ALBANY, N.Y. -- Early Sunday morning Gov. Andrew Cuomo announced the release of the final report from the Moreland Commission on Utility Storm Preparation and Response, which exposes some deficiencies and proposes dramatic reform to utilities.
In November 2012, Cuomo initiated an investigation and study by the Commission of the State's power utility companies' response to recent storms. He also asked that the Commission analyze the adequacy of regulatory oversight of the utilities and review the State's energy agency and authority functions.
"Hurricane Sandy exposed the incompetent and unacceptable response of power utility companies throughout downstate New York during one of our state's most vulnerable periods," Governor Cuomo said. "The Commission did extraordinary work, conducting a thorough investigation of every aspect of the utilities operations and management. The findings released today raise a series of questions regarding LIPA's management of a consulting contract that passed unexplainable costs to ratepayers and involved exorbitant expenditures that appear to have nothing to do with providing power to Long Island residents. I second the Commission's call for a full and thorough investigation by a prosecutorial body. I thank the distinguished members of the Commission, Executive Director Regina Calcaterra and the Commission's staff for their dedication and commitment."
The Moreland Commission's investigation into New York's investor-owned utilities uncovered systemic problems within the industry, including inefficiencies, disorganization, and lack of planning. The report outlines a series of industry-wide and utility specific recommendations aimed at ameliorating the problems identified.
The Commission made a series of discoveries regarding the Long Island Power Authority's (LIPA's) use of consultants. Between 2008 and 2011, LIPA paid over $64.8 million for outside consultant contracts, $28 million of which was paid to Navigant Consulting, Inc. The Commission's review of invoices between 2007- 2013 illustrated Navigant's deep involvement with almost every aspect of LIPA's business – and Navigant's extraordinary cost to ratepayers. The Commission's report revealed highly questionable billing issues, reimbursements for exorbitant and non-work related expenses, and a disturbing revolving door practice between Navigant and LIPA staff that could breach state ethics law. The Commission's findings regarding the relationship between LIPA and Navigant have been referred to federal prosecutors for their further investigation and potential prosecution if deemed appropriate.
"The problems the Commission found at LIPA are extremely troubling and some of them need to be further investigated by criminal prosecutors," Benjamin Lawsky, Co-Chair of the Moreland Commission, said. "Our extensive investigation uncovered breathtaking waste and inefficiency at LIPA that helped jack up rates for Long Island families. A revolving door culture and lack of oversight stuck ratepayers with the bill for lavish, questionable expenses that should be reviewed by prosecutors."
The Commission's report builds on its Interim Report preliminary review of the State's energy efficiency programs and activities, and examines the challenges associated with managing the costs of infrastructure investments. Additionally, the report identifies regulatory deficiencies and provides suggested measures for strengthening the State's representation of consumer interests through a formal advocacy office.
The Commission identified three main issues common to the State's utilities' preparedness and response to recent storms. First, most utilities failed to provide timely, localized information regarding estimated time of restoration, in part due to limited use of available technology. Second, utilities have an increasing reliance on mutual assistance (utility workers from other states), which is not sufficient for obtaining the necessary crews as other utilities are reluctant to send crews until the impact of the storm to their area is known. This creates a highly competitive process for utilities to secure other resources on their own. Finally, the Commission found that the utilities do not have defined procedures in place for responding to large-scale flooding events.
The recommendations suggested in the report to address these industry-wide areas for improvement include:
The Commission also recommended utility-specific improvements, like:
"The implementation of the Commission's recommendations will create the opportunity for a stronger safety net for New Yorkers in the event of future storms, provide for more consumer protection for utility customers who historically have been disadvantaged by lack of a level playing field and will bring to justice those who transgressed by violating New York's ethics laws," said Robert Abrams, Co-Chair of the Moreland Commission.
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