A long list of perpetrators are responsible for the fact that Long Islanders once again found themselves sitting for weeks in cold and dark homes. Add one more name to the list: Three Mile Island.
At first blush, there does not seem to be much of a connection between the Pennsylvania power plant that was the site of America’s worst civilian nuclear accident 33 years ago and the fact that windblown trees took down 90 percent of the power grid in a New York suburb during “Superstorm” Sandy. Certainly Long Islanders are not thinking about Three Mile Island. Their displeasure is focused on the Long Island Power Authority (LIPA), their local utility, which is pretty much the laughingstock of the power industry, though nobody on Long Island is apt to see anything funny about it.
As of Nov. 14, more than 10,000 Long Island power customers still had not had their service restored. Meanwhile, according to a faulty online service map, which was eventually removed, LIPA accomplished such heroic feats as restoring power to more homes in one town than the town actually contained. Calls from customers without power went unanswered. Some who tried to complain in person were turned away.
Massive outages, long delays in service restoration and spotty communication are nothing new to Long Island power customers. Last year, 523,000 customers lost power in the wake of Tropical Storm Irene, some of them for as long as nine days. Not surprisingly, two recent national surveys both ranked LIPA dead last in terms of customer satisfaction, though the utility’s customers pay some of the highest rates in the nation for their sub-par service.
Yet there is a connection between LIPA’s performance woes, Long Island’s exorbitant utility rates and the 1979 accident at Three Mile Island, which is a short distance from Pennsylvania’s state capital of Harrisburg.
Long Island’s high power costs are partly due to a now-dismantled nuclear reactor that once stood near the shore of Long Island Sound. The Shoreham Nuclear Power Plant was built between 1973 and 1984 by the privately-owned Long Island Lighting Company (LILCO), LIPA’s predecessor.
Shoreham was originally slated to be operational by 1973, but the standard recipe of design changes and construction difficulties led to cost overruns and delays. As a result, the plant was still under construction when Three Mile Island had its partial meltdown. Protests soon mounted at the Shoreham construction site. Meanwhile, the Nuclear Regulatory Commission began requiring nuclear power operators to develop practical evacuation plans in conjunction with local governments.
The local governments near the Shoreham site determined that they could not safely evacuate their populations in the event of a radiation leak. This effectively blocked the plant from starting commercial operation, though the NRC allowed LILCO to conduct lower-power tests. Conducting the test meant making the reactor “hot,” which drove up the cost of later dismantling the now-radioactive facility. Shoreham was decommissioned in the early 1990s, without having ever produced a single kilowatt of electricity for sale.
In the midst of the fight over Shoreham, Hurricane Gloria stuck Long Island in 1985. Power remained out in some areas for nearly two weeks, in a scene that has been repeated several times between then and now.
In response to the service debacle following Hurricane Gloria and the financial disaster that was Shoreham, New York’s governor at the time, Mario M. Cuomo, pushed to set up a public authority that he said would deliver better service at lower cost. LIPA was born.
But LIPA simply inherited the problems that brought down LILCO. Even though the Shoreham plant never generated any power for the region, it still had to be paid for. To cover the construction costs, LIPA attached a 3 percent surcharge to all bills. As of 2009, Long Island residents still had $3.3 billion of the original $6 billion cost left to pay.
LIPA has also introduced new problems of its own. For starters, the authority does not actually operate its own grid; it hires an independent contractor for that task. This creates potential redundancies and room for miscommunication. The authority is currently in the process of switching contractors, exacerbating the problem.
It is also not entirely clear what the authority actually does, since both service and maintenance are handled by the contractor, but the authority’s executives are paid pretty well to do it all the same. Executive positions at the authority have an average salary of $110,000, according to The New York Times. These positions also have a remarkable tendency to be filled by state and local political leaders’ relatives, friends and former aides.
While mid-level positions at the authority are mined for patronage, slots at the top, which might carry actual accountability, remain empty. Five spots on the authority’s 15-member board are vacant, and no permanent chief executive has held the reins for the past two years. The current temporary occupant of the top office, Michael D. Hervey, has said he will leave at the end of the year.
All of this structural mismanagement has left the physical infrastructure equally unsound. When disaster hits, this vulnerability becomes all too apparent.
As LIPA continues struggling to clear up the wreckage, Gov. Andrew M. Cuomo (son of the governor who created LIPA) and others in the political arena have been quick to criticize the authority, while downplaying their own involvement. Cuomo, who is responsible for filling three of the five vacancies on the authority’s board, has now created a commission to investigate utilities’ handling of Sandy.
To get back on track, Long Island is going to need to go back to the point where it got derailed: when it moved its power authority from private hands to public ones. In the aftermath of Three Mile Island and the abandonment of the Shoreham project, public management looked like a good idea. It does not look so good now.
As for Shoreham, its fate remains uncertain. LIPA has received proposals from a Japanese company that would use the site for a natural-gas-fueled power plant and from a company that would use an existing substation at the facility as part of an offshore wind farm. Until LIPA can be reformed, however, anyone trying to improve Long Island’s power system is more likely to end up tilting at windmills than building them.
Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book,
The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book
Looking Ahead: Life, Family, Wealth and Business After 55.
Posted by Larry M. Elkin, CPA, CFP®
A long list of perpetrators are responsible for the fact that Long Islanders once again found themselves sitting for weeks in cold and dark homes. Add one more name to the list: Three Mile Island.
At first blush, there does not seem to be much of a connection between the Pennsylvania power plant that was the site of America’s worst civilian nuclear accident 33 years ago and the fact that windblown trees took down 90 percent of the power grid in a New York suburb during “Superstorm” Sandy. Certainly Long Islanders are not thinking about Three Mile Island. Their displeasure is focused on the Long Island Power Authority (LIPA), their local utility, which is pretty much the laughingstock of the power industry, though nobody on Long Island is apt to see anything funny about it.
As of Nov. 14, more than 10,000 Long Island power customers still had not had their service restored. Meanwhile, according to a faulty online service map, which was eventually removed, LIPA accomplished such heroic feats as restoring power to more homes in one town than the town actually contained. Calls from customers without power went unanswered. Some who tried to complain in person were turned away.
Massive outages, long delays in service restoration and spotty communication are nothing new to Long Island power customers. Last year, 523,000 customers lost power in the wake of Tropical Storm Irene, some of them for as long as nine days. Not surprisingly, two recent national surveys both ranked LIPA dead last in terms of customer satisfaction, though the utility’s customers pay some of the highest rates in the nation for their sub-par service.
Yet there is a connection between LIPA’s performance woes, Long Island’s exorbitant utility rates and the 1979 accident at Three Mile Island, which is a short distance from Pennsylvania’s state capital of Harrisburg.
Long Island’s high power costs are partly due to a now-dismantled nuclear reactor that once stood near the shore of Long Island Sound. The Shoreham Nuclear Power Plant was built between 1973 and 1984 by the privately-owned Long Island Lighting Company (LILCO), LIPA’s predecessor.
Shoreham was originally slated to be operational by 1973, but the standard recipe of design changes and construction difficulties led to cost overruns and delays. As a result, the plant was still under construction when Three Mile Island had its partial meltdown. Protests soon mounted at the Shoreham construction site. Meanwhile, the Nuclear Regulatory Commission began requiring nuclear power operators to develop practical evacuation plans in conjunction with local governments.
The local governments near the Shoreham site determined that they could not safely evacuate their populations in the event of a radiation leak. This effectively blocked the plant from starting commercial operation, though the NRC allowed LILCO to conduct lower-power tests. Conducting the test meant making the reactor “hot,” which drove up the cost of later dismantling the now-radioactive facility. Shoreham was decommissioned in the early 1990s, without having ever produced a single kilowatt of electricity for sale.
In the midst of the fight over Shoreham, Hurricane Gloria stuck Long Island in 1985. Power remained out in some areas for nearly two weeks, in a scene that has been repeated several times between then and now.
In response to the service debacle following Hurricane Gloria and the financial disaster that was Shoreham, New York’s governor at the time, Mario M. Cuomo, pushed to set up a public authority that he said would deliver better service at lower cost. LIPA was born.
But LIPA simply inherited the problems that brought down LILCO. Even though the Shoreham plant never generated any power for the region, it still had to be paid for. To cover the construction costs, LIPA attached a 3 percent surcharge to all bills. As of 2009, Long Island residents still had $3.3 billion of the original $6 billion cost left to pay.
LIPA has also introduced new problems of its own. For starters, the authority does not actually operate its own grid; it hires an independent contractor for that task. This creates potential redundancies and room for miscommunication. The authority is currently in the process of switching contractors, exacerbating the problem.
It is also not entirely clear what the authority actually does, since both service and maintenance are handled by the contractor, but the authority’s executives are paid pretty well to do it all the same. Executive positions at the authority have an average salary of $110,000, according to The New York Times. These positions also have a remarkable tendency to be filled by state and local political leaders’ relatives, friends and former aides.
While mid-level positions at the authority are mined for patronage, slots at the top, which might carry actual accountability, remain empty. Five spots on the authority’s 15-member board are vacant, and no permanent chief executive has held the reins for the past two years. The current temporary occupant of the top office, Michael D. Hervey, has said he will leave at the end of the year.
All of this structural mismanagement has left the physical infrastructure equally unsound. When disaster hits, this vulnerability becomes all too apparent.
As LIPA continues struggling to clear up the wreckage, Gov. Andrew M. Cuomo (son of the governor who created LIPA) and others in the political arena have been quick to criticize the authority, while downplaying their own involvement. Cuomo, who is responsible for filling three of the five vacancies on the authority’s board, has now created a commission to investigate utilities’ handling of Sandy.
To get back on track, Long Island is going to need to go back to the point where it got derailed: when it moved its power authority from private hands to public ones. In the aftermath of Three Mile Island and the abandonment of the Shoreham project, public management looked like a good idea. It does not look so good now.
As for Shoreham, its fate remains uncertain. LIPA has received proposals from a Japanese company that would use the site for a natural-gas-fueled power plant and from a company that would use an existing substation at the facility as part of an offshore wind farm. Until LIPA can be reformed, however, anyone trying to improve Long Island’s power system is more likely to end up tilting at windmills than building them.
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