CommunityFDL Main Blog

Has the Decision Already Been Made to Sell Long Island Power Authority’s T & D System to National Grid?

Author’s note: Many, many thanks to our own Kelly Canfield who made all these gorgeous professional video clips. This post would not have been possible without him. 

 As some of you may know, I testified before the joint hearings of the NYS Senate Committee on Investigations and Government Oversight and the NYS Senate Committee on Corporations, Authorities and Commissions on February 27th. Some clips from that hearing will appear below. After the hearing I had a 3+ hour drive back from Albany which gave me time to reflect on what I had seen and heard. Some things jumped out at me:

1)      The Moreland Commission evidently already knows that the private entity that buys the LIPA electric Transmission & Delivery (T&D) system stands to make $100s of millions a year in profits.

2)      The primary basis for claiming that privatization could be economically feasible, even though not a single study has ever concluded that—not even the Lazard Study cherry picked  it because it  did not specifically conclude privatization is a non starter like all the others did– is that it creates  “new synergies between the new private owner and its existing nearby facilities.

3)      However, there are no “new synergies.” National Grid already has a presence in the North East and has a related gas business on Long Island itself, whatever synergies which might be possible are already being enjoyed. There are no “new synergies.”  I pointed this out to the NYS Legislators.

CommunityMy FDL

Has the Decision Already Been Made to Sell Long Island Power Authority’s T & D System to National Grid?

Author’s note: Many, many thanks to our own Kelly Canfield who made all these gorgeous professional video clips. This post would not have been possible without him. 

 As some of you may know, I testified before the joint hearings of the NYS Senate Committee on Investigations and Government Oversight and the NYS Senate Committee on Corporations, Authorities and Commissions on February 27th. Some clips from that hearing will appear below. After the hearing I had a 3+ hour drive back from Albany which gave me time to reflect on what I had seen and heard. Some things jumped out at me:

1)      The Moreland Commission evidently already knows that the private entity that buys the LIPA electric Transmission & Delivery (T&D) system stands to make $100s of millions a year in profits.

2)      The primary basis for claiming that privatization could be economically feasible, even though not a single study has ever concluded that—not even the Lazard Study cherry picked it because it  did not specifically conclude privatization is a non starter like all the others did– is that it creates “new synergies between the new private owner and its existing nearby facilities.

3)      However, there are no “new synergies.”  National Grid already has a presence in the North East and has a related gas business on Long Island itself, whatever synergies which might be possible are already being enjoyed. There are no “new synergies”. I pointed this out to the NYS Legislators.

4)      Further, a letter submitted by the NYS Comptroller’s Office cast doubt on the existence of new synergies saying it was “difficult to quantify” the savings from synergies that the Moreland Commission was projecting. See, Newsday 3/7/13, “New doubts on privatizing LIPA”, by Mark Harrington [online title varies from print edition]. That same letter “notes the benefits of public ownership in getting federal reimbursement for storm costs” and notes that a private entity will have much higher financing costs. Id.

5)      A study commissioned by LIPA and conducted by the Navigant Group in 2010 assessed the value of LIPA’s T&D system at $5.4 billion. LIPA has debt of approximately $7 Billion, so a sale for $5.4 would leave taxpayers or ratepayers on the hook for approximately $1.6 Billion. See, Newsday 2/27/13, “LIPA study: Rates up if privatized”, by Mark Harrington.

6)      However, the Moreland Commission assumed a value of only $3.5 Billion, leaving $3.5 Billion in orphan debt. Id. Further, it seems that the studies currently being conducted by Lazard and NYPA, which I discussed yesterday , is using a valuation of only $3.5Billion.

7)      Perhaps the discount in value is the result of National Grid’s performance reports consistently putting its customer service performance at the bottom of national rankings? Supra, “New doubts on privatizing LIPA”, link at para. 4 above. Everyone you can name, including the Moreland Commission, the Governor, and both houses of the NYS legislature and local government of every stripe have denounced the poor management of National Grid over the T&D system.

(more…)

Previous post

"Pay attention to ME!"

Next post

Paul Ryan Offers Austerity Budget, Claims His Critics Are Trying To Destroy Medicare

Jane Hamsher

Jane Hamsher

Jane is the founder of Firedoglake.com. Her work has also appeared on the Huffington Post, Alternet and The American Prospect. She’s the author of the best selling book Killer Instinct and has produced such films Natural Born Killers and Permanent Midnight. She lives in Washington DC.
Subscribe in a reader