Commentary: Look no further than Long Island for a case for public power
Tangible improvements show a correlation between an improved ability to invest and reliability of service.
As the people of Maine consider the Pine Tree Power proposal, they can look to the Long Island Power Authority for some insight.
As the president of the Large Public Power Council and former CEO of the Sacramento Municipal Utility District, I know firsthand the benefits that public power provides customers. In recent months, some have cited LIPA’s experience after buying an investor-owned utility as a scare tactic to say public power won’t work in Maine. Their information is misguided, outdated and not based on facts.
After watching LIPA closely, I have seen the organization evolve since its purchase of the local for-profit utility. It has improved governance, strengthened financial policies and recruited best-in-class personnel and practices.
LIPA has used its public power status to take full advantage of funding opportunities not available to private companies and has invested billions of dollars in its electrical system without passing on costs to customers. Without public power status, this turnaround would have been unlikely.
LIPA’s public ownership of the electric grid has allowed access to lower financing rates available exclusively to public utilities. According to a LIPA analysis, the typical residential customer pays an estimated $32 less per month compared to what it would be under an investor-owned utility.
As a nonprofit public power utility, LIPA has prioritized reliability and resiliency by investing a record $5.7 billion in infrastructure since 2016 while minimizing costs to customers by working with partners in federal and state government. LIPA’s investments are leading to significant improvements for their customers. LIPA is now ranked eighth out of 63 peer utilities for reliability. And, since 2016, customers have seen a 35% reduction in power outages. These tangible improvements show a proven and measurable correlation between increased investments and system reliability.
Public power utilities can issue tax-exempt bonds that pay lower interest rates. Public power utilities also don’t have private shareholders and don’t pay dividends – they retain all customer funds and reinvest them in the system. They don’t have to pay federal corporate income taxes, given their not-for-profit status. For LIPA, these two factors together reduce its cost of capital by half of what it is for a privately owned utility in New York, saving customers $447 million per year.
We have seen lobbying efforts to privatize LIPA’s operations, much like those from opponents of public power in Maine. The fact is independent analysis has shown time and time again that privatization leads to higher electric rates with less direct accountability to consumers and the loss of local governance and decision-making.
LIPA is governed by a board of trustees made up of stakeholders who live within the service territory and know the concerns of the local community. In the past, Long Islanders have had to trust out-of-state vendors to keep their lights on. The results spoke for themselves.
While LIPA is still required by law to contract with a private utility to manage the day-to-day operations of the grid, the New York state legislature is exploring how to implement a full public power model for Long Island, owned, governed and managed directly by LIPA. The New York state legislature first authorized LIPA to take over an investor-owned utility and is now exploring completing the transaction by moving to public management. It speaks for itself that the New York state legislature continues to find LIPA to be on the right path as a now-public power utility.
As you consider what is best for your community in the Nov. 7 election, the facts show the public power model which Pine Tree Power is seeking works – and puts customers first.