NYS inspector general opens inquiry into LIPA and PSEG, sources say

The state Inspector General’s office has opened an inquiry into the Long Island Power Authority and its primary contractor, PSEG Long Island, following a period of tumult at the utility, according to people with knowledge of the probe.

The people include some who have been contacted by the state watchdog, whose purview includes LIPA, and whose mission is to conduct "investigations into corruption, fraud, abuse, and misconduct in state government," according to its website.

Michael Cook, a spokesman for Inspector General Lucy Lang, said office policy is not to confirm or deny the existence of investigations. He noted "LIPA is under our jurisdiction and we would investigate if there were any complaints brought to us" concerning the authority.

He declined to comment further.

People familiar with the probe say the agency appears to be examining potential influence brought to bear as LIPA considered a range of options about its future. Those options included operating the electric grid on its own or choosing one of two investor-owned energy companies to manage the grid for LIPA, as PSEG Long Island does now. (PSEG’s contract expires at year’s end.)

The inquiry appears to be open-ended and has been active for about a month, according to one source. It’s uncertain whether investigators have contacted LIPA and PSEG directly. Neither entity would provide answers in response to numerous questions from Newsday.

When asked Tuesday if her office or any other were investigating, Gov. Kathy Hochul, who appoints five of LIPA's nine trustees and its chair, said, "I’m not going to comment on that right now."

Asked about recent events at LIPA, including a recent unprecedented vote by most of her board appointees to reject a recommendation of LIPA’s most senior staff on a contractor to replace PSEG, Hochul said she was "aware of the situation," but added, "Those issues will be worked on internally."

LIPA, which owns the Long Island electric grid, and PSEG, which operates it under 10-year contract, had seen early years of some harmony followed by periods of acrimony, heightened following PSEG’s acknowledged failures during Tropical Storm Isaias in 2020.

For years after the storm, LIPA’s board and top executives openly challenged and publicly criticized PSEG for its performance failures and transparency, but Hochul’s appointment of a new slate of board members in 2023, led by chairwoman Tracey Edwards, seemed aimed at resetting relations.

Soon top LIPA officials were heading to the exits, including the chief executive, chief financial officer and chief operating officer, among other top jobs. Some of those key jobs remained filled by interim officials, including the CEO slot filled by former Public Service Commission chairman John Rhodes.

The most recent turmoil at LIPA came earlier this month when six LIPA trustees, most appointed by Hochul, voted to reject the advice of LIPA’s most senior executives who had recommended they award the grid-management contract to Houston-based Quanta Services. Former LIPA trustees said such a rejection has never happened in the past, and three of them, including former vice chairman Mark Fischl, in a statement read at the LIPA board meeting, called the vote the "height of arrogance."

In March, one of LIPA’s most outspoken and longest-serving trustees, Drew Biondo, an assistant deputy Suffolk County police commissioner, announced his resignation from the board after he said he discovered political players were planning to replace him with criminal defense attorney Anthony LaPinta. (LaPinta attended his first board meeting last week.)

Biondo had previously raised questions about the unexpected replacement of another board member, Laureen Harris, after she had voted to abstain from a vote to appoint Rhodes as acting chief executive.

In his resignation letter, Biondo expressed "significant concerns about the undue influence of PSEG lobbyists and others in shaping decisions regarding the governance and operation" of LIPA.

As Newsday has reported, LIPA's previous board had passed a resolution that required PSEG receive approval from LIPA for PSEG lobbying activities, though it's unclear whether PSEG complied. As Newsday has previously reported, PSEG’s lobbying was brought to bear during the two-year process by the State Legislature to transition LIPA to a fully public utility, which ended in failure last year.

An activist for the Long Island Progressive Coalition previously brought concerns about PSEG lobbying to the state Attorney General’s office, Newsday has reported. The Attorney General’s office on Tuesday confirmed it received a complaint concerning LIPA and PSEG in 2024, but said the matter wasn’t pursued at the time because of jurisdictional issues.

LIPA trustees met Monday in yet another closed-door executive session. A LIPA spokeswoman had no information to release about what they discussed.

LIPA could opt to extend its existing contract with PSEG Long Island, if only because the utility has no other options. LIPA’s $80 million a year contract with PSEG already has a clause for a five-year extension and finding a new bidder other than Quanta could take months.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.