What’s Next For Embattled LIPA?


COO resigns amidst calls for major change

In the first domino to fall in the aftermath of the public’s frustration with the efforts of the Long Island Power Authority (LIPA) to restore power to its customers following Hurricane Sandy, chief operating officer (COO) Michael D. Hervey has resigned his position effective Dec. 31.

“Mike has provided 12 years of valuable service to LIPA, including taking on the responsibility to perform the functions of CEO of the organization over the past two years,” said Chairman of the Long Island Power Authority Howard E. Steinberg. “Mike has played a leadership role in connection with the planned structural changes at LIPA going forward which will result in better service and accountability to LIPA’s customers in the years ahead.”

The resignation comes after many elected officials have harshly criticized the power authority for delays in restoring power and a lack of communication. “The magnitude of the problem with this utility goes well beyond the COO and I join with Governor Cuomo in supporting a full investigation so this disservice to our residents never occurs again in Nassau County,” said Nassau County Executive Ed Mangano.

In the days following the storm, Governor Cuomo has said that he would hold utility companies and their management accountable for their performance. The governor has since signed an executive order to establish a commission under the Moreland Act that will investigate the response, preparation, and management of New York’s power utility companies and recommend reforms to overhaul regulation of the entire system to better deal with emergencies.

“It is time to take a long hard look at LIPA and find out why the response took so long and make sweeping changes so we’re not left with the same extended level of frustration, problems and overall level of inconvenience as well as the dangers to public safety,” said New York State Assemblyman Joseph Saladino, who added that the unsung heroes of the storm have been the police officers, firefighters, and sanitation workers who the assemblyman says, “have done an amazing job.”

Hervey, who had been the chief operating officer of LIPA, also assumed the role of acting chief executive officer (CEO), following the resignation of Kevin Law in 2010. According to LIPA by-laws, LIPA’s CEO is elected by the LIPA Board of Trustees and must be approved by the New York State Senate. However, the laws also state that in the absence, disability, incapacity, or vacancy of the CEO, the COO will fill the responsibilities until a successor is elected, so, therefore, Hervey has served as the CEO, without having being approved by the senate. A successor to Law was never elected, even though the power authority was severely criticized for its performance following Hurricane Irene in 2011.

“After Irene and what makes it so frustrating is that we went through a major storm where LIPA did a poor job and since then they haven’t appointed a permanent CEO,” said New York State Assemblyman Tom McKevitt. “How many times do we have to get hit before we make some permanent change?”

According to LIPA by-laws, the board of trustees is comprised of individuals who are appointed for a set term. The governor, with one of these designated as chairman, makes nine of those appointments. The speaker of the assembly makes three of the trustee appointments, and the president of the Senate makes three. Trustees may be reappointed at the expiration of their term. The length of terms varies based on who made the appointment and whether it is an initial term or reappointment.

Presently, only 10 of the 15 positions are filled. Three of the positions appointed by the governor are currently vacant, and three trustees who were appointed by the governor’s office, are currently serving although their terms have expired. Therefore, theoretically, Governor Cuomo could currently appoint six of the 15 positions on the board, and would have a significant impact on the future of LIPA and who its next leader might be. North Hempstead Town Supervisor Jon Kaiman has been among those speculated to be the next head of LIPA. However, some local elected officials are calling for more than just a change of management.

“The problems of LIPA go beyond one person,” said U.S. Congressman Peter King. “LIPA is in desperate need of massive restructuring.”

“I believe that LIPA is structurally broken and no matter what different people you put in there, I’m not sure you can get a much different result at this point,” added McKevitt.

State Senators Kemp Hannon and Charles Fuschillo would vote to approve a potential CEO at LIPA. They both expressed strong dissatisfaction at LIPA’s handling of the restoration of power to Long Islanders and called for significant changes.

“I think that there will be a reconstitution of LIPA or maybe an elimination,” said Hannon. “When it was originally set in place it was meant to be a transition. I don’t think we envisioned it to be a permanent operating entity. I really think there is a need to focus on who is going to be responsible for the power lines, who is going to be responsible for the ongoing customer service, who is going to be responsible for the gas and electric.”

“The future of LIPA has to be reorganized and restructured,” added Fuschillo. “What Hurricane Sandy has proved is that LIPA has failed its ratepayers. Their operation and communication to our ratepayers was a complete disgrace.”

McKevitt adds that he is concerned that there are already too many layers of bureaucracy with LIPA and National Grid and that will further be complicated in 2014 when Public Service Enterprise Group, Inc. (PSEG), will run the day-to-day operation of LIPA’s electric utility business, as one more entity is added to the bureaucracy.

“We should make things more efficient,” said McKevitt.

Leave a Reply