Opinion

Primed for disaster

Long Islanders don’t need the Moreland Commission that Gov. Cuomo tapped to determine why they were without electricity in the aftermath of Hurricane Sandy. Ratepayers know quite well that the patronage and debt-laden Long Island Power Authority is squarely to blame.

The leadership-challenged state agency took weeks to restore power because it failed to implement longtime recommendations meant to prevent blackouts — trimming tree limbs, replacing damaged electrical poles and updating ground-worker equipment and customer-communications systems.

But the failures were all-too-predictable.

LIPA was created by Albany in the 1980s to appease environmental lobbyists who wanted to prevent the Long Island Lighting Company from ever firing up the Shoreham nuclear plant, which it owned.

In May 1988, when the state stopped the opening of the $6 billion plant and crippled LILCO financially, Gov. Mario Cuomo promised that LILCO’s customer base would not be stuck with the costs of mothballing Shoreham.

But when the deal was finally struck in February 1989, the opposite happened: Although LIPA took title to Shoreham in March 1992, LILCO had to eat the costs of the debacle. Its 1 million customers were told to expect the Public Service Commission to raise electrical rates every year for at least a decade.

In 1994, just weeks before the gubernatorial election, Cuomo announced an incredible $9 billion scheme for a government takeover of LILCO. GOP candidate George Pataki condemned the plan and pledged to shelve it if elected. But for short-term political goals, Pataki dropped his opposition to a LILCO takeover in 1995 after he became governor. LIPA had to issue $7 billion in municipal debt, the largest offering in history.

Some savings permitted electrical rates to drop. Interest costs on LIPA’s tax-exempt bonds, for example, were lower than on LILCO’s taxable corporate debt. Also, unlike LILCO, LIPA is a state “public-benefit corporation” and does not have to pay corporate income taxes or dividends.

LIPA, which was to be nothing more than a holding company with 25 staffers to oversee the financing and KeySpan/National Grid’s operation of the electric system, ballooned to over 100 employees under the leadership of political hack poster-boy Richie Kessel, a former consumer gadfly with no utility or business experience.

Pataki abandoned his opposition to installing Kessel as LIPA CEO based on entreaties from Kessel’s base — lobbyists and Nassau County political bosses.

These political pros knew Kessel would do as told to stay in office. For instance, Florida Power & Light, an Al D’Amato client, convinced Kessel to pursue a ruinous and expensive wind project off Jones Beach that would have jacked up LIPA rates even higher.

Rather than investing in nuts-and-bolts infrastructure, Kessel — looking to curry favor with enviros — squandered hundreds of millions in failed fuel cells, electric buses, solar panels on the roofs of favored companies and costly R&D projects that yielded little.

As a result, LIPA is hamstrung with $6 billion of debt and cannot rebuild its power system without issuing even more debt and significantly increasing what are already the nation’s highest electric rates.

Pols who want to avoid responsibility for rate increases and future outages are proposing to sell LIPA’s electrical grid to a private company. A LILCO redux?

Even if the feds grant a waiver that permits the present debt to remain tax-exempt, such a deal would still be preposterous. Debt service on new capital-project bonds would be more costly, and a publicly traded company would have to pay taxes and give shareholders a return on investment. This would cause customer kilowatt charges to go through the roof.

Privatization would only benefit elected officials who want to be off the hook when disaster strikes.

Fact is, Albany created the utility mess on Long Island. Instead of passing the buck, it must undertake meaningful LIPA reforms to avoid another Sandy fiasco.

For starters, LIPA’s board should be shrunk and comprised of business, finance and utility people — not hacks like Kessel.

A minimum annual amount of spending for maintenance and tree trimming should be mandated. That spending should be funded by stopping the spigot on hundreds of millions of dollars in no-return “green energy.”

Finally, the electrical grid operator should be required to publish its storm-restoration and communications plan.

Long-suffering LIPA customers deserve no less.

George J. Marlin is the author of “Squandered Opportunities: New York’s Pataki Years.”