Albany (WALK) - The LIPA death watch could be starting soon.
Word arrived from Albany yesterday that leaders of the state legislature have reached a deal with Governor Andrew Cuomo that would all but dismantle LIPA and hand over day-to-day control of Long Island's electric system to New Jersey-based PSEG. The deal calls for the state Public Service Commission to act as watchdog.
Governor Cuomo says that superstorm Sandy exposed the "depth of the dysfunction" at LIPA.
"For years, LIPA has provided lackluster service while asking ratepayers to foot the bill for its financial problems," said Cuomo, in a written statement. "LIPA’s failure during Superstorm Sandy was a wakeup call for action."
According to the governor, LIPA's debt has not decreased since the late 1990s and represents almost 10% of ratepayer bills, while escalating property taxes have also contributed to high rates. To provide relief for ratepayers, the governor’s legislation will reduce the cost of LIPA’s debt by refinancing up to half of the $6.7 billion debt at a lower interest rate, and a 2% annual property tax cap will be established for the transmission and distribution system.
The bill would also freeze rates for two years, which Cuomo says will stimulate the local economy, and LIPA will be downsized from about 100 employees to only about 20. LIPA will function only as a holding company for the utility's debt, with a nine-member board.
State lawmakers could vote on the legislation as early as today.