2011-12-23 / Top Stories

Long Island Power Authority (LIPA) Chooses PSEG To Run Grid

The Long Island Power Authority (LIPA) announced late last week that they have chosen to begin a partnership with New Jersey-based power company PSEG and Lockheed Martin to operate LIPA’s electric grid starting in 2014.

The 10 year contract will begin on January 1, 2014. The Rockaway peninsula is the only area of New York City that is powered by LIPA while everyone uses Con Edison as their provider. According to LIPA officials, the decision was made in advance to prepare for the transition of management.

The $2.5 billion contract reportedly includes the operation, maintenance and construction of LIPA’s transmission and distribution facilities, customer service, financial services and backoffice support services for LIPA’s 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, with subcontractor Lockheed Martin’s services, will create a team with complex business transition experience to ensure a seamless transition of services in 2014. As part of the new contract, PSEG will keep jobs on Long Island at comparable pay and benefits.

“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 LIPA Chairman of the Board Howard Steinberg. “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.” 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. 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 at www.ourLIPAfuture.info.

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