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Kevin Law, Chairman LIPA -Repowering and other issues

February 22, 2008 @ 12:00 am EST


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This morning’s meeting was blessed with snow. I say blessed because we had a  filled room, and many people showed up "out of the blue". Accommodating those people and every person who indicated he or she would come, would not have been possible. Our speaker was Kevin Law, the recently appointed President and CEO of LIPA.
Mr. Law began by giving the audience an overview of what LIPA does and explained that the poles and distribution facilities are owned by LIPA, but the generating facilities are not. To add further to the confusion the LIPA trucks are manned by Keyspan/Grid employees, the trucks belong to LIPA, but the employees wear LIPA helmets. Ya got it? It’s pretty confusing.
Then Kevin explained the structure of the cost of power. 55% of your bill is dedicated to paying for the fuel that is used to produce electric. 13% is used to pay interest on the debt, and another 11% is used to pay taxes or payments in lieu of taxes. Taxes on a municipal power company are unusual. Other municipal power companies do not pay taxes, but to mollify the effected local school districts, these concessions were made.
As difficult as may be to accept, much of our LIPA bills are immutable. The good news is that while some municipal bonds are being hit with high interest rates at this time, LIPA has not experienced this because of the way the contracts were written.
Repowering is an agenda item for LIMBA because modern plants pollute a lot less while producing more power. But according to Mr. Law repowering is a very expensive proposition and at best, could only be achieve incrementally.
Going forward LIPA will investigate conservation measures that may include time of day metering. Conservation is counter-intuitive to a utility company, so rates may actually increase while total billing may fall. As an example a consumer who lowers his consumption by 50%, may lower his billing by only 30%. That would bode well for the consumer without undermining the financial structure of the utility.
According to Law, alternative energy sources will be investigated with renewed vigor, solar, wind, geothermal, bio-fuels are all worthy of a new look.
Lastly, Kevin stated that the gifts to charity are not condoned by state law, and they will be discontinued without regard to the merit of these organizations.