MuniLand

The worst performing public service in the aftermath of Superstorm Sandy was the Long Island Power Authority. There are a lot of different estimates floating around, including 2.1 million of LIPA’s electricity customers were without power; some for up to 3 weeks. It was a public health disaster of epic proportions as households had to face late October and early November weather with no way to heat their homes or turn on the lights. The latest LIPA fiasco followed years of criticism of the organization.

New York State governor Andrew Cuomo ordered a swift investigation into the slow response of LIPA after Sandy. His Moreland Commission delivered its interim report on Monday.

According to Reuters (emphasis mine):

The commission recommended a complete overhaul of LIPA and the system by which power is delivered on Long Island…It recommended that a private utility buy LIPA.

But before there was time to dig out the financials for LIPA, Dennis Pidherny, Managing Director of Fitch Ratings, was out with a note saying privatization was not economically feasible:

Fitch believes the suggested privatization of Long Island Power Authority (LIPA) could be extremely expensive and may not result in the ratepayer benefits projected. Yesterday, the Moreland Commission recommended privatizing the utility and increasing state oversight and fines that all state utilities would pay if they are found to perform poorly.

The Long Island Power Authority (LIPA) has done a dismal job of restoring power for its customers after Hurricane Sandy. According to the New York Times, “[t]he bungling of the storm has called into question the Authority’s very future.”

There are three powerful forces descending on LIPA now, the credit raters, bond investors and New York Governor Andrew Cuomo. It seems like discipline is long overdue. The Albany Times-Union blog Capitol Confidential dug around in its archives about previous attempts of the Cuomo administration to audit what is happening at LIPA:

While the audit is directed at LIPA’s costs to customers, the quality of its performance comes up in the accompanying press release. From the list of concerns to be addressed: