Gurney's Inn
August 02, 2006

Alessi: LIPA Surcharges Illegal?

East End residents sick of getting slammed by skyrocketing electric bills every month have a political watchdog on their side — and he's demanding answers.

Assemblyman Marc Alessi announced recently that he has formally petitioned the New York State Public Service Commission to conduct a comprehensive review of the Long Island Power Authority's fuel charges and rates.

According to Alessi, LIPA added on "illegal rate hikes" to the monthly bills of residents and the assemblyman is demanding PSC conduct a full review.

"The PSC's excuse that it doesn't have the power to regulate LIPA is ridiculous — especially when the PSC ruled that LIPA can add to its surcharges without being accountable to anyone," said Alessi.

The problem, said the assemblyman, is that "temporary fuel surcharges" tacked onto bills last year have yet to be eliminated, making them permanent. Alessi maintains the surcharges have compounded since 2001, translating into rate increases for residents.

"To make matters worse, LIPA has just released a new bill template that hides this supposed fuel surcharge in the base rate," said Alessi, who said this supports his belief that the rate hikes were "illegal" and that both LIPA and the PSC would "look the other way without scrutiny."

Not likely, said Alessi: "I won't look the other way and let them slip a fast one past the public."

According to a 1997 LIPA enacting statute, any rate increase over 2.5 percent needs to go to the PSC for review. The assemblyman's petition asks the PSC to hold evidentiary hearings; Alessi based his request on a 1998 letter from the PSC to LIPA that stated the energy provider would be subject to just such a review.

Alessi filed both a petition for a rehearing of the original declaratory ruling and a petition for the rehearing of the initial order that denied requests for a review of adjustment clause with Jaclyn A. Brilling of the state PSC in Albany on July 19.

In 1997, in a resolution approving certain specified LIPA projects, including the acquisition of assets and operations of the Long Island Lighting Company by LIPA, the New York State Public Authorities Control Board conditioned approval based on five project conditions.

Project Condition Number 5 stated LIPA would "not implement an increase in average customer rates exceeding two and one half percent over a twelve-month period, nor will LIPA extend or reestablish any portion of a temporary rate increase over two and one half percent, without approval" of the PSC following a full evidentiary hearing.

Alessi has long been an advocate of consumer protection for LIPA ratepayers, emphasizing that the LIPA takeover of LILCO was based on a promise to provide residents reductions in rates and relief from ever-escalating energy costs.

Instead, said Alessi, ratepayers have seen prices increase, and a full review is essential: "The need for oversight of LIPA's rates by the PSC cannot be understated," he said. "The failure of such review demonstrates a failure of the state with respect to the taxpayers of Long Island."

Elected officials lauded Alessi's efforts: "I applaud Assemblyman Alessi's efforts in seeking full transparency of LIPA's rates," said Suffolk County Legislator Vivian Viloria Fisher.

LIPA Chairman Richard Kessel did not return calls for comment by press time.

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