Bright Ideas and Bold Initiatives: Battling High Energy Rates on Long Island

It takes a village to do something about Long Island’s high energy rates. In this case that village is Port Jefferson.

Long Island has the highest energy rates in the continental United States yet the Long Island delegation of the New York State Senate has done nothing to discover and expose the root cause of this unfair burden on Long Island rate payers.

The Village of Port Jefferson is done waiting for someone to do something to correct this inequity so they recently took matters into their own hands by . This action is likely to be a game changer for Long Island energy policy.

According to the Complaint filed with the Federal Energy Regulatory Commission (FERC) dated July 30, 2012, the Complainant, Port Jefferson Village, is “…seeking a Commission investigation and hearing into the fraudulent practices and illegal exercise of market power currently being perpetrated by National Grid Generation LLC and its affiliates (collectively, ‘GENCO’).”

The Complaint also includes a request for an order requiring National Grid to divest itself of all generating capacity in the Long Island Control Area (LICA), an order requiring National Grid to make customers whole for the injuries caused by its strategic forbearance and other market manipulation, penalties against National Grid for market manipulation, and an order to prevent LIPA and National Grid from executing any extension of the Power Supply Agreement (PSA) pending the outcome of the Commission's investigation.

The Village of Port Jefferson is taking this bold action to end the unfair practices that continue to drive Long Island energy rates up. This week the village followed this action with a call for a moratorium on the award of any new contracts for LIPA power purchases. Unfortunately our State Senator Ken Lavalle has not been so bold. In fact he continues to drag his feet by failing to publicly support these measures aimed to bring real relief to Long Island rate payers.

National Grid is essentially holding Long Island legacy plants hostage. They refuse to repower or sell the legacy plants while, as alleged in the Complaint, creating entry barriers through market manipulation. Without FERC intervention this would leave LIPA with no other options except to extend the PSA with National Grid for another fifteen years at great expense to rate payers due to inefficient plants and unfavorable contract terms. These actions also provide economic hurdles for further alternative energy development.

With respect to the Port Jefferson plant (and other legacy plants on Long Island) there must be a plan in place to repower the plant or provide for a soft landing for Port Jefferson (and other host communities). However all things considered, repowering may be the most economical option. This does not necessarily exclude appropriate greenfield development as well. All options need to be on the table with willing participants for long Island to move forward.

Additionally, credit should be given to Governor Cuomo who has also taken a bold stance this past week with the announcement of a plan to strip LIPA of certain core functions. It is too early to say whether this will be an effective action as the Governor has not yet released specific details of this proposal. However I am optimistic about the Governor’s proposal and agree that it is time to redefine LIPA. LIPA was never meant to serve the dual purpose of contract manager and operating utility.

There is some debate as to whether this shakeup should occur prior to the completion of the PSC audit which is underway. However, the results of the audit may fail to address the fact that LIPA may need to refocus towards its core competency. There is also no telling what, if any, actionable remedies may result from the audit. We need to get the ball rolling on necessary reform. It is about time we start taking action on multiple fronts.

While Senator LaValle did recently call for a moratorium it was only to exist until the Governor’s plans for LIPA are in place and only for new power plant decisions. That is not sufficient. No matter what form LIPA takes it does not change the situation with respect to the National Grid contracts. The moratorium must be in place until the FERC investigation and hearings are concluded and it must include contracts for power purchases.

In addition to the possible restructuring of LIPA, the Long Island Senate delegation must clearly and expressly support the recent FERC action by The Village of Port Jefferson and the call for a proper moratorium in order to demonstrate that they are willing to put Long Island rate payers first, not energy companies.

Jennifer J. Maertz, Esq., a Rocky Point resident, holds a B.S. degree from St. Johns University, a JD from Touro Law, and an MBA from NYIT. Jennifer is a Democratic candidate for New York State Senate on the East End of Long Island and part of Brookhaven Town. www.JenniferMaertz.com