2006-06-09 / Community

Hevesi: LIPA Electric Charges Highest In Area

The average Long Island [and Rockaway] household can expect to pay $300 or 17 percent more for electricity this year compared to 2005, including $130 more just for summer electricity, according to a report issued today by State Comptroller Alan Hevesi. Because of the costs of the surcharges the Long Island Power Authority (LIPA) has instituted since 2001, households on Long Island are paying more for electricity than they did under Long Island Lighting Company (LILCO).

The report notes that residential electric costs have increased by 53 percent since 1998 when LIPA took over for the LILCO and promised Long Island residents a reduction in base electric rates. Although LIPA initially lowered base rates by 20 percent and has kept them unchanged since that time, residential costs have increased significantly through seven surcharges that were not reviewed by the Public Service Commission as is required for any long-term rate increases.

LIPA Chairman Richard Kessel announced in April that LIPA would stabilize its rates and fuel surcharges at current levels for the remainder of the year.

"Although LIPA has said it won't raise rates this year, ratepayers will still be paying significantly more than last year," Hevesi said. "LIPA was created to lower the price of electricity on Long Island, but has failed to do so."

Key points in the report include:

Households served by LIPA can expect to pay an average of $2,000 for electricity during 2006 and $830 over the summer, an increase of 17 percent or $300 over 2005 and $130 more than last summer.

Surcharges were imposed last year in June and October and that added $36 and $290 to consumers' costs respectively. There have been no further surcharges imposed in 2006. Consumers are now feeling the full impact of the two surcharges imposed last year.

LIPA's rate structure imposes added costs on ratepayers in summer months (June 1-September 30) during peak usage. In 2006, the differential will mean costs will be approximately 10 percent higher in the summer months than in the non-summer months.

LIPA households continue to be the fourth highest consumers of electricity in the nation. One factor contributing to the increased demand is the construction of larger, more technologically equipped homes that require significantly more energy. Annual electricity usage by the average Long Island home increased 14.5 percent from 1999 to 2005.

Central air conditioning consumes more electricity than any other single component of household demand. During the period from 1999 to 2005, average summer electricity usage increased 17 percent, from 3,439 kWh to 4,028 kWh. High summer electricity demand is also driven by the influx of summer-only residents in beach communities around Long Island. It is estimated that summer population increases by as much as tenfold in some areas.

A recent report from the Federal Energy Regulatory Commission stated the balance between electricity supply and demand on Long Island remains tight. The report notes that this factor can also contribute to higher energy costs.

The Comptroller's report also notes that higher electricity costs for Long Islanders come on top of increased gasoline prices, rising mortgage rates, and tax burdens per household that are twice the statewide average.

"This report provides a full picture of the impact consumers will feel this summer from LIPA's latest round of surcharge increases. While the cost increases are troubling because LIPA's promise was to reduce them, the surcharges are even more troubling because they are not independently scrutinized," Hevesi said. "In the coming months I hope to see that rectified through the Public Service Commission review and LIPA's own steps to increase transparency."

This is the fourth formal report on the LIPA's financial policies by the Office of State Comptroller. In addition to these reports, the Comptroller's office audits the utility; reviews and approves its contracts; monitors, comments and approves the terms and conditions of its debt transactions and, from time to time, comments on other aspects of LIPA's financial strategies and performance.

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