Opinions
First and foremost, power-thirsty Long Islanders want reliable power, and they want it to be cheaper, cleaner and greener. Can new chief executive Law deliver it all? He would be the first to say no - not unless we want bills, already among the highest in the nation, to surge even higher. And Law insists that holding the line on LIPA bills is his first priority. That's hard to argue with. Still, Law must develop a master plan and a timeline for deciding whether and when to repower existing plants, build new ones, reduce fossil fuel dependency, invest in renewable power sources and reduce consumption.
Law argues that homeowners, burdened with large tax bills and high utility bills, are "crying out for relief." By the end of the summer, more than 200,000 LIPA accounts, most of them residential, had balances due. And this year, the number of homes where power was ultimately shut off spiked by 37 percent.
The honest response, however, is that there are few ways to provide that relief. Electric customers send 15 percent of their dollars to pay interest on LIPA's $7 billion worth of debt, more than half of which comes from the closing of the Shoreham nuclear plant. Another 20 percent goes to taxes or payments in lieu of taxes that LIPA makes to various local governments and school districts. Some of these are mandated by law, part of a political compromise in Albany to prevent a serious drop in revenue when the public authority took over for the Long Island Lighting Company.
Most of the rest of the bill - 60 percent - is used to buy fuel. Despite hedging and long-term contracts, the cost of foreign oil and natural gas will always be subject to geopolitical events and weather. Recently, the rates for fuel have remained stable, despite oil's reaching $80 a barrel. That's because LIPA's on-island plants burned cheaper natural gas 69 percent of the time in 2006, and they're on track to match that usage this year. If gas costs move higher, however, Law might have little choice but to raise rates.
Unplug
That's why Law's first major initiative will be a conservation campaign, to be unveiled by the end of the year. It's a simple idea: Bills will go down if people use less power. We also all know that we'd lose weight if we ate less, but it's hard to do in practice. That's why Law is promising to give customers real incentives to cut back on usage. That's a good start, but it mustn't only be designed for those with oversized homes stuffed with expensive gadgets. Lower-income customers also need help lowering their bills.
Fuel fitness
Repowering has been the mantra for environmentalists who want to reduce noxious emissions from Long Island's older, single-cycle plants. Some of them have only 30 percent of the efficiency of newer plants. These groups are correct - repowering is needed. But the question remains about how much we are willing to pay for it. The oldest generating plant, the mostly steam units at Glenwood Landing in northern Nassau, for example, should be mothballed, kept in reserve for emergency use only.
Unfortunately, Repower Long Island, which represents a coalition of community groups, unions and elected officials, is asking for more studies and even a citizens' oversight panel. Neither is warranted. Repowering has been studied enough. Law needs to digest the research and decide in which cases the costs will be best mitigated by the projected fuel savings. There is no free lunch here.
Buy or rent
LIPA has until May to exercise its option to purchase the 185-megawatt E.F. Barrett generating plant in Island Park from National Grid. Instead of simply retrofitting it, Law might consider the possibility of replacing it entirely with a 500-megawatt combined-cycle plant, to get more power for the buck. Next on Law's list is what to do with the system's workhorses. The new LIPA-National Grid management agreement requires Grid to invest $100 million to modernize the two biggest plants: Northport's, with 1,500 megawatts of power, and Port Jefferson's 450-megawatt operation. By the end of the year, Law is expected to have on his desk a National Grid study outlining three ways the Northport plant can be repowered, with the costs initially estimated to range from $750,000 to $1.3 million. This might be attractive for LIPA, since National Grid, the plant's owner, would front the capital and then recover it over time through fuel savings.
LIPA can also consider virtual repowering, adding a new plant to the system to replace an aging facility. For years, LIPA fended off KeySpan's request that it agree to purchase power from a new 250-megawatt plant the company would build in Melville at an already-licensed site on Spagnoli Road.
Renewables
The end of Richard Kessel's remarkable run at LIPA came with the rebuffing of his estimated $800 million proposal to bring wind power to the region. Law is recommending that the LIPA board abandon the controversial project to put wind turbines a few miles off the Jones Beach shoreline. He says he supports wind and other renewable sources of power, but doesn't want customers to pay through the nose for it.
To reaffirm that commitment, Law should consider asking for bids to build a general renewable-power project or rebid a new wind project, to see if there is newer technology allowing the giant turbines to be out of sight. He should also explore importing land-based wind power from upstate or from Connecticut, through the Cross Sound cable.
Wired
Law has the confidence and the ear of Gov. Eliot Spitzer, who controls the public authority and ended Kessel's reign. That relationship with Spitzer can be an enormous boon, because Law needs support from Albany. There's a downside, however, of having a reputation as the governor's "go-to-guy on Long Island."
Kessel made keeping the lights on his priority, and as result, Law inherits a very reliable system. But will running a utility while calculating how best to protect the governor politically preclude making the best long-term business decisions?
Perhaps, the best way Law can demonstrate the benefits of LIPA's being a public utility is to ask the state and federal government for help in repowering the existing plants and investing in new ones. That would alleviate the pressure on ratepayers, and allow LIPA to make progress on moving toward a cleaner and greener electric company.
Partners
Law takes charge just as KeySpan, which owns the island's generating plants and maintains LIPA's transmission and distribution system, has been taken over by National Grid. While Grid can provide expertise in repowering and using renewables, concern lingers over whether it will provide the reliable service of its predecessor. LIPA's management contract holds the new company to specific performance requirements, but it will be up to Law to enforce it.
Faced with the demands for lower bills, cleaner air and fewer fossil fuels, Law might come to realize that keeping the lights on will be the easy part.
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