January 5, 2011

NYPA, LIPA "Partnership"

We must admit, we've got high hopes for today's State of the State Address by Andrew Cuomo. So far, Cuomo is saying all the right things - he's focused on the state's economy, creating jobs, getting taxes under control, Medicaid reform, reducing unfunded mandates and improving the overall climate of the state. Of course, saying the right things and actually enacting the critically important reforms that are so vital to the state's future will be no easy task. Nonetheless, we're going to remain optimistic until Cuomo proves otherwise.

That being said, we have an ongoing concern with Cuomo's intentions when it comes to the New York Power Authority. While most readers of Niagara Times are familiar with NYPA, few know that there is a downstate counterpart by the name of LIPA (Long Island Power Authority). LIPA provides electrical service to Nassau County, Suffolk County and part of Queens.

LIPA, which incidentally was previously run by current NYPA President & CEO Richie Kessel, is in a heap of trouble. The public authority currently carries a $7 billion debt load, mothballed and inefficient facilities, huge expenses and rates that are among the highest in the nation.

Now, you're probably asking why those of us on the Niagara Frontier should care what the Long Island Power Authority does. After all, what they do 450 miles away can't possibly impact us here. That may or may not be the case.

As we know, the Niagara Power Project is NYPA's cash cow. Of the 17 NYPA facilities across the state, only two are profitable, Niagara and Massena. Billions of dollars have been "swept" from NYPA over the years to fund economic development initiatives (except last year, when $550 million was swept to fill the gaping hole in the state's budget). Needless to say, they've got boatloads of cash to go around.

LIPA, on the other hand, needs a huge infusion of cash. That can come from one of two sources: ratepayers or, you guessed it, NYPA. There is no way that Cuomo is going to let LIPA raise rates to the point necessary to finance their huge debt load, so he's looking to NYPA to bail them out. Of course, everyone is denying this publicly at this point. Even Cuomo, on his Cuomo 2010 campaign website, was very ambiguous in choosing his words.

Buried on page 30 of his "New York Works" vision on his campaign website, Cuomo states the following:
New York State already has ambitious goals to
improve energy efficiency and increase the use of
renewable fuels, but not nearly enough is being done
to meet those goals. To make more rapid progress,
the New York State Power Authority and the Long
Island Power Authority must be made full partners in
advancing energy related projects that will create
jobs and grow the economy.

Did you catch it? "Full partners". Now, that's a very careful use of words, but make no mistake about his intentions here - he is broaching the subject of a NYPA takeover of LIPA. With that, NYPA will assume all of the debt of LIPA - $7 billion worth. If people in this region were pissed off about NYPA sending $550 million to Albany, how does the prospect of sending $7 billion, primarily generated in Niagara County, to Long Island sound? Not too good.

We're going to continue to give Cuomo the benefit of the doubt, but this scenario is very disturbing. It certainly deserves watching, as this "partnering" seems to be something that NYPA, LIPA and Cuomo would try to do without drawing too much attention to it.

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