News Release Date: February 4, 2009
LIPA Issues RFP for Independent Evaluation of its Power Supply Charge
Continuing Reform Efforts, LIPA President Also Calls on State Comptroller to Review Other Authority Programs
Uniondale, NY— Following through on his earlier commitment for an independent review of the utility’s oft-maligned fuel and purchased power clause adjustment (“FPPCA”) or Power Supply Charge, Long Island Power Authority (LIPA) President and CEO Kevin S. Law announced the issuance of a Request for Proposals (RFP) to procure an independent consultant to perform a comprehensive review of the charge.
The findings of the independent evaluation, which will be paid for by LIPA, will be delivered directly to the Department of Public Service for review. LIPA will also provide a copy to the New York State Comptroller’s Office.
LIPA’s Power Supply Charge includes, among other things, the cost of petroleum and natural gas 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. The Power Supply Charge also includes the cost of power purchased by LIPA from independent power producers, both on and off Long Island, or power purchased directly from other markets via undersea cables, as well as other power-related costs.
“The issuance of the RFP is consistent with my efforts to reform LIPA and to make it a fully transparent agency,” said LIPA President and CEO Kevin S. Law. “Some believe that LIPA has placed items in the Power Supply Charge to circumvent review of certain of its increases by the Public Service Commission. The intent of this evaluation is to determine whether the costs LIPA currently places into its power supply charge are consistent with what the Public Service Commission has allowed regulated utilities to place in their power supply-type charges. If what LIPA has been doing in the past is not appropriate, I will correct the practice,” Law said.
The RFP is seeking proposals from experienced individuals/firms to conduct an independent evaluation of LIPA’s recovery of costs through its Power Supply Charge. The consultant(s) selected for this task will be provided with full access to LIPA’s books and records as necessary to complete the scope of work.
The consultant selected would have demonstrable qualifications to analyze and answer the following four questions:
- Has LIPA been recovering any costs through its Power Supply Charge that are already being recovered in other rates and charges levied by LIPA?
- Has the recovery of costs through the Power Supply Charge been authorized by the Authority’s Board of Trustees?
- Are the costs listed in LIPA’s Power Supply Charge tariff provision reasonably considered components of the costs of fuel and purchased power?
- Is the range of costs that the Public Service Commission has allowed investor-owned utilities to recover through automatic adjustment clauses similar to the types of costs that LIPA recovers through its Power Supply Charge?
The deadline for RFP responses is February 16, 2009. Interested parties may view the RFP in its entirety by visiting LIPA’s Web site at www.lipower.org.
In addition to the release of the RFP, Law has requested New York State Comptroller Thomas DiNapoli to continue and expand upon the baseline audit of LIPA that his office is currently conducting to include a review of other LIPA programs that have been the subject of criticism in the past including LIPA’s Clean Energy Initiative (CEI) and its Research and Development (R&D) program.
“I believe it is imperative to continue and expand upon our energy efficiency and renewable energy programs,” Law said. “However, I also believe it is important to review the administration of these programs in the past to ensure the proper administration of the programs in the future.”
LIPA, a non-profit municipal electric provider, owns the retail electric Transmission and Distribution System on Long Island and provides electric service to more than 1.1 million customers in Nassau and Suffolk counties and the Rockaway Peninsula in Queens. LIPA is the 2nd largest municipal electric utility in the nation in terms of electric revenues, 3rd largest in terms of customers served and the 7th largest in terms of electricity delivered. In 2011, LIPA outperformed all other overhead electric utilities in New York State for frequency and duration of service interruptions. LIPA does not provide natural gas service or own any on-island generating assets. More information about LIPA can be found online at http://www.lipower.org.
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