Continuing turmoil at LIPA — and how to fix it

The turmoil at the Long Island Power Authority continues.

Among recent events: Newsday exposed how the Newark, New Jersey-based Public Service Enterprise Group, PSEG, which Gov. Andrew Cuomo arranged to run the Long Island Power Authority’s electric grid, has been contributing to the Suffolk Democratic Party.

The June 1 article was headlined “Suffolk Democrats benefited from PSEG campaign donations to super PAC.” It was written by Mark Harrington, who has done superb investigative reporting on PSEG.

His piece began: “A political action committee funded by various PSEG entities, including PSEG Long Island [a subsidiary PSEG set up] and ‘PSEG LI Management Company’ has contributed since 2014 more than $30,000 to the Suffolk County Democratic Committee, whose former counsel and one-time vice chairman was recently appointed to the LIPA board.”

The piece also related that “PSEG entities” having “funneled” money into “Power Long Island….a super political action committee…The largest single beneficiary of money” from Power Long Island “has been the Suffolk County Democratic Committee.”

Also, “The Friends of Kathy Hochul, the governor’s campaign fund, in 2022 received $5,000 from Power Long Island.” That certainly is not a giant amount of money. But, as Newsday noted, “Hochul appoints five of LIPA’s nine board members, including the chair” and….four of six board members….who recently voted” down a LIPA selection committee’s “request for a new service provider” in place of PSEG and, instead, to “extend PSEG’s contract were Hochul appointees.”

“No one is saying that PSEG’s campaign donations are out-sized or improper,” said the article. “Rather, some question whether a contractor to a public authority should be politically active.”

The piece quoted former State Assemblyman Fred W. Thiele, Jr. of Sag Harbor speaking of an “inherent conflict in the structure” of LIPA as the only public utility in the nation with a private company, a “third-party,” operating its grid. 

“LIPA each year pays the PSEG management company about $80 million to manage the grid,” related the piece. It went on that Thiele “sought to convert LIPA to a fully public utility,” running its grid itself. “The effort failed last year in part, he says, under the weight of PSEG lobbying.” Thiele, not incidentally, is a Democrat.

The situation at LIPA could be seen as small potatoes considering the profiteering going on these days on the national government level. But, as Newsday also exposed, the salaries of the PSEG executives of PSEG Long Island do not involve small monetary potatoes.

That article last month, also by Harrington, reported that Dave Lyons, the president and CEO of PSEG Long Island, was paid $837,000 in 2024. Gregory Filipkowski, managing director and chief information officer, received $761,202. Paul Napoli, managing director for power markets, got $709,141. Christopher Hahn, vice president of external affairs, “a registered PSEG lobbyist and the company’s leading external voice against a state legislative plan to convert LIPA to a fully public utility, received $505,525.”

These sorts of very high salaries are common for private utility executives. This is not what the champions of public power on Long Island had in mind when they campaigned decades ago for creation of LIPA to replace the private Long Island Lighting Company.

For example, LIPA’s executive salaries currently range from $154,279 per year for Head of Project Management to $354,123 per year for Chief Executive Officer.

And highly important to those who crusaded for creation of LIPA was it being an entity that through democracy would manage Long Island’s energy system and chart its future. They and the law creating LIPA in 1986 said its trustees would be elected. But this was canceled by Gov. Mario Cuomo, a Democrat, and formally eliminated by his successor, Gov. George Pataki, a Republican, in favor of the trustees being appointed by top state officials.

PSEG finally had competition this year for the contract to run LIPA’s electric grid: Texas-based Quanta Services. A LIPA selection committee recommended that Quanta get the contract. It said Quanta offered “superior value, superior performance potential, and a stronger operational fit for Long Island’s needs.” However, a majority on the LIPA board, most of the trustees appointed by Hochul, voted in April against the committee’s recommendation.

There has been more turmoil recently at LIPA because it was found that its interim CEO, John Rhodes, a former chairman of the New York State Public Service Commission, noted on a disclosure statement that he previously owned Quanta stock. This resulted in the majority on the LIPA board voting last month to cancel the competition and move ahead on extending PSEG’s contract. (See prior column, “Understanding the recent turmoil at LIPA,” June 14.)

Rhodes defended his support on the selection committee for Quanta saying his “prior ownership…had absolutely nothing to do with my recommendation three months after I sold that stock.” He said it was based “entirely on the merits.” The committee’s choice of Quanta was reached unanimously by three LIPA executives and was “clean and aboveboard and solely purposed on what was best for ratepayers.”

Meanwhile, also last month the New York State Inspector General’s office opened an inquiry into LIPA and PSEG. Reported Harrington in Newsday: “People familiar with the probe say the agency appeared to be examining potential influence brought to bear as LIPA considered a range of options about its future.”

What, at long last, needs to be done is for LIPA to return to its original vision as a democratically based public utility running its grid itself—like a model in its formation, the Sacramento Municipal Utility District, with a board of trustees elected by residents of its California service area and which operates its grid itself.

Can this ever be accomplished or will PSEG pressure and manipulation continue to block it?