Opinion ID: 2590048
Heading Depth: 2
Heading Rank: 1

Heading: The Crisis

Text: The LIPA Act and the movement to replace the Long Island Lighting Company (LILCO) with a public power authority arose out of increasing concern for the reliability and affordability of electric power on Long Island. Rapidly escalating rates, excessive costs, insufficient power supply, and the economic ruin of LILCO were serious threats to the Long Island economy ( see , Public Authorities Law § 1020-a; Assembly Mem, Bill Jacket, L 1986, ch 517, at 13). Although the environmental and financial problems posed by Shoreham initiated the public concern, the focus of that concern was on LILCO's mismanagement and unresponsiveness to the public which caused many to view LILCO as having breached its public trust and no longer deserving of exercising its monopoly electrical and gas franchise (Assembly Mem, id. , at 14; see also , Governor's Mem, id. , at 15; Budget Report on Bills, id. , at 5). In 1986, the Governor and the Legislature approved funding of the Sawhill Report on [t]he specific means by which public power could be implemented on Long Island as one mechanism which could provide substantial benefits to ratepayers on Long Island (Governor's Approval Mem, id. , at 12). Throughout the drafting and approval of the statute, replacement of LILCO by a public authority remained the objective ( see, e.g. , Mem of New York State Energy Office, id. , at 39 [The Authority (LIPA) would be created for the purpose of acquiring the assets or securities of the Long Island Lighting Company (LILCO) and providing electric and gas service in the franchise area currently served by the company]; Attorney-General's Mem, id. , at 9-11 [The purpose of the bill is to create a non-profit corporate instrumentality of the State    which is mandated to employ the most cost-effective method of acquiring LILCO    Under LILCO, Long Island's electric rates will remain inordinately high whether or not Shoreham opens    Clearly, drastic relief is needed, and this bill will put Long Island on a new course.]). Indeed, in his Approval Message, the Governor stated: Replacement of LILCO with a public power authority is designed to resolve the problems caused by LILCO's imprudence and mismanagement, to operate LILCO's system more reliably, safely, efficiently and economically    and to place control of LILCO's system in the hands of elected representatives of the ratepayers (1986 NY Legis Ann, at 242 [emphasis added]). That the replacement of LILCO by LIPA as the power provider is the only solution offered by the Legislature to the crisis on Long Island and is the aim of the LIPA statute is made clear in the Legislature's own statement of the statute's objectives and purposes. Section 1020-a, Declaration of legislative findings and declarations, states: Constantly escalating and excessive costs of electricity    pose a serious threat to the economic well-being, health and safety of residents of and the commerce and industry in the service area     Such matters of state concern best can be dealt with by replacing such investor owned utility with a publicly owned power authority    In such circumstances, such an authority will provide safe and adequate service at rates which will be lower than the rates which would otherwise result    realizing savings for the ratepayers and taxpayers in the service area and otherwise restoring the confidence and protecting the interests of ratepayers and the economy in the service area. Moreover, in such circumstances the replacement of such investor owned utilities by such an authority will result in an improved system and reduction of future costs and a safer, more efficient, reliable and economical supply of electric energy (Public Authorities Law § 1020-a [emphasis added]).