LIPA trustees agree to extend PSEG contract to manage electric grid despite legal challenge
LIPA's board has agreed to extend a contract with PSEG to manage the area’s power grid for an additional five years, despite a legal challenge from Houston-based Quanta Services. Credit: Newsday/Steve Pfost
LIPA's board has agreed to extend a contract with PSEG to manage the area’s power grid for an additional five years, despite a legal challenge from Houston-based Quanta Services.
The Long Island Power Authority’s board of trustees voted on Thursday in favor of the contract, which several members said would bring lower costs for ratepayers and greater accountability for PSEG.
"We are proud to report to our ratepayers that this agreement builds on the 2022 reforms, delivering concrete improvements while advancing our mission of reliability and affordability," said Valerie Anderson Campbell, vice chair of the board.
The vote came even though acting State Supreme Court Justice Philippe Solages on Wednesday directed that attorneys for Quanta and LIPA show up for a Monday hearing to address the prospects of a temporary restraining order that would block the extension. Last week, Quanta sued over LIPA's denial of its bid and the contract extension.
LIPA projects that the contract extension will be worth roughly $493 million. The agreement, which lasts until 2030, cannot be extended. The new competitive procurement process is expected to begin in 2028. The state attorney general and comptroller still must sign off on the contract ahead of final authorization.
PSEG has managed the electric grid on Long Island since 2014. LIPA makes approximately $80 million in annual payments to PSEG.
“PSEG is proud to maintain its successful partnership with LIPA for the next five years and continue to improve electric service on Long Island and in the Rockaways,” said Ralph LaRossa, board chair, president and CEO of PSEG, in a statement provided by LIPA.
Quanta, which did not immediately respond to a request for comment after Thursday's LIPA vote, said in court documents that the bidding process for a LIPA contract was unfair and “deeply flawed.”
Amid the lawsuit, the New York State inspector general is investigating LIPA to see whether improper influence occurred during the procurement process. There is also an ongoing internal ethics investigation.
On Thursday, LIPA officials laid out some of the benefits of the extension. They include more explicit reimbursement provisions from the Federal Emergency Management Agency to avoid costly legal disputes and a management service fee that will save ratepayers $17 million, officials said.
The extension has a monthly budget discussion meeting to make sure that LIPA remains informed of budget adjustments, officials said. It also enables the development of quantitative and qualitative metrics tied to at least half of PSEG’s variable compensation.
Newsday's Michael O'Keeffe contributed to this story.
Tiffany Cusaac-Smith is a general assignment reporter for Newsday. She previously worked at USA TODAY and is an alum of Howard University.
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