LIPA: Hurricane Earl prep cost $30M; rates may rise
Posted by Fred on 9/8/2010, 9:29 am
It is better to be safe then sorry.But did they have to call in all those out of state utility workers when a direct hurricane hit was unlikely.they could have call in some and had others on stanby and if needed then have them come.I could see if a hurricane was iminent(sp?) then yes call in as many as you can.




Newsday Article


including costs for Earl, LIPA has spent upward of $156 million responding to storms in 2010 - and its storm budget is a mere $27 million.


The Long Island Power Authority, already $72 million in the red for 2010 storm restoration costs, spent another $30 million last week to respond to Hurricane Earl and wouldn't rule out a rate increase to recoup those costs, a spokeswoman said Tuesday.

Including costs for Earl, LIPA has spent upward of $156 million responding to storms in 2010 - and its storm budget is a mere $27 million.

The costs for last week's storm, which spokeswoman Vanessa Baird-Streeter said were still a "very early estimate," went mostly to hire out-of-state utility contractors who traveled to Long Island in advance of the storm, which fizzled out by the time it reached here. Crews began arriving Thursday afternoon and were released Saturday.


LIPA heralded its response to the storm with news conferences and a large show of force, with hundreds of trucks amassed at staging areas and tons of equipment moved east for quick restoration.

Few customers even experienced outages.

The authority said Tuesday it is too early to tell what effect last week's storm costs will have on rates and has yet to decide if there will be a rate increase.

Before Earl, LIPA had already spent $126 million responding to storms so far in 2010, an active storm year. Because the March nor'easter led to federal disaster declaration, LIPA was able to get $54 million in disaster relief. That still left it with a $72-million gap, however, and Baird-Streeter said LIPA departments have been ordered to look for ways to trim costs to offset the deficit.

Every additional $40 million of expense for LIPA translates into a 1 percent bill increase (about $1.50 more on the average residential monthly bill).

The prospect of a possible rate increase doesn't sit well with some ratepayers. "I don't think the increase should be in effect unless those [out-of-state] crews are used," said Delores Plunkett, a Sayville ratepayer. "I just think it's needless."

Because last week's storm largely missed Long Island, the $30-million expense is almost certainly not federally reimbursable, particularly because Long Island, unlike Massachusetts and North Carolina, didn't receive an advance emergency declaration from President Barack Obama.

But Baird-Streeter said LIPA remained hopeful because Suffolk County Executive Steve Levy issued a "pre-emergency declaration, that can start the process and dialogue with [the Federal Emergency Management Agency]." She called the prospect of federal reimbursement "uncertain at this time."

Utility expert Matthew Cordaro said LIPA may have jumped the gun in bringing in 1,600 outside crews in advance, rather than reserving them to arrive the morning after Earl, if needed.

"That was a lot of people to amass for a storm that was just going to hit the East End," he said. "But you never know with hurricanes. You can have them [crews] alerted, and locked up, so they are able to make a commitment," if the storm does damage.

Baird-Streeter said that based on early forecasts LIPA had little choice but to activate outside crews, particularly as other East Coast utilities expected to get hit just as hard. Utilities often vie for the well-paid contractors when big storms brew. "At the end of the day, we have to be prepared and we have to be able to restore power as quickly as we possibly can," she said. "We followed the forecast and our procedures based on what the forecast was."

The possibility of a rate increase tied to storms would mark a reversal for LIPA, which has cut rates to 2005 levels, mainly because of lower natural gas prices. (LIPA rates still remain among the highest in the nation, however.)

While she wouldn't rule out a rate increase for 2010, Baird-Streeter said LIPA is considering increasing the 2011 budget for storm restorations, given the higher level of storm activity.

"We're exploring all options in reference to subsidizing the cost of the storms," she said.

With Sandra Peddie

WHAT LIPA SPENT ON STORMS THIS YEAR



March 15 nor'easter: $68 million

June 24 Great Neck microburst storm: $15.2 million

Hurricane Earl (Sept. 3): $30 million

Other storms: $43 million

Total LIPA spent on storms: $156 million

Less FEMA nor'easter payment: $54 million

Total left to fund: $102 million


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LIPA: Hurricane Earl prep cost $30M; rates may rise - Fred, 9/8/2010, 9:29 am
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