LIPA budget projects $6 drop in average monthly electric bills in 2026, depending on usage

LIPA plans to hold the line on costs next year with a proposed $4.3 billion operating budget that projects lower monthly bills, depending on customer usage.

The Long Island Power Authority on Tuesday released details of a 2026 operating budget that is $36 million lower than this year’s, owing largely to lower budgeted power supply costs of $219 million.

LIPA said it expects customers next year to use slightly less power each month tied to the use of home energy efficiency programs, compared with 2025, a reduction that makes up part of the projected $6.53 monthly bill reduction. Even if customers hold usage to this year’s average 725  kilowatt-hours monthly, LIPA said, they are expected to see some level of bill reductions due chiefly to lower power supply costs.

Next year’s budgeted expense reduction is partially offset by planned increases in wages (up $14 million, or 3%) and debt service payments (up $52.7 million, or 4.6%), among other costs. Storm and pension costs are slightly down, and the budget includes $26.9 million in "cost-savings initiatives," and lower projected costs for natural gas.

The utility’s budget for 2026 expects average residential customers will use 719 kilowatt-hours of electricity each month, a drop from this year’s actual usage of 725 kilowatt-hours. But customers’ usage may vary, and some costs could vary beyond LIPA and PSEG projections, if past patterns repeat.

LIPA last year under-projected customer usage, predicting residential customer monthly bills of $193.98 a month in the budget, while actual bills came in at an average $198.83 a month, according to the budget. That meant all-in power costs for Long Island residential customers came in at around 27.4 cents per kilowatt-hour, according to Newsday calculations. Next year’s anticipated average usage of 719 kilowatt-hours a month translates to $192.30 average monthly bills, with an all-in cost of 26.7 cents a kilowatt-hour.

The lower power supply costs, according to a budget book released Tuesday, include a $148 million decrease in the cost of fuel, chiefly natural gas, due to "less on-island generation."

Most of LIPA’s power needs come from three large and more than a dozen small generating plants owned by National Grid. It’s unclear why LIPA would be using less on-Island generation in 2026 given that 2025 saw a 10-year peak-power record, including the largest usage day ever at National Grid’s Northport Power Station. This year’s June 24 peak hit 5,616 megawatts, LIPA’s highest in over a decade.

Chief financial officer Donna Mongiardo said the increase in customer usage this year was primarily tied to a warmer summer, including the June peak, when air conditioning use soars. Higher-than-anticipated bills for 2025 were tied to an increase in the power supply charge earlier in the year, she said.

A bright spot on the green-energy front was that rooftop and other "distributed" solar power installations came to the rescue during those peaks, reducing LIPA’s peak power needs last year by 5%, or 283 megawatts, during the summer. LIPA chief executive Carrie Meek Gallagher said the utility is still talking to partners in the state and industry about plans that could help sustain solar sales in the face of an expiring federal tax credit this year, though any costs aren't reflected in the 2026 budget.

"Stay tuned on that," Gallagher said. "We’re hoping for good news early in 2026."

LIPA also cited a $22 million reduction in fees and transaction costs tied to a new power and fuel management contract with The Energy Authority. (The contract was previously held by a PSEG division.) LIPA’s budget predicts the cost of natural gas will fall by about   $124.2 million next year to $182.6 compared with about $306.8 million this year. Mongiardo said the lower costs for natural gas are based on PSEG projections for 2026.

LIPA this year purchased $60.3 million in fuel oil to operate power plants, nearly double the projected 2025 figure of $36.4 million. It predicts spending $36.1 million on fuel oil in 2026.

The cost for renewable power, which includes the 2024-commissioned South Fork Wind Farm, is expected to increase next year to $196.7 million from $176.3 million this year, tied in part to the purchase of renewable energy credits from the state.

LIPA is also seeing continued savings in property taxes tied to its property tax challenges over the past decade, with a $10 million reduction in those costs expected next year.

The budget includes an increase in LIPA’s head count to 91 full-time and two part-time employees next year, up from the current 80 full-time and two part-time workers. Some of those positions are information technology workers whom LIPA plans to hire as it transitions from consultants and as it takes control of computer systems following a migration away from PSEG control.

LIPA in 2025 had budgeted for 97 staffers, with three part-time and 94 full-time employees. The budget includes a $9 million increase in cybersecurity expenses.

LIPA’s legal expenses, initially budgeted at $5.4 million for 2025, came in at $6.7 million, according to the budget. Mongiardo said the figure is impacted by a range of expenses, including for outside counsel. 

LIPA since the spring has faced state and internal probes and a lawsuit following a contested procurement for contractors to operate the grid. LIPA's board in May approved a PSEG contract extension after canceling the procurement. Bidder Quanta Services has since filed suit to halt the contract, which is under review by the state comptroller’s office.

LIPA’s total debt and lease obligations of $10.375 billion this year are expected to dip next year to $10.18 billion, but jump to $11 billion in 2027, the budget said, much of it tied to lease obligations. Interest payments on LIPA debt in 2026 are projected at $373.3 million compared with $367.6 million this year, the budget book said.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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