LIPA Files $70M Lawsuit Against PSEG LI Over Isaias Response

LONG ISLAND, NY — The Long Island Power Authority has filed legal action against PSEG Long Island seeking $70 million in damages over what it called failures in the utility's response to Tropical Storm Isaias, which left hundreds of thousands without power for days.

Gov. Andrew Cuomo announced the legal action Wednesday. LIPA accused PSEG Long Island of breaching its contract and inadequately responding to the storm, specifically in managing outages and its communications systems and lacking business continuity plans that would have provided a fail-safe option when critical systems broke down.

PSEG Long Island told Patch in a statement Wednesday it is working to address recommendations outlined in LIPA's 30- and 90-day reports.

"We believe that the current public-private partnership is the best option for Long Island customers and we have remained committed to being the service provider of choice for LIPA. We stand by our dedicated and hardworking employees, our past accomplishments and our commitment to improve. We will continue to cooperate with LIPA to meet the OSA obligations for LIPA and our customers. We are aware that this lawsuit has been filed and we are reviewing it."

Cuomo said the filing was a direct result of the state Department of Public Service and LIPA's investigation reports issued in September and November. It also follows through on the department's recommendation to the LIPA Board of Trustees.

"Utility companies are beholden to ratepayers, and when that service is inadequate — or as in this case, a complete failure — those utilities need to be held accountable," Cuomo said in a statement. "Utility companies like PSEG Long Island get paid to manage the aftermath of a storm, and time after time they have failed to hold up their end. It's inexcusable, and we're going to make sure that it doesn't happen again."

LIPA also asked the court to order the utility to prioritize fixing these systems to avoid future failures.

Tom Falcone, CEO of LIPA, said PSEG Long Island must "immediately fix these failed information technology systems and abide by its contract" as LIPA reviews its legal, contractual, and termination options.

"PSEG Long Island has collected nearly half a billion dollars from Long Island customers over the past seven years while failing to meet its basic obligations," Falcone said.

John Rhodes, CEO of the Public Service Department, called the mass outages on Long Island "unacceptable."

"The Department has the responsibility to help determine how PSEG Long Island performed regarding Tropical Storm Isaias," he said. "If PSEG Long Island's operations were mismanaged, then customers on Long Island should not be harmed, and PSEG Long Island should pay to remedy such situations."

Isaias smashed into Long Island on the afternoon of Aug. 4, packing strong gusts and heavy rains. The storm caused extensive damage to electric utility infrastructure that led to lengthy outages. At the height of the outages, about 900,000 New Yorkers were left in the dark.

As Patch reported at the time, the storm knocked out power to a third of all PSEG Long Island customers. At one point, 338,076 homes and businesses lost power on the island, according to the utility's own outage map. Many Long Islanders also experienced trouble reporting outages on the utility's website or over the phone.

"Tropical Storm Isaias was one of the strongest storms to hit our service territory in recent years, and some outages could last for an extended period," PSEG said at the time.

Cuomo ordered the Public Service Department to perform an expedited investigation into utility performance the following day. As a result of that investigation, three of the state's largest utilities — Con Edison, Orange & Rockland and Central Hudson — face penalties of up to $137.3 million. Con Edison and Orange & Rockland could also have their licenses revoked. All three will must explain why penalties should not be imposed.

Cuomo in October also introduced new legislation that would remove penalty limits for storm response violations, speed up the process for revoking a utility's license, and require the Public Service Commission to limit the amount of money that ratepayers contribute to utility executive's salaries.