LIPA trustees to meet as Quanta raises questions about the management contract process

As LIPA trustees prepare to meet on Thursday amid continued uncertainty about the utility’s operating future, Quanta Services, the company the board rejected to manage the grid despite a recommendation from LIPA staff, is raising new concerns about the process and the "dubious qualification criteria" set by the board’s top official.

Quanta called for an immediate and public release of "all information related to the evaluation" and LIPA’s internal review of the two bidders, Quanta and PSEG Long Island, saying it would "provide LIPA customers a clear evaluation of each proposal."

In a letter to the Long Island Power Authority Tuesday, B.J. Ducey, Quanta’s president of strategic operations, described as "profoundly surprising" the decision by LIPA’s board to reject the recommendation of a panel of LIPA executives, who had unanimously chosen Quanta after a yearlong internal review. LIPA’s board of trustees, most of whom are appointed by Gov. Kathy Hochul, last month rejected the executives’ recommendation in an unprecedented 6-1 vote, with two abstentions and little discussion.

As Newsday reported last week, the move returned LIPA to a legacy of uncertainty amid a state Inspector General’s investigation of the utility and a prolonged search for a permanent chief executive. Newsday reported last week that LIPA hired the law firm WilmerHale to "review certain issues that have come to the board’s attention" during the contract bidding process, "and to advise the board about future procurements." LIPA declined to elaborate.

Quanta, Ducey wrote in his May 20 letter obtained by Newsday, had been told early in the bidding process that there would be "no preferential treatment" given PSEG Long Island’s position operating the grid for the past decade. But that assertion, he wrote, "proved not to be the case as new dubious qualification criteria were introduced by the chair of the LIPA board," Tracey Edwards, "after best and final offers had already been prepared and submitted."

Edwards during the board meeting raised questions about Quanta’s role in the blackout-plagued Puerto Rico electric grid, even though LIPA staff had said Quanta wasn’t responsible for the island’s inadequate generating plants, which were the cause of the blackouts.

"While this unprecedented action remains profoundly surprising," Ducey wrote, "it has not shaken Quanta’s steadfast commitment to LIPA’s customers, or its desire to build a better energy future for Long Island and the Rockaways."

LIPA and PSEG didn’t immediately respond to requests for comment.

Ducey called the IG's investigation of the utility a cause for "concern," adding, "What is now in question, evidently, is whether this process was indeed fair."

He’s not the only one raising questions. On Monday, six former LIPA trustees wrote a letter to Hochul, calling the LIPA trustees’ vote to reject Quanta "baffling" and "unlike any we have seen during our experience on the board." They noted they would never have undertaken such a move to reject staff expertise without consulting the governor and they recommended that the board "reconsider" its decision. (Hochul has told Newsday, "I assure you my hands are not in the middle of this.")

The former LIPA board members, including former U.S. congressional candidate Nancy Goroff, Peter Gollon, Mark Fischl, Sheldon Cohen, Elkan Abramowitz and Drew Biondo, called the LIPA board rejection of Quanta’s bid "a tragedy — one that demands swift correction."

Quanta’s Ducey pointed to "misstatements" by Edwards about Quanta’s track record, qualifications and its experience during the board meeting and asked for an opportunity to "correct the record."

Quanta is also requesting from LIPA "immediate and public release" of the scorecards for the two companies in the bidding process and "all information related to the evaluation of the proposals."

And the company is asking for the release of details of which "qualifications were not met and how the current operator [PSEG] could still be considered to continue operating the grid."

Even given the lateness of the process, because PSEG’s contract expires at year end, Ducey said, Quanta is "willing and able" to accelerate the proposed transition" timeline to assume operating the grid for LIPA "should the board of trustees reconsider its decision."

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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