LIPA Board Votes on Multi-Million Dollar Package to Help Mitigate Soaring
Energy Costs Including Program to Assist Low-Income Seniors and Pay Down
Shoreham Debt
LIPA also announces a 3% bill increase to meet sky-rocketing fuel costs;
LIPA’s fuel hedging program saves millions and staves off higher increases.
LIPA President & CEO Law cuts discretionary spending 3.5% and freezes base
delivery rates for 2 years.
Brookhaven, NY-June 26, 2008—The Long Island Power Authority (LIPA)
Board of Trustees today gave the go ahead to begin the administrative process to
implement a multi-pronged rate mitigation package which will allocate more than
$140 million in reserve funds to residential and small business customers and
create a special $10 million fund aimed at low-income senior citizens struggling
to pay their electric bills.
The “Low-Income Senior Energy Assistance Program” is a $10 million dollar
fund which will provide financial assistance to qualifying seniors in paying
their LIPA bills.
“The number one request that comes across my desk since taking over LIPA is
from senior citizens on fixed incomes begging for rate relief,” said LIPA
President and CEO Kevin S. Law. “Given the staggering rise in oil and natural
gas prices and a sluggish economy, lowering rates for everyone is simply
unrealistic. But whatever help I can extend to our low-income senior population
to help ease the burden is worth the effort.”
Law anticipates that the program would be administered by a local
not-for-profit organization or possibly in conjunction with the Nassau and
Suffolk County Departments of Aging and/or Social Services.
The rate mitigation package will be funded through $200 million in monies
realized largely through a settlement of disputed payments under a previous
Management Services Agreement (MSA) with KeySpan and through savings extracted
under a renegotiated MSA with National Grid after its announced merger with
KeySpan.
In addition to the $10 million “Low-Income Senior Energy Assistance Program”,
the package will allocate more than $140 million in reserve funds to residential
and small business customers over a 30 month period, $25 million to pay down
debt on the Shoreham Nuclear Power Plant, $1 million for expert evaluation of a
recently issued RFP to secure the largest block of solar energy in the State of
New York and to kick off LIPA’s Commercial Net Metering program, and $1 million
to fund a repowering analysis for six power plants in National Grid’s generation
fleet.
As a result of skyrocketing fuel prices the Long Island Power Authority also
today announced a 3% rate hike effective July 1st, 2008. The typical LIPA
residential customer will see an increase of about $4.44 on their monthly bills.
As oil and natural gas prices continue to rise at record rates, with more
than 55% of LIPA’s nearly $4 billion budget going for fuel and purchased power
costs, a rate increase is inevitable. Utilities across the country are grappling
with this problem and have increased rates as much as 30%.
The price of a barrel of oil increased from $92.18 at the beginning of the
year to $138 as of this morning. That’s almost a 50% increase. In that same
period natural gas has increased from $8.11 to $13.30, a 64% increase. Without
LIPA’s fuel hedging program which allowed it to lock in 85% of its fuel costs
the rate increase would have been 22.5%. LIPA’s hedging program, if current
contract prices hold, will save LIPA ratepayers more than $400 million this
year.
“I recognize the harsh reality that the energy crunch is having on our
customers,” Law added. “And as I have been saying since I took over at LIPA, I
cannot control the cost of fuel, but whatever costs can be controlled, I remain
committed to doing what’s best for the ratepayers and that’s why I will be
further cutting discretionary spending by 3.5%.”
The LIPA board also approved the 2008/09 capital budget which allocated
$300,000 toward a smart meter pilot program in Hauppauge and Bethpage. |
