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Source: Long Island Business News

LIPA silently inches closer to 2,500 MW deal


Posted: April 4, 2011
Originally Published: April 1, 2011

The Long Island Power Authority on Thursday reached a deadline on proposals to provide up to 2,500 megawatts of power, potentially the biggest contract for new power in the authority’s history.

But the Uniondale-based public authority said it won’t release the names of the proposers, despite pledges of transparency. Thursday’s 3 p.m. deadline was for contracts for electricity produced on or off Long Island such as power plants and cables. Contracts could be awarded as of winter 2012.

“LIPA is not required to release the identities of the proposers before selection, and doing so before selections are made has the potential to jeopardize the evaluation and negotiation process,” said Paul DeCotis, LIPA’s vice president for power markets. “This practice is consistent with investor-owned and public power utilities nationally and in New York.”

Local groups and experts, however, questioned LIPA’s decision not to disclose the identities of those submitting proposals seeking 20-year contracts that could alter the way Long Island gets most of its power.

LIPA in December expanded its request from 1,000 megawatts to 2,500 megawatts, saying it received substantial interest and believed greater scope would increase flexibility and allow for a “phased-in approach to upgrade and modernize” its power sources.

Contracts could provide enough energy for up to 2.5 million homes and about 40 percent of the demand on a hot summer day. The nation added only 16,000 megawatts last year, a little more than six times the amount in this contract.

“Our view is that how LIPA handles this RFP could decide our energy future for 20 to 30 years. This is unprecedented in Long Island’s history. It’s a major step,” said Adrienne Esposito, executive director of the Citizens Campaign for the Environment. “I wish there was a lot more transparency. Because they’re a public authority, the public should have some say in our energy future.”

While LIPA said its decision not to disclose names isn’t unusual, Esposito said the authority should provide information in the interests of the ratepayers.

“This is a public power authority, not a private utility,” she said. “The public should have a voice in what our energy future should look like. Closed door negotiations and just telling us the result will exclude the public.”

Bob Freeman, an expert in freedom of information law and executive director for the Committee on Open Government at the Department of State, said LIPA should provide company names.

“Since the deadline for proposals has been reached, there’s no potential downside to the disclosure of the identities of the submitters,” he said. “The details, in some instances, might be withheld. The names of the companies that submitted the proposals should be public.”

Others charged with LIPA oversight also argued the authority should provide information, especially following its pledges of transparency.

“I cannot imagine that the folks who work for us, everybody at LIPA, can’t be more candid and forthcoming,” said Sheldon Sackstein, a former LIPA board member who is co-chairman of the Suffolk County Legislature’s LIPA oversight committee. “There are a lot of questions that need to be answered. They should not move in a precipitous fashion.”

Sackstein also questioned the wisdom of moving ahead with selections at a time when LIPA has no CEO and faces the expiration of a power supply agreement for 4,000 megawatts with National Grid on May 28, 2013.

“Why would you bind us to something now, knowing that this is looming on the horizon?” Sackstein said. “It seems to me you’re in a better negotiating position if you buy two and a half to three times that in one shot. What’s the rush?”

LIPA has argued it wants to gradually prepare for the future, which it expects will require it to provide more power.

Its forecasting in the past came under fire, raising questions as to the process used in determining future demand.

“I’m wondering why they need it, how they make the case for needing it,” Sackstein said. “What’s the methodology they used to determine they need 2,500 megawatts?”

LIPA said it’s looking out for ratepayers by keeping company names under wraps and will reveal the number of proposals “in the next few days after staff has an opportunity to open the proposals and ensure they comply with proposal requirements.”

“LIPA has not, in the past, released the identities of the proposers before selection, because we believe that it could affect the evaluation and negotiation process,” LIPA spokeswoman Vanessa Baird-Streeter said.

Freeman said an RFP deadline for submissions begins a negotiation process, but that doesn’t justify withholding company names.

He said government can withhold information that would impair “present or imminent contract awards” or when disclosure would cause “substantial injury to the competitive position of a commercial enterprise.”

“There may be elements of every proposal valuable to proposals and damaging the submitter,” Freeman said. “But there’s no downside to disclosure of the submitters of proposals. Once the deadline for submission has been reached, they are all on an equal footing.”

Esposito said LIPA should not only reveal information, but let the public help it craft an energy plan.

“Why don’t they ask us how we see the energy future?” she asked. “Is there any public comment allowed in this process? Is there a public hearing? There’s no access for the public to weigh in on this monumental decision.”

LIPA’s refusal to provide company names also seems at odds with its description of the selection of companies through this process.

When he announced the initial request while he was LIPA CEO last year, Kevin Law said “the issuance of this RFP will provide for a competitive and transparent process that will benefit our customers and our environment and will help LIPA continue to meet its capacity and generation obligations.”

Whether or not LIPA discloses information to the public, the contract and the process must pass muster with the New York State Comptroller, who must approve it before it’s signed.

“They select somebody and send us the contract.,” said Emily DeSantis, a spokeswoman for the New York State Comptroller’s office.” We review the contract and the process. The Attorney General’s office reviews it as well.”

Freeman said LIPA could even strike better deals with more disclosure, despite the authority’s argument that negotiations are best handled out of the public spotlight.

“If they disclose elements of the proposals, submitters often will offer better deals and tailor proposals more effectively to the needs of the agency,” he said. “Some disclosure may be to the advantage of LIPA.”