Why Long Island’s Unique Utility Structure Continues to Burden Ratepayers
Long Islanders pay some of the highest electricity rates in the continental United States. This is the direct, enduring legacy of a unique and often criticized public authority structure, the Long Island Power Authority (LIPA). Born from a political and financial catastrophe, LIPA’s hybrid model—public ownership of assets currently managed by PSEG, a private, for-profit company—has been a constant source of controversy, a pendulum swinging between promises of affordability and the reality of persistent excessive costs and operational missteps.
Rather than follow the LIPA unique operational structure, Action Long Island (ALI) from the beginning more than 40 years ago, was opposed to the manner in which the LIPA plan was going to be implemented. It was and still is the ALI position that the plan should have been fully implemented as it was originally written into the Legislation.
ALI has always taken the position that LIPA could hire the necessary talent on Long Island to effectively operate the system without bringing in a for profit entity, currently PSEG, to operate the system. At the LIPA trustees meeting where the vote to extend the LIPA/PSEG contract was held ALI rose to voice our opinion in strong opposition to that extension. Where were all the other voices?
The story of LIPA is, at its heart, the Shoreham Nuclear Power Plant. Its specter haunts every LI utility bill, a testament to a $6 billion-plus LILCO mistake from the 1980s that fundamentally reshaped the region’s energy landscape.
With LILCO teetering on the brink of financial collapse, saddled with debt for a massive, non-operational asset, the NYS legislature created LIPA. LIPA’s original mission was clear: to acquire LILCO’s assets and debt and transition LI to a lower-cost, publicly controlled power system.
The key to LIPA’s initial cost-control promise was its status as a public authority. Unlike LILCO, LIPA could issue tax-exempt bonds, allowing it to refinance LILCO’s massive Shoreham debt at significantly lower interest rates. The debt itself—the cost of the never-opened Shoreham plant—was simply transferred, not eliminated. For decades, a massive portion of every LIPA customer’s bill was dedicated to paying off the so-called “stranded costs” of Shoreham.
The reality for LI ratepayers is that the financial scar of Shoreham may soon fade, but the structural challenge of the failed LIPA model remains. Moving forward, the focus must shift from political maneuvering to genuine, enforceable accountability and grid modernization.
To that end, ALI has recently reached out to many of our NYS and Local elected officials as well as labor leaders and other business organizations, and civic associations to expeditiously meet with us to collectively work toward those objectives and we are looking forward getting their support to quickly get the deliberations underway.
All Long Islanders, which by definition obviously also includes allour NYS and Local elected officials, labor leaders, business organizations and civic associations should be laser focused and work alongside ALI in revisiting the potential of full implementation of the LIPA Act as it was originally crafted, while working vigorously to control energy costs and ensure ample additional reliable and environmentally sensitive energy capacity.
.If you have a light switch in your house you should immediately contact your elected officials to voice your opinion.
The author is the Chairperson of Action Long Island, an activist not-for-profit organization with a long history in LI energy, a former LIPA Trustee and the former Chairperson of the Suffolk County Legislature Energy Utility Oversight Committee
WWW. ActionLI.org – info@actionli.org