Quanta asks LIPA, Hochul to restore process to select a manager for LI electric grid
LIPA power lines in Mount Sinai. Credit: Newsday/Steve Pfost
Quanta Services, the Houston-based energy infrastructure giant that was selected by LIPA’s top officials to operate the Long Island electric grid only to be rejected by LIPA’s board, on Friday sent letters to the board and Gov. Kathy Hochul, urging them to “immediately reinstate the process.”
In letters obtained by Newsday, a top Quanta official called the board’s actions in rejecting Quanta’s bid “highly irregular and potentially improper,” took note of a state Inspector General's investigation of the matter and cited the finding by top LIPA officials that rival PSEG failed to meet “even the minimum bid requirements."
Quanta also noted the main reason board members gave for rejecting Quanta — that it did not have “end-to-end” experience in operating the grid — was “based on a metric that was not included in the [bidding] selection criteria.”
In April, LIPA’s board, controlled primarily by Hochul appointees, rejected by a 6-1 vote the "strong" recommendation of the panel of LIPA executives to award the grid management contract to Quanta.
LIPA spokeswoman Jennifer Hayen declined to comment.
LIPA's board is scheduled to meet in secret again on Monday, and sources say it’s likely to disclose internally that Carrie Meek Gallagher is a final candidate to become LIPA’s permanent chief executive. Gallagher currently heads the Department of Public Service’s Long Island office, LIPA's quasi-regulator. A DPS spokesman declined to comment on her possible appointment at LIPA.
After rejecting Quanta in April, the same six board members voted on May 22 to cancel the entire bidding process. In a letter to Hochul and other state leaders, the trustees defended their actions by criticizing elements of Quanta’s bid.
Among the concerns, LIPA chairwoman Tracey Edwards said the company doesn't have "end-to-end" experience running a utility and that Quanta's bid "would not have been less expensive" over a 10-year period for LIPA.
But in the Friday letter to LIPA’s board, Quanta strategic operations president B.J. Ducey said the company “respectfully disagree[s] with their criticisms" and urged the board to “immediately reinstate the cancelled [request for proposals] and associated procurement process.”
Quanta noted that it had participated in the bidding process for the better part of a year and that its offer for LIPA customers “demonstrated experience and qualifications across the required range of operations service” while being “superior” in respect to management fees. The trustees in a letter to lawmakers said Quanta's bid would "not have been less expensive," but have not released any documents to support their claim.
“As one who has always been dedicated to ensuring that the state acts above ethical reproach, we believe you will be troubled by what you find,” Ducey wrote to Hochul. “We trust that in so doing, you take appropriate steps that benefit LIPA’s ratepayers.”
In the past, Hochul has declined to comment on the turbulent situation at LIPA and has told Newsday’s editorial board: "I assure you my hands are not in the middle of this."
Ducey noted comments by LIPA’s acting chief John Rhodes that PSEG “did not meet minimum bid requirements” and wondered, “Why then was Quanta not awarded the contract automatically on this basis alone as the only bidder who submitted a complete proposal?”
He also charged that the LIPA board used “subjective criteria” in rejecting Quanta, adding, “action based on subjective assessment of criteria not specified in the bid request gives rise to speculation that favoritism, improvidence, extravagance or something worse may have played a role in the decision.”
Ducey noted that state finance law requires that procurements be based on “clearly articulated procedures,” but he suggested that the term “end-to-end” used by Edwards in rejecting Quanta for not having such experience was never a requirement in the bidding document.
“If ‘end-to-end’ experience, however that term is defined by the chair, was essential, then it should have been explicitly included in the RFP,” Ducey wrote.
Quanta’s letter was copied to state Comptroller Thomas DiNapoli, who must review any PSEG contract extension, plus DPS chair Rory Christian and leaders of the State Legislature.
Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.
