LIPA Board Approves Plan to Freeze Electric Rates & Charges for Two Years; Provide Modest Rebates; Reduce Long-Term Debt Uniondale, NY-January 26, 2006- The Long Island Power Authority (LIPA) Board of Trustees today approved the details of a Ratepayer Protection Plan that seeks to stabilize LIPA's electric rates and charges for a minimum of two years, provides $40 million in cash rebates for customers, and reduces LIPA's long-term debt. The multi-faceted plan uses cash and credits that will accrue to LIPA's benefit under the terms of the agreement between LIPA and KeySpan announced by Governor George E. Pataki in December. "LIPA's Ratepayer Protection Plan seeks to bring stability and predictability - barring an energy price crisis caused by a Katrina-like storm or unprecedented commodity price increases - to the price of electricity on Long Island so that at the very least, residential and commercial customers can budget with some certainty for electric costs, said LIPA Chairman Richard M. Kessel." The Ratepayer Protection Plan seeks to achieve five major objectives:
Mr. Kessel said that while cash rebates would allow customers to use the money as they wished, and inject $40 million into the Long Island economy, the ability for LIPA to hold electric rates and charges at the same level for at least the next two years would send an important signal that Long Island can be competitive in energy costs at a time when other utilities will be increasing their bills. Most other utilities have been increasing their bills in the last year to pay higher fuel costs, Mr. Kessel noted. From January 2005 to January 2006, LIPA increased its bill by 20.2%, while Con Ed increased its bill by 34.8%, Connecticut Light & Power by 22.4%, and Central Hudson Gas & Electric by 13%. Furthermore, current gasoline prices on Long Island are 28.6% higher now than one year ago, and home heating oil is up 22.9% since last year. Mr. Kessel underscored that fuel and purchased power expenses represent the single largest expenditure in LIPA's annual operating budget. For 2006, LIPA has budgeted $2.086 billion - an increase of $345 million over 2005 - to cover the cost of the fuel required to generate the electricity it acquires for its customers or the power it buys from various on- and off-island electricity suppliers. Fuel and purchased power costs have risen as a percentage of LIPA's operating expense from 31% in 1999, when $713 million was allocated for these costs, to 56% of the 2006 budget. Over the last seven years, LIPA's fuel and purchased power costs have increased a staggering 184%. [LIPA does not own any on-island electric generating assets. It acquires the bulk of the electricity it supplies to its customers from a variety of sources both on and off Long Island.] Funding for LIPA's Ratepayer Protection Plan, and to enhance its Solar Roof Initiative and assist lower income customers, will come in part from $120 million in cash and credits that LIPA will receive from KeySpan for the resolution of outstanding "global issues" between the two entities, and lower fees and related costs resulting from the restructured Management Services Agreement with KeySpan. The State Attorney General and State Comptroller must also review and approve LIPA's proposed Ratepayer Protection Plan, before it can be fully implemented. It is anticipated that once all of the reviews have been completed, customer rebate checks could be put in the mail by early March. LIPA, a non-profit municipal electric utility, owns the retail electric Transmission and Distribution System on Long Island and provides electric service to over 1.1 million customers in Nassau and Suffolk counties and the Rockaway Peninsula in Queens. In terms of customers served, LIPA is the 3rd largest municipal electric utility in the nation and the 6th largest in terms of electricity delivered. LIPA does not provide natural gas service or own any on-island electric generating ### Contact Information: Press Release 1/26/06 1:39 PM Eastern |
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