NYS judge sets hearing on Quanta request for restraining order over LIPA contract

A Nassau County judge ordered attorneys for Quanta Services and the Long Island Power Authority to appear at a hearing on Monday to discuss why he should not order a temporary restraining order barring the power authority from extending its contract with PSEG Long Island.

Acting State Supreme Court Justice Philippe Solages issued the order on Wednesday, a day after Houston-based Quanta asked for a temporary restraining order barring the LIPA from granting PSEG a five-year extension to operate Long Island’s electric grid when LIPA’s board of trustees meets on Thursday.

Quanta filed a lawsuit last week, also in state Supreme Court, that challenged LIPA’s decision to reject its bid in April and asked the court to bar the power authority from extending its contract with PSEG until the litigation is resolved.

Quanta asked for a temporary restraining order on Tuesday, according to court papers, after LIPA posted a preliminary agenda for its Thursday board of trustees meeting that designated 20 minutes to consider “Approval of an Operations Agreement with PSEG Long Island.”

Solages’ order asks lawyers for Quanta and LIPA to explain why LIPA should not be barred from granting the extension before he rules on Quanta’s request for a preliminary injunction.

LIPA spokeswoman Jen Hayen said the board will take up the agenda item when it meets on Thursday, but declined to comment on Quanta’s lawsuit or Solages’ order, saying the power authority does not discuss ongoing litigation. A PSEG representative also declined to comment. Attorney Evan Glassman of Manhattan, who represents Quanta, did not return a request for comment.

The Quanta lawsuit also asked the court to declare "void and unlawful" the LIPA board’s vote in May to cancel its request for proposals to manage the grid that LIPA issued in May 2024. Quanta is also asking the court for fast access to LIPA documents it sought in advance of the lawsuit but failed to receive.

PSEG has operated Long Island’s electric grid for LIPA since 2014 under a contract that expires at the end of the year. LIPA pays PSEG about $80 million a year.

Even if LIPA announces an agreement with PSEG on Thursday, the contract must still undergo reviews by the state attorney general and comptroller before final approval.

In a letter filed with the court Tuesday afternoon, an attorney for LIPA asked Solages to reject Quanta's request for a temporary restraining order, saying the company knew its bid had been turned down in April but waited until September to file its lawsuit.

LIPA's 1.2 million customers could be without a service provider early next year if LIPA is unable to extend its agreement with PSEG, added the attorney, Michael Versichelli.

Quanta said in court papers that it entered bidding for a 10-year contract with LIPA with the "reasonable expectation that there would be a fair playing field." But the process was "anything but fair," the papers said, calling it "deeply flawed."

The lawsuit comes as LIPA is under investigation by the New York State inspector general, who is trying to determine if undue influence was brought to bear during the process to determine the best way to manage the grid. It also comes amid an internal ethics probe, led by a law firm hired by LIPA, that was sparked by a complaint filed by two people connected to the procurement processes.

As Newsday first reported in April, a special LIPA committee, including former Public Service Commission chairman and then-acting LIPA chief John Rhodes, strongly recommended Quanta to take over the contract to manage the grid. Quanta, the committee concluded, was in the best position to "reduce risk and deliver the strongest performance on storm preparation and restoration, reliability and minimized electric rates." PSEG, the committee said, "did not satisfy certain minimal requirements" to extend its contract.

But six members of LIPA’s board, citing news accounts of problems with Quanta’s joint venture managing Puerto Rico’s troubled electric grid, voted to reject Quanta.