Reformed Management Contract with PSEG Long Island

LIPA owns the Long Island and Rockaways electric grid and contracts with PSEG Long Island, a subsidiary of Public Service Enterprise Group Incorporated, to operate the grid on a day-to-day basis. Following PSEG Long Island's failed response to Tropical Storm Isaias in August 2020, LIPA’s Board of Trustees sought:

  • 85 specific changes to management, emergency management, and information technology,
  • 8 specific management and contractual changes to address the root causes of PSEG Long Island’s failures to perform during the storm and enhance oversight by LIPA staff and the Department of Public Service, and
  • Appropriate compensation for customers, including the cost to repair poorly implemented information technology and communications systems.

LIPA conducted a process unprecedented in its transparency, starting with the Board’s vote to either terminate or renegotiate the PSEG Long Island contract in November 2020. The 90-Day Report discussed, openly and publicly, the root causes of the failures experienced during Tropical Storm Isaias and diagnosed the management issues that caused communications and information technology systems to break down. Furthermore, the 90-Day Report listed 85 specific recommendations and directed PSEG Long Island to implement these changes to address management, emergency management, and information technology. In subsequent Board meetings, the Board has adopted an additional 79 recommendations concerning non-storm areas of management. LIPA has reported to the Board publicly on the status of PSEG Long Island’s implementation of these recommendations monthly, including a detailed Quarterly Report issued in June 2021.

In December 2020, LIPA issued an Options Analysis outlining the four management alternatives under consideration and laying out criteria for a reformed contract with PSEG Long Island. These options included:

  • Option 1: Sell LIPA’s Assets to Private Investors
  • Option 2: Reset the PSEG Long Island Relationship and Reform the Contract
  • Option 3: Contract with a New Service Provider to Improve Operations
  • Option 4: Bring Utility Operations Under LIPA Management

This was further expanded upon in the Phase II Options Analysis Report LIPA issued in April 2021, which detailed eight specific criteria for a reformed contract. A recording of the presentation of the Phase II Options Analysis to the LIPA Board of Trustees is available here

As no deal was available with PSEG Long Island in April 2021 meeting the Board’s eight reform criteria, the Board authorized the issuance of a Request for Information from alternative providers (Option 3), as we also continued to explore the LIPA management option. We held public comment hearings on the options, where we asked elected officials, customers, and stakeholders for their views.

Reformed Contract

On June 28, 2021, LIPA and PSEG Long Island reached an agreement on a set of contract reforms that puts customers first and provides LIPA and the New York State Department of Public Service greater oversight authority. PSEG Long Island will forfeit $30 million to compensate customers and pay for repairs to the information technology and communications systems that failed during the storm. The terms meet all eight of the Board’s reform criteria, as described in the Phase II Options Analysis Report, and prior reports dating back to November 2020. That reformed contract is expected to be reviewed by the LIPA Board of Trustees at its meeting on August 11 and is the strongest contract that LIPA has had with a service provider in its 22-year history.

To watch a video that explains the key terms of the PSEG Long Island agreement, click here.

Public Engagement

LIPA is committed to providing a transparent and meaningful process for the public and stakeholders. In addition to LIPA accepting public comments at the May 19 Board Meeting, two additional virtual public comment sessions were held on May 25 and May 27 on the Options Analysis. 

Once LIPA and PSEG Long Island have a contract for the public to review, the public will have 30 days to review and comment on the contract ahead of it going before the Board for a vote.

All written comments received including recordings will be posted below. Click here to submit written comments >>

REPORTS AND RESOURCES

LIPA is dedicated to keeping stakeholders, elected officials, and the public informed about the progress made by LIPA, the Isaias Task Force, and PSEG Long Island after Tropical Storm Isaias. Below is a list of resources, including a timeline, reports, board meeting materials, and more.

Public Comment Sessions

Overview

Facts Sheets

30-Day Isaias Task Force Report & Board Meeting Materials

90-Day Isaias Task Force Report & Board Meeting Materials

LIPA Phase I Options Analysis & Board Meeting Materials

LIPA Phase II Options Analysis & Board Meeting Materials

Quarterly Report

New York State Assembly Hearing (Aug. 9, 2021)

PUBLIC COMMENTS

Options Analysis Public Comment Sessions

Options Analysis Public Board Comments

Options Analysis Public Comments

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