LIPA Files $70-Million Claim Against PSEG-LI for Isaias Response

The Long Island Power Authority has filed a $70-million claim against PSEG-LI over its response to Tropical Storm Isaias, Gov. Andrew M. Cuomo said Wednesday.

 The complaint says PSEG-LI failed to adequately oversee outage management and communications systems, and also complained about a lack of business continuity plans that would have provided a failsafe option when key systems broke down. The filing is a result of the New York State Department of Public Service and LIPA’s investigation reports issued in September and November and follows through with the department’s recommendation to the LIPA Board of Trustees.

State Sen. Jim Gaughran, D-Northport, who had battled LIPA over several accountability issues, said,”It’s about time LIPA start acting to protect the best interests of Long Island ratepayers. LIPA has been asleep at the wheel for years, letting PSEG’s failed management culminate in the disastrous Tropical Storm Isiais storm response. Now, LIPA must step up and ensure that this $70 million come out of the pockets of PSEG’s corporate shareholders, not ratepayers, and an independent receiver should be appointed to refund this $70 million to hardworking Long Islanders and not dumped into the blackhole of LIPA’s budget.”

The claim alleges PSEG Long Island is in breach of obligations set out in its operating agreement with LIPA and seeks damages related to PSEG Long Island’s inadequate design, implementation, and testing of its outage management and communications systems, which failed during the storm. LIPA is also asking the Court to order PSEG Long Island to urgently fix these systems to prevent future failures.

“Utility companies are beholden to ratepayers, and when that service is inadequate – or as in this case, a complete failure — those utilities need to be held accountable,”  Cuomo said. “Utility companies like PSEG Long Island get paid to manage the aftermath of a storm, and time after time they have failed to hold up their end. It’s inexcusable, and we’re going to make sure that it doesn’t happen again.” 

LIPA Chief Executive Officer Tom Falcone said, “LIPA is seeking relief from the Courts because we have an obligation to protect customers. PSEG Long Island must immediately fix these failed information technology systems and abide by its contract as we proceed in reviewing our legal, contractual, and termination options. PSEG Long Island has collected nearly half a billion dollars from Long Island customers over the past seven years while failing to meet its basic obligations.” 

The Aug.4 storm brought strong winds and heavy rain that hit hard in the Mid-Hudson, New York City, and Long Island regions, causing extensive damage to electric distribution infrastructure that, in turn, led to lengthy outages for a substantial number of New York utility customers. Peak outages affected approximately 900,000 customers. Thousands of customers complained about not being able to report outages, reach a customer service agent, or get accurate information about when power would be restored.

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