Throughout its history, the Long Island Power Authority has embraced a public-private partnership
approach toward governance. This arrangement benefitted LIPA as it had lacked the capacity to
effectively manage and maintain Long Island’s electric infrastructure. It entrusted these responsibilities to KeySpan, National Grid, and most recently, PSEG.
However, the last year has shown that the public- private partnership is no longer tenable. It is time for full municipalization.
Public-private partnerships saddle government agencies with expensive management fees and bonus structures for corporate executives. LIPA has paid $469 million in such fees to PSEG since 2014 as well as annual bonuses for performance. Even after its mishandling of the Isaias response, PSEG is still seeking its bonuses for last year. LIPA may restructure the management contract so that bonuses have to be earned with more outstanding performance but this is only a band-aid approach. So long as LIPA has to pay any form of management fee or bonus, it will have to recoup the cost of this arrangement.
This desperate push to find ways to cover costs and reduce expenses gives LIPA the internal justification to pursue property tax adjustments along the North Shore. This rightfully inspired angst from residents who have the dual burden of seeing their school district be defunded while paying some of the highest electric rates in the region. With no means of public input, residents are powerless to protest or propose alternatives for LIPA to address its financial situation.
This is where municipalization comes into effect.
Fully public power involves both the democratization of policymaking and the removal of the profit
incentive — two structural alterations to LIPA that would profoundly affect its management and
relationship with Long Islanders.
Democratization of policymaking involves converting LIPA’s board into an elected body so that ratepayers — not Governor Cuomo and Albany leadership — decide who makes decisions about Long Island’s electricity. This is the first component of a broader regime in which decisions over infrastructure, finances, rate disputes are all adjudicated with full public input giving residents the ability to directly participate in the decision-making process without having to rely on access or a sympathetic representative.
This approach has worked in Nebraska for almost 90 years despite the state voting Republican in every election since 1964.
Nebraska is also the epitome of customer satisfaction at low cost. Since there are no for-profit electric companies within the state, revenues generated are not funneled to executives but immediately re- invested in infrastructure improvements. Workers are obliged to serve the public first and foremost resulting in customer service that consistently ranks at or near the top of the industry. Nebraska is also a relevant comparison to Long Island because it: a) is a large land area with over 1 million residents, b) incorporates pre-existing municipalized electric utilities into one broad regime, and c) has had to build an electric grid capable of withstanding extreme weather brought on by climate change.
Both LIPA and industry experts know that municipalization brings better service at less cost but our coalition of socialists, progressives, and environmentalists want to take it one step further by addressing residents’ feeling of powerlessness. This will be done by pushing LIPA toward full municipalization so that working-class Long Islanders finally have a say over electric policy. This approach will enable Long Island to respond to the challenges of climate change with the LIPA that it deserves.
Christian Araos is a member of the Suffolk County Democratic Socialists of America and holds a Master’s Degree in International Affairs from CUNY Baruch College. He has previously written for such outlets as: The Guardian, The Athletic, and Esquire.