LIPA Seeks To Mitigate Senior Rising Rates
Faced with looming rate pressure tied to the spiraling costs of natural gas, residual fuel oil, and purchased power, LIPA President and CEO Kevin S. Law today unveiled a multi-pronged rate mitigation package that will allocate more than $140 million in reserve funds to ratepayers over a 30 month period and create a $10 million emergency fund to help low-income senior citizens struggling under the weight of electric bills.
"Oil and gas costs continue to rise at record rates," said Law. "With more than half of LIPA's budget dedicated solely to the cost of fuel and purchased power, we are in the midst of an energy price crisis with all indicators suggesting the situation may get worse before it gets any better.
Utilities all across the country are in the same bind." Over the last decade the price of oil has shot up from $15 a barrel to more than $132, a 790% increase. In that same time the price for natural gas has also increased sharply from $2 a dekatherm (dth) to nearly $12, a 473 % increase.
Recognizing the crunch the energy price crisis is having on ratepayers, Law today recommended plans to LIPA's Board of Trustees to expend more than $200 million in funds realized largely through a settlement of disputed payments under a previous Management Services Agreement (MSA) with KeySpan and through savings extracted under a renegotiated MSA with National Grid after its announced merger with KeySpan.
The package recommends returning approximately $140 million to ratepayers over the next 30 months in an effort to mitigate anticipated increases in the Power Supply Charge. Those savings will be implemented immediately if adopted by the LIPA Trustees.
Law also recommended the creation of a $10 million "Low-Income Senior Energy Assistance Program" that would provide additional financial assistance to qualifying seniors in paying their LIPA bills. Law anticipates that the program would be administered by a local not-for-profit organization or possibly in conjunction with the Nassau and Suffolk County Departments of Aging and/or Social Services.
"The number one theme in letters, emails and phone calls I have received since taking over LIPA is from senior citizens on fixed incomes begging for rate relief," said Law. "I truly wish I could wave a magic wand and lower rates for everyone, but that is simply unrealistic given the geopolitical events that have resulted in unprecedented costs for oil and natural gas. But any small measure I can take to ease the burden, however slightly, for our low-income senior population is worth the effort."
Law also recommended allocating $25 million from the reserve funds to pay down debt on the Shoreham Nuclear Power Plant, $1 million for expert evaluation of a recently issued RFP to secure the largest block of solar energy in the State of New York and to kick off LIPA's Commercial Net Metering program, and $1 million to fund a repowering analysis for six power plants in National Grid's generation fleet.
The LIPA Board is expected to vote on Law's recommendations at its scheduled June 26 meeting.