State Panel Urges Privatization Of LIPA

The storm left more than 90 percent of the 1.1 million LIPA customers on Long Island without power for over two weeks, Reuters has reported.

LIPA, which has a services agreement with UK’s National Grid Plc, was found to have an operational disconnect with the UK firm by the Moreland Commission set up by New York Governor Andrew Cuomo that resulted in an inadequate response to Sandy.

Apparently, the commission has also recommended fines for utilities that fail to meet the expectations to the tune of $100,000 a day to as high as $2 million, the Wall Street Journal has reported.

"We are reviewing the report and will continue to cooperate with the state and the Moreland Commission to do what is in the best interest of Long Island's ratepayers," LIPA said in a statement.

"The costs of privatization ... are significant and none of these things are going to come about without a probable increase in rates," Michael Fragin, who served on the LIPA board of trustees' finance committee through 2011, said.

The Moreland Commission was set up to investigate why it took long for some of the state's utilities, including LIPA, to restore power after Sandy and make recommendations toward improving the state's power sector.

The commission has recommended for a complete overhaul of LIPA and the system by which power is delivered on Long Island, Reuters has indicated.