Government Fails In Long Island

The Long Island Power Authority’s (LIPA) only job is to transmit and distribute electricity. Unlike private utilities in New Jersey, Connecticut, and New York City, it is a government body.

The aftermath of Sandy has once again demonstrated that government does a worse job in serving customers than does the private sector.

The private utilities affected by Sandy were able to restore electric service to their customers more quickly and efficiently than LIPA. According to Reuters, 80% of those without power on November 11 were LIPA customers.

In spite of this, politicians are lumping private utilities with LIPA. Typical is a quote from Reuters, “Damage from Sandy to the electricity system in the U.S. Northeast exposed deep flaws in the structure and regulation of power utilities.

Note this is painting all utilities with the same broad brush even though the private companies responded more effectively than the government run LIPA.

The horror stories emanating from LIPA describe an uninspired bureaucracy unable to do its job.

Until around twenty years ago, Long Island was served by a private utility, Long Island Lighting Company (LILCO).

LILCO was building a nuclear power plant in the face of anti-nuclear opposition from the Sierra Club and others, on the north shore of long island at Shoreham, about 60 miles from New York City.

Following Three Mile Island, enough hysteria was generated by the Sierra Club and others, to force the closing of the Shoreham nuclear power plant.

This hysteria is what has led to the current situation at LIPA. The events leading up to, and following the closure of Shoreham, involved accusations, turmoil and political grand standing.

It resulted in LIPA being established by the state of New York to take over the Shoreham nuclear power plant and buy LILCO’s transmission and distribution system. In the process, LIPA assumed the $4.5 billion debt left over from the closing of Shoreham.

The genesis of the current bureaucratic dysfunctional LIPA was the closing of LILCO with its $4.5 billion debt.

Today, LIPA has the second highest rates for electricity in the nation.

LIPA’s problems are well documented with numerous studies pointing to a neglected and archaic system. Deferred maintenance and lack of tree trimming were reported by the Wall Street Journal.

None of LIPA’s board of trustees has had experience in the electric utility industry. Typical of board members, in so far as an Internet search could determine, includes one who is with Off Track Betting, another who is a lawyer, another in construction, another in real estate and another who is an educator.

The board is, in the truest sense, a political board.

The pattern has now gone full circle.

A political problem (hysteria over the nuclear power plant at Shoreham), led to a political solution (the establishment of a government run utility, LIPA, that has failed), thereby creating a new political crisis and an effort to arrive at another political solution.

When will we learn that government is not the solution and that the private sector does a better job at serving the people?

NOTE: It now appears as though JCP&L is also being sued in New Jersey for breach of contract. It will be interesting to see how that evolves. Is it based on fact, or is it merely a law firm trying to make money?

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