News Release Date: December 15, 2011
LIPA Board Selects PSEG to Operate the Long Island Electric Grid
PSEG Selection Provides Best Value to LIPA Customers
Jobs Remain on Long Island
Uniondale, NY - The Long Island Power Authority (LIPA) Board of Trustees today voted to select Public Service Enterprise Group, Incorporated (PSEG), a leading New Jersey based energy provider with over 100 years of experience in electric energy generation, transmission and distribution, to manage the operations of the electric grid on Long Island. The new contract is for 10 years and requires PSEG to create a wholly-owned subsidiary to be located on Long Island and dedicated to LIPA and its 1.1 million customers.
In October, the Board of Trustees approved the restructuring of LIPA’s business model for the operation of its electric utility business. PSEG will assume the day-to-day operations in January 2014 at which time LIPA will implement an improved business model designed to enhance the quality of customer service, provide long-term workforce stability and allow LIPA to more effectively manage costs.
PSEG was selected as the new service provider based on a joint proposal which demonstrated the following key strengths:
- Proven track record of 1st quartile customer service and reliability;
- A corporate culture that emphasizes transparency and local decision making;
- A commitment to efficiency, cost control and customer satisfaction;
- Superior IT and management system experience;
- Experience with similar complex business transitions by Lockheed Martin Services Inc.;
- A comprehensive and detailed plan that demonstrates the ability to achieve a seamless transition of services; and
- Lowest cost and best value for LIPA customers.
PSEG, with subcontractor Lockheed Martin’s services, will create a team with complex business transition experience to ensure a seamless transition of services in 2014.
“Partnering with PSEG for the operation of LIPA’s transmission and distribution system under an improved business model provides the best value for our customers while also providing greater transparency and tighter controls of all activities and costs,” said Chairman of the Board, Howard Steinberg.
LIPA will collaboratively work with PSEG to ensure the highest level of efficiency, providing increased accountability, transparency and control to improve customer service and to continue to provide superior reliable electric service to LIPA’s customers. As part of the new contract, PSEG will keep jobs on Long Island at comparable pay and benefits.
“PSEG demonstrates a superior commitment to improving customer service and maintaining safe reliable electric supply on Long Island,” said Michael Hervey, LIPA’s Chief Operating Officer. “Choosing a service provider to move forward with LIPA’s operations for the next decade was a long, rigorous process, and we are confident that PSEG’s proposal offers the best overall value for LIPA’s customers while ensuring LIPA maintains an experienced and dedicated workforce on Long Island.”
“Our members have consistently provided LIPA and Long Island with the best service and reliability in the state year after year,” said Don Daley, Assistant Business Manager, IBEW Local 1049. “We are committed to working with the new service provider going forward.”
This decision follows a comprehensive and competitive procurement process which commenced in 2009 and included a thorough technical and cost analysis of proposals submitted in 2010. This is the first time that the contract for operation of Long Island’s transmission and distribution system has been competitively procured and follows the recommendations of many State and local officials. The current contract for utility services management between LIPA and National Grid expires December 31, 2013.
"National Grid and its predecessor have worked hard serving LIPA’s customers for the past thirteen years,” said Michael Hervey. “We thank them for their commitment and look forward to working with them toward a successful transition.”
Before the contracts between LIPA and PSEG become effective, regulatory approvals are required from the Internal Revenue Service, the NYS Attorney General and the Office of the State Comptroller. These approvals are expected to be secured over the next several months. Following these approvals, PSEG will begin a process of transition, during which it will prepare to assume the operation of LIPA’s system targeted for January 1, 2014. In the meantime, LIPA has set up a web site to keep the public updated on transitioning to the new business model and service provider (www.ourLIPAfuture.info).
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.Back to top