off Long Island.

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How is the Power Supply Charge calculated?
LIPA combines the cost of the fossil fuel for use at National Grid’s power plants with its purchased power costs into an overall Power Supply Charge, and that charge is applied to your individual electric usage measured in kilowatt hours (kwh). As of May 1, 2009, the basic cost for the Power Supply Charge has been 10.3˘ per kWh, and will be reduced to 9.9˘ per kWh effective January 1, 2010. This reduction represents a 4% decrease in the Power Supply Charge.

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Why is the Power Supply Charge being reduced by LIPA?
The price that LIPA estimated in the 2009 budget for the cost of fuel and purchased power was higher than actually experienced and projected for during the remainder of 2009. Customers will get the advantage of these lower costs.

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What happens if in a couple of months, the cost of fuel, like oil and gas, rises or falls? Will the Power Supply Charge be increased or decreased accordingly?
It is LIPA’s policy to estimate its fuel and purchased power costs for the entire year, and set the Power Supply Charge at a level to meet those costs over the coming 12 months.

It is possible that there could be changes to the Power Supply Charge, depending on the amount of the change in costs and whether LIPA anticipates it to be a longer-term change or a short-term fluctuation. We believe customers prefer for us to smooth over the short term aberrations to the extent we can, to provide them with a degree of stability in their energy prices. Ultimately LIPA must recover its total cost of providing power and that may mean that the Power Supply Charge has to change.

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Is this reduction related to LIPA’s recent announcement that everyone is receiving a refund from LIPA?
Yes. In the fall of 2009, LIPA announced that it was refunding approximately $144 million in Power Supply Charges because our cost of fuel and purchased power was lower than anticipated. Not all of the excess revenues that were collected in 2009 were returned to customers at that time, due to uncertainty about the price of energy for the remainder of 2009, including uncertainty about other economic and market conditions. Now that our power supply costs for 2009 are known with a greater degree of certainty, LIPA is returning the remainder of the excess revenues from 2009 as part of our Power Supply Charge reduction for 2010.

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What is Efficiency Long Island?
Efficiency Long Island is a 10-year, $924 million energy efficiency program that makes a wide array of incentives, rebates and initiatives available to LIPA’s residential and commercial customers to assist them in reducing their energy usage and thereby lowering their bills.

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It has been publicized that Efficiency Long Island is a 10-year, $924 million initiative. How will it be paid for?
Beginning in January 2010, an Efficiency and Renewables Charge will appear as a new line item on the bill that will show what each customer pays for this program. LIPA believes it is to the customer’s advantage to see the amount of the charge so that each customer will have more control to take steps to lower their cost. This charge is similar to the Systems Benefit Charge that the Public Service Commission imposes on energy utilities for efficiency measures. Both the media and representatives of the community have endorsed this concept.

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How is the Efficiency and Renewables Charge on my bill calculated?
Each year, LIPA’s Board of Trustees will approve the budget used to calculate the rate, and on each bill you will be charged that rate times the number of kilowatt-hours you consumed during that billing period as shown on the bill. How much you pay depends on how much you use, but we expect the charge to be very small for the typical residential customer. We are proposing a residential rate of 0.478˘ per kWh in 2010; that’s less than one-half of one cent per kilowatt-hour. For the typical residential customer that uses 775 kilowatt-hours per month, the Efficiency and Renewables Charge would be less than $3.75 per month.

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What are Efficiency Long Island’s rebate, incentive and renewable programs that I can take advantage of?

For Residential Customers

  • Efficient Products – ENERGY STAR® qualified products; specifically select lighting products, refrigerators, dehumidifiers, and room air conditioners as well as other more energy efficient products such as two-speed and variable speed pool pumps. Proposed new products and services for 2010 include refrigerator recycling, and select ENERGY STAR solid state lighting (SSL) products.
  • ENERGY STAR Labeled Homes – includes building shell upgrades, HVAC, hot water, duct seals, lighting and high efficiency appliances
  • Existing Homes – duct sealing and tune-ups for central air conditioners, whole house retrofit assistance and installation services, Residential Energy Affordability Program (REAP), and properly installed higher-than-code efficiency central air and heat pump equipment

For Commercial Customers

  • Commercial & Industrial (“C&I”) New Construction – targets all new buildings and major renovations
  • C&I Existing Buildings – addresses equipment purchases stemming from natural replacement at the end of useful life and retro-fits (discretionary replacement of functioning inefficient equipment)

The Efficiency and Renewables Charge also funds renewable programs, including solar and wind, for both residential and commercial customers.

For additional information and more details on all LIPA efficiency and renewable programs visit www.lipower.org/efficiency.

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Will all retail customers have the Efficiency and Renewables Charge on their bill?
Yes.

Why did LIPA decide to put the Efficiency and Renewables Charge as a separate line item on our bills at this time?
As energy efficiency and renewable programs become a more increasingly important part of planning throughout the State and on LI, LIPA believes that if our customers are aware of their individual contributions towards these programs that they will be able to make better decisions in managing their energy usage. This approach of a separate charge is similar to that taken by the NY State Public Service Commission, which has authorized similar programs, and similar separate charges, for the regulated electric utilities in the State.

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Why is LIPA implementing Efficiency Long Island?
LIPA is committed to providing its customers with the most reliable service at the lowest practical price. To meet this goal, LIPA must ensure that it will always have enough supply resources to serve customers’ electrical needs with margin in case of equipment failure or unexpected increase in customer demand. Based upon our evaluations, Efficiency Long Island is the most effective approach to meet these needs because it lowers overall energy consumption more cost effectively than the alternative of adding new generating resources.

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How do LIPA customers participate in Efficiency Long Island?
All of LIPA’s residential and commercial customers have the opportunity to participate. Customers should visit the LIPA Web site for a list of all programs that are available and how they may take advantage of them. For those customers who do not have access to the web or who prefer obtaining information about the program via telephone, call LIPA’s Info line at 1-800-692-2626. Customers may also participate by contacting their contractor, architect or appliance retailer.

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How will participation in Efficiency Long Island benefit me?
The benefit depends upon what energy savings initiatives you choose to purchase and install. For example, you may choose to simply purchase ENERGY STAR qualified compact fluorescent lights (CFLs) to replace existing incandescent light bulbs. You might also have your central air conditioner tuned-up or have your ductwork inspected and sealed and could expect to spend approximately a few hundred dollars. In both examples LIPA has rebates available to offset the costs that will bring your net cost down, resulting in a shorter payback on your investment. Again, visit LIPA’s Web site (www.lipower.org/efficiency) to learn about all the programs that might be of benefit to you. For those customers who do not have access to the web, call LIPA’s Info line at 1-800-692-2626

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Will the Efficiency and Renewables Charge remain the same, or is it going to change?
The Efficiency and Renewables Charge is expected to change each year. We project that as more customers participate in the program and as LIPA’s targets for energy efficiency and renewables resources grow, the charge will increase, and so will the savings to those customers that participate. In addition, we expect the savings to customers that do not participate will grow over time, as less expensive fuel is burned and fewer power plants are required to meet the needs of the Long Island economy. Since those costs are paid by all customers, the savings will be shared among all customers as well.

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Are there any programs or initiatives paid for by the Efficiency and Renewables Charge that are not available to LIPA customers?
No.

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Is the Efficiency and Renewables Charge the same for Residential and Commercial customers?
Different charges are proposed for small and large customers. Small customers include all residential customers and those commercial customers without demand meters (including street lighting, area lighting and traffic signal accounts). Large customers are the commercial demand-metered customers. Each group will have its own rate, which will recover those costs spent on behalf of those customers.

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What is the New York State Assessment?
LIPA is collecting an assessment on behalf of New York State in accordance with Public Service Law, Section 18-a. This law was enacted on April 7, 2009 as part of the 2009 to 2010 New York State budget and stipulates that the assessment is applicable to LIPA and all NYS energy utilities.

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Do I have to pay it?
Yes. All customers are required to pay this assessment.

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Does LIPA get any of the money generated by this new assessment?
No. All monies collected from this assessment will be transferred to New York State for the State’s General Fund. This assessment is a direct pass-through which LIPA collects on behalf of New York State.

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Does this New York State Assessment only apply to LIPA, or will I see it on my other energy utility bills?
Customers are already receiving this surcharge on their other energy utility bills.

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How is the New York State Assessment calculated – how much will I have to pay?
The new assessment will amount to a monthly charge of $1.75 for the average residential customer. The surcharge is collected at a rate of approximately 1% of the bill. The dollar impact for each customer will vary based on individual customer usage.

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What is the schedule and location of the Public Information Sessions for LIPA’s Proposed 2010 Budget?

  • November 17th @ 10:00 AM at the Omni Building, Uniondale in the Teleconferencing Center (lower level)
  • November 17th @ 7:00 PM at the Sheraton Long Island, Hauppauge
  • December 9th @ 10:00 AM at the H. Lee Dennison Building, Hauppauge in the Media Room
  • December 9th @ 7:00 PM at the Omni Building, Uniondale in the Teleconferencing Center (lower level)

LIPA encourages written comments for those unable to attend the public sessions.

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Last Updated: 11/02/2009