Tropical Storm Isaias Frequently Asked QuestionsSee a full list of frequently asked questions about Tropical Storm Isaias and LIPA's options moving forward below. If you have a question that is not on the list, contact us
How is LIPA different than PSEG Long Island?
LIPA is a not-for-profit public utility with a mission to enable clean, reliable, and affordable electric service for our customers. LIPA owns the electric grid on Long Island and all the equipment used to provide service to customers.LIPA has utilized a public-private partnership business model since purchasing the electric grid from the Long Island Lighting Company (LILCO) in 1998. Currently, LIPA contracts with PSEG Long Island, a subsidiary of Public Service Enterprise Group Incorporated, to operate the electric grid on its behalf. Previously, LIPA contracted with KeySpan and National Grid, which operated the electric grid under the LIPA brand name from 1998 to 2013.
If LIPA owns the assets, why does LIPA contract with PSEG Long Island?
LIPA’s ownership provides customers with the financial advantages of public ownership, including LIPA’s not-for-profit status, access to low-cost financing, and dedication to Long Island and the Rockaways. These advantages reduce residential customer bills by an estimated $32 per month.
How is LIPA governed?
A local Board of Trustees governs LIPA. The Board supervises, regulates, and sets policy for LIPA. The Board consists of nine Trustees, five of whom are appointed by the Governor, two by the Temporary President of the State Senate, and two by the Speaker of the State Assembly. The Trustees are volunteers who must live in the Service Territory. LIPA Trustees must have relevant utility, board, or finance experience.
Who operated the grid during Super Storm Sandy?
National Grid was responsible for day-to-day operations of the electric grid. In 2010 and 2011, with the pending expiration of the National Grid management contract, the LIPA Board of Trustees rebid the management contract, which was awarded to PSEG Long Island beginning in 2014.
- In July 2013, the LIPA Reform Act was signed by Governor Andrew M. Cuomo to restructure electric utility operations on Long Island. The legislation reformed utility operations on Long Island to improve customer service, including enhancing emergency response and preparation; reduce the cost of LIPA debt; and implement state oversight of LIPA and PSEG Long Island.
- The Department of Public Service provides the oversight and review of electric service operations and customer service practices on Long Island. This extended the expertise of DPS over LIPA and PSEG Long Island to ensure the public interest in obtaining high-quality electric service. The Department provides independent recommendations to the LIPA Board of Trustees. The LIPA Board has adopted all the Department’s recommendations to date.
- The Operating Services Agreement (OSA) has a base term of 12 years, expiring December 31, 2025, and provides that if PSEG Long Island achieves certain levels of performance during the first ten years, the parties will negotiate in good faith an eight-year extension of the OSA on substantially similar terms and conditions.
Tropical Storm Isaias
What happened during Tropical Storm Isaias?
On August 4, 2020, Tropical Storm Isaias landed on Long Island with rain and wind gusts of up to 70 miles per hour. The resulting damage to the electrical system resulted in approximately 645,000 customer outages. PSEG Long Island’s restoration efforts took eight days to restore 99% of customers.
When did LIPA create the Isaias Task Force?
- On August 5, 2020, the day after Tropical Storm Isaias made landfall, LIPA formed an Isaias Task Force to undertake a comprehensive, independent investigation into the failure of PSEG Long Island’s communications and service restoration systems during the storm.
- LIPA appointed its Senior Operations Oversight and Information Technology executives to lead an Isaias Task Force with the heads of the Offices of Investigations and Enforcement and Resilience and Emergency Preparedness at the New York State Department of Public Service. The Task Force is supported by LIPA staff and a team of independent utility consultants experienced in management, operations, and technical design of utility systems.
What Reports has the Task Force published on PSEG Long Island’s failures during Tropical Storm Isaias?
The Isaias Task Force’s 30-Day Report identified PSEG Long Island’s most consequential failures, provided preliminary results of the Task Force’s investigation of the technical causes, and recommended 39 immediate corrective actions for PSEG Long Island to implement.
The Task Force also issued 90-Day Report which expanded on the findings of the 30-Day Report and addressed broader questions on the effectiveness of PSEG Long Island’s management of utility operations.
Did the Department of Public Service launch an investigation?
Yes. On August 5, 2020, Governor Andrew M. Cuomo directed the Department of Public Service, with the Department of Financial Services' assistance, to investigate utility performance, including the performance of PSEG Long Island.
What else did New York State do to investigate PSEG Long Island?
On August 6, 2020, New York State Attorney General Letitia James launched an inquiry into PSEG Long Island’s preparation and response to Tropical Storm Isaias to determine whether violations of state law occurred.
- On August 20, 2020, the New York State Legislature held a joint public hearing to address the emergency storm response and customer communication by utilities located in New York City, Long Island, Westchester County, and the greater Hudson Valley post Tropical Storm Isaias. LIPA’s Chief Executive Officer, Tom Falcone, testified.
What did the Department of Public Service Investigation find?
- On November 13, 2020, DPS provided a recommendation to the LIPA Board as a result of its investigation of PSEG Long Island’s storm response. DPS Staff identified more than 70 potential violations of PSEG Long Island’s Emergency Restoration Plan (ERP).
- The Department's initial investigation showed that PSEG Long Island failed to follow its ERP requirements relating to PSEG Long Island’s damage assessment responsibilities; responsibility to maintain a functional Outage Management System; responsibility to publish accurate estimated time of restoration notices; and responsibility for timely and effective communication and coordination with its customers, local municipal governments, and state agencies.
- The DPS recommended, among other things, that LIPA:
- evaluate options to terminate PSEG Long Island as LIPA’s Service Provider;
- declare PSEG Long Island’s poor performance during Isaias as a first failure of the Major Storm Performance Metric as defined in the OSA; and
- seek to either terminate or renegotiate the OSA to enable greater oversight by LIPA and DPS.
- LIPA’s Board of Trustees adopted nearly 100 recommendations from the 30-Day and 90-Day Task Force Reports and the DPS recommendations to improve PSEG Long Island’s management, emergency response operations, and information technology. The main recommendation the Board adopted was to change the way LIPA’s assets are managed to provide greater alignment and accountability for Long Island customers. The Board asked staff for an analysis of LIPA’s alternatives to implement this recommendation.
- On December 9, 2020, LIPA filed a complaint in the New York State Supreme Court against PSEG Long Island for breach of contract and specific performance related to Tropical Storm Isaias. The filing had been recommended by DPS and ordered by the LIPA Board of Trustees based on the investigative findings. The complaint seeks $70 million in damages related to PSEG Long Island’s inadequate design, implementation, and testing of its outage management and communications systems, which failed during the storm, and the absence of business continuity plans in the face of such failures during a major weather event.
What is an Emergency Response Plan?
Pursuant to the LIPA Reform Act of 2013, in accordance with Public Service Law (PSL), and New York Codes, Rules and Regulations (NYCRR) Section 16, Part 105 PSEG Long Island is required to prepare an annual Emergency Restoration Plan (ERP).
The ERP illustrates and outlines the activities PSEG Long Island will undertake to prepare for and respond to electric emergency events that may affect customers in LIPA’s service territory on Long Island and on the Rockaway Peninsula in Queens County. PSEG Long Island’s ERP is filed annually by December 15th and DPS Staff conducts a thorough review of the ERP.
- Once the review is complete recommendations by DPS are provided to LIPA for formal adoption. Once adopted by LIPA, the ERP is made available to the public on the DPS website. The final ERP is also posted on the PSEG Long Island website.
What oversight is there of storm preparedness?
The DPS Long Island Office is responsible for monitoring PSEG Long Island’s storm or heat event preparation and response before and during storm events. DPS Long Island performs continuous review of PSEG Long Island’s storm preparation and response, including assessment of the reasonableness of storm restoration costs, and that appropriate responses were taken.
LIPA, as owner of the electric grid, also undertakes oversight of PSEG Long Island’s operations and storm preparedness, which is in addition to the DPS’ oversight.
Why is LIPA considering alternative options for the future management of the electric grid?
Following PSEG Long Island's failures before, during, and after Tropical Storm Isaias, LIPA, as directed by its Board of Trustees, is seeking organizational and contractual changes, as well as appropriate compensation for our customers.
Option 1: PrivatizationWhat is privatization?
- Privatization would require the sale of LIPA’s assets to an existing investor-owned utility (IOU) or spin-off an independent self-managed LIPA to private investors.
- Long Island’s electric service was originally provided by an IOU. LIPA purchased the privately-owned Long Island Lighting Company (LILCO) in 1998. The purpose of that transaction was to access the lower financing costs available to a public power utility. The transaction resulted in a 20 percent reduction in customer bills.
- The Phase I Options Analysis Report found that privatization would significantly raise residential customer bills by an average of $32 a month.
- No. LIPA has analyzed and reconsidered privatization three times: in 2005, 2011, and 2013. In each instance, LIPA rejected the privatization option due to the impact on cost for electric customers. LIPA staff again revisited the privatization option and found no evidence that would change the conclusion that privatization would significantly raise customer bills.
Option 2: Reform or Reset the Public Private Partnership
Is LIPA renegotiating a better contract with PSEG Long Island?
- Yes. LIPA and PSEG Long Island are meeting to renegotiate the current contract. The first step is for both parties to prioritize the reset and present PSEG Long Island’s best contract terms for consideration by the Board and public. These reset contract terms can then be evaluated relative to LIPA’s best alternative to continuing with PSEG Long Island. The best terms offered by PSEG Long Island will be presented to the LIPA Board and stakeholders, alongside an alternative plan, in March 2021.
Together, haven’t LIPA and PSEG Long Island made significant progress since 2014?
Yes, the electric grid is 35 percent more reliable than it was in 2016. That is a real accomplishment that reflects sustained in investment. In fact, since 2016, the LIPA Board of Trustees has invested over $4.2 billion in Long Island’s electric grid—a record amount and three times the annual level of investment under the prior National Grid management contract. However, the 90-Day Report identified that the problems PSEG Long Island experienced restoring power during Tropical Storm Isaias were preventable and that their root cause was management failures rather than technical issues.
In fact, PSEG Long Island knew that critical information technology systems were performing poorly before the storm and took insufficient action to address the problems. In a PSEG Long Island email uncovered by LIPA during its investigation dated July 16, PSEG Long Island staff alerted management on Long Island and in New Jersey that PSEG Long Island was “NOT even managing on a day-by-day basis and [PSEG Long Island is] definitely NOT prepared for a weather event. Management needs to know this is no closer to being resolved after 3 weeks.”
PSEG Long Island management failed to take prudent steps to either fix the systems that were failing or to implement contingency plans. PSEG Long Island management also failed to inform LIPA of these issues before, during or after the storm, which were only uncovered as a result of the investigation. Instead, PSEG Long Island attempted to deflect blame on Verizon for its own failures.
LIPA pays PSEG Long Island nearly $80 million per year to provide excellent management. And Tropical Storm Isaias was caused by management failures that need to be addressed.
Option 3: Transform Operations Under a Municipal Management Model
If LIPA becomes a fully municipal utility, would utility staff transition to LIPA?
The main change in the municipal model is that the 18 management positions now provided by PSEG Long Island would be employed by LIPA. Additionally, the ServCo subsidiary that now employs 2,500 utility employees would become a LIPA subsidiary under LIPA management.
LIPA already owns the electric grid assets that PSEG Long Island has been managing, and there are mechanisms in place to bring the 2,500 dedicated ServCo employees under LIPA’s direct management with no disruption to operations or employees.
Throughout its history LIPA has benefited from a strong, professional, and hard-working ServCo workforce, which have been managed under various contracts with KeySpan, National Grid, and now PSEG Long Island. A LIPA with municipalized management of operations would vigorously invest in its employees to reinforce the skills required of a highly successful 21st century utility.
How would this transition impact customer electric bills?
Based on a preliminary cost analysis, LIPA expects annual cost savings of $65 to $75 million under LIPA management compared to the existing PSEG Long Island contract. These savings primarily reflect elimination of the nearly $80 million per year PSEG Long Island management fee. This management fee covers the costs of approximately 18 management positions in the PSEG Long Island management company.
Is the LIPA management cheaper than hiring PSEG Long Island?
Yes, assuming a transition in 2022, LIPA estimates that municipal management could save LIPA customers in the range of $155 million to $215 million net of transition costs through the 2025 termination of the OSA contract. The OSA contains an eight-year extension. If such extension were exercised, the total savings between 2022 and 2032 would be in the range of $675 to $815 million.
What are the benefits of LIPA management over the PSEG Long Island contract?
LIPA management would be hired by the LIPA Board of Trustees and dedicated and accountable to Long Island. The LIPA management team would design, integrate, and manage the entire delivery value chain. LIPA would also ensure that utility functions – irrespective of whether carried out in-house or by contractors – are delivered seamlessly, cost-efficiently, and in the best interest of Long Island customers.
This municipal model has been successfully executed by numerous public power and cooperative utilities, many of whom are ranked among the best utilities in the country for customer satisfaction and reliability. For additional information on the benefits of public power, please reference page 22 of the Phase I Options Analysis Report.