S6136-2011 Actions

• Jan 30, 2012: SUBSTITUTED BY A8957
• Jan 9, 2012: ORDERED TO THIRD READING CAL.20
• Jan 9, 2012: REPORTED AND COMMITTED TO RULES
• Jan 4, 2012: REFERRED TO ENERGY AND TELECOMMUNICATIONS

S6136-2011 Meetings

S6136-2011 Calendars

S6136-2011 Votes

S6136-2011 Memo

BILL NUMBER:S6136

TITLE OF BILL:

An act
to amend the public service law, in
relation to the department of public service;
to amend the public authorities law, in relation to
the Long Island power authority; to amend the
executive law, in relation to the department
of state; and to repeal
a chapter of the laws of 2011 amending the public service law relating
to the Long Island power authority, as proposed in legislative bill
numbers S.2581 and
A.3614

PURPOSE OF BILL:

The bill would (i) require the Long Island power authority ("LIPA" or
"the Authority") to undergo a comprehensive and regular management
and operations audit to maximize the Authority's operational
efficiencies through review of internal procedures and policies, (ii)
provide the Department of State with specific authority to
investigate and mediate complaints made by LIPA's customers, and
(iii) repeal a chapter of the laws of 2011 amending the public service
law ("PSL") relating to LIPA, as proposed in legislative bill
numbers S.2581 and A.3614.

SUMMARY OF PROVISIONS:

Section 1 of the bill names the bill the Long Island power authority
oversight and accountability act.

Section 2 would amend � 3 of the PSL to require the Department of
Public Service ("DPS") to undertake a comprehensive and regular
management and operations audit of LIPA.
DPS would have discretion to have such audit conducted by an
independent consultant chosen by and under such terms negotiated by
the Department, but through a contract entered into between the
independent auditor, LIPA and DPS. The process used by DPS to
choose the independent auditor would be similar to the process it
currently uses under PSL � 66(19), as applied to audits of
investor-owned utilities ("IOUs").

Section 3 would add a new subdivision (bb) to � 1020-f of the public
authorities law ("PAL") - divided into four separate paragraphs - to
establish the substantive requirements and procedures to be followed
with respect to the comprehensive and regular management and
operations audits of LIPA.

Paragraph 1 would require LIPA to cooperate with DPS and/or the
independent auditor and would provide the auditing standards that
must be followed in undertaking such audit. In particular, the
auditor would be required to review and evaluate LIPA's overall
operations and management, including the Authority's operations and
management in the context of its duty to set rates at the lowest
level consistent with the standards and procedures provided in PAL
�1020-f(u). The auditor would also be required to examine a
non-exclusive list of six audit topics related to LIPA's operations
and management.

Paragraph 2 would establish the frequency of the audits, with the
first audit being initiated immediately and in a manner and to an
extent that is practicable in the context or LIPA's transition to a
new management service structure. The second audit would be
initiated no later than December 15, 2015 and all additional audits
would be initiated at least once every five years thereafter.
Paragraph 2 would also require public statement hearings to be held
in both Nassau and Suffolk Counties at the beginning of each audit
process.

Paragraph 3 would require each audit to be completed within eighteen
months of initiation, with a standard for an extension of time, and
for the audit report to be provided to the LIPA Board, DPS and
certain public officials, and be posted on LIPA's website.
Paragraph 3 would also provide the LIPA Board with authority to make a
preliminary determination with respect to whether any finding or
recommendation contained in such audit report is inconsistent with
the Authority's sound fiscal operating practices, any existing
contractual or operating obligation, or the provision for safe and
adequate service ("determination of inconsistency").

Paragraph 4 would establish the process that the LIPA Board must
follow in providing for public review of such a preliminary
determination of inconsistency, if and when one is made, and the time
period associated with such review. The LIPA Board would be required
to hold a public hearing with respect to any preliminary
determination of inconsistency, at which DPS or the independent
auditor would be required to present the basis for its
determinations. The LIPA Board would be required to hold a public
hearing with respect to any preliminary determination of
inconsistency, at which DPS or the independent auditor would be
required to present the basis for its findings and recommendations
and the Board to present the basis for its determination of
inconsistency. Paragraph 4 would also provide the LIPA Board with
authority to make a final determination of inconsistency, which would
be subject to any applicable judicial review proceeding, including
review under article 78 of the civil practice law and rules.

Section 4 would amend Executive Law � 94-a(4)(b) to provide the
Utility Intervention Unit within the Department of State's Division
of Consumer Protection, with authority to accept and investigate

complaints made by LIPA customers, attempt to mediate such
complaints where appropriate, and to refer such complaints to the
appropriate state or local agencies.

Section 5 would repeal a chapter of the laws of 2011 amending the
public service law ("PSL"), as proposed in legislative bill numbers
S.2581 and A.3614, related to subjecting to review and approval by
the Public Service Commission ("PSC") any proposal by LIPA to
increase customer rates exceeding two and half over a twelve month
period.

Section 6 would make the bill effective immediately upon
enactment into law.

EXISTING LAW:

This is a new bill; LIPA is currently not required under its enabling
statute to undergo a management and operations audit.

STATEMENT IN SUPPORT:

There is a present and continuing need for LIPA's internal standards
and procedures to become more transparent and to ensure adherence
with best-industry practices. There is also a need for LIPA to
maximize the efficiencies of its management and operations, with the
recognition that implementation of such efficiencies provides for the
most economical electricity rates consistent with LIPA's obligations
under its enabling statute. The purpose of this bill is to meet these
dual needs by requiring LIPA to undergo a comprehensive and regular
management and operations audit that is open to public review and
comment. This would subject LIPA's internal standards and procedures
to more public scrutiny in a manner that promotes improvement of
LIPA's management and operations to the benefit of its customers.

The comprehensive audit would be similar to the audits currently
undertaken by the Public Service Commission under PSL � 66(19), but
would be subject to a more inclusive public comment and review
process. The public nature of the process (in the new
�1020-f(bb)(2), (4)), and in particular the requirement that the
LIPA Board make a public presentation of any determination of
inconsistency, would ensure that the Board's final decision with
respect to adopting the audit's findings and recommendations is held
to a more rigorous standard than currently exists for any other
utility in the state. The bill clarifies, moreover, that any final
determination of inconsistency would be subject to court review by
any effected party. This transparency is balanced with ensuring that
the LIPA Board retains the authority to implement the audit
recommendations, therefore preserving the Board's independent
ratemaking authority, consistent with LIPA's enabling statute. The
entire process that would be imposed under the bill balances the need
to find efficiencies for the benefit of ratepayers against LIPA's
continuing statutory and contractual obligations.

The first audit of LIPA, to be initiated immediately upon enactment
of the bill into law, would be undertaken in a manner that
acknowledges that the Authority is currently transitioning to a new
management service structure and entering into a new management
service agreement projected to be completed by January 1, 2014. Among
other things, the bill is intended to ensure that the new structure
is operated in an efficient and cost-effective manner.

In response to the concerns that have been raised by LIPA's customers
regarding the lack of a sufficient consumer advocate, the bill would
also give the Utility Intervention Unit ("UIU"), within the
Department of State's Division of Consumer Protection, with specific
authority to investigate any complaints made by such customers and
mediate such complaints consistent with LIPA's tariff, and to refer
such complaints to appropriate state and local agencies for further
review. The new authority granted the Department of State would
augment LIPA's existing program.

PRIOR LEGISLATIVE HISTORY:

This is a new proposal.

BUDGET IMPLICATIONS:

None.

EFFECTIVE DATE:

The bill would become effective immediately.

S6136-2011 Text

 S T A T E   O F   N E W   Y O R K
 
 S. 6136                                                  A. 8957
 SENATE - ASSEMBLY
 (PREFILED)
 January 4, 2012
 
 IN  SENATE  -- Introduced by Sens. LAVALLE, FLANAGAN, FUSCHILLO, HANNON,
 JOHNSON, MARCELLINO, MARTINS, SKELOS, ZELDIN -- read twice and ordered
 printed, and when printed to be committed to the Committee  on  Energy
 and Telecommunications
 IN ASSEMBLY -- Introduced by M. of A. SWEENEY, WEISENBERG, LAVINE, SCHI
 MEL,  ENGLEBRIGHT,  THIELE,  MURRAY,  RAIA, CONTE, SALADINO, McKEVITT,
 McDONOUGH, MONTESANO -- read once and referred  to  the  Committee  on
 Corporations, Authorities and Commissions
 

AN ACT to amend the public service law, in relation to the department of
 public  service;  to  amend the public authorities law, in relation to
 the Long Island power  authority;  to  amend  the  executive  law,  in
 relation  to  the  department of state; and to repeal a chapter of the
 laws of 2011 amending the public service  law  relating  to  the  Long
 Island  power  authority,  as  proposed in legislative bill numbers S.
 and A. 3614
 THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM
 BLY, DO ENACT AS FOLLOWS:

 

Section  1.  This  act  shall  be  known and may be cited as the "Long
 Island power authority oversight and accountability act".
 

S 2.

Section 3 of the public service law, as amended by chapter 155 of
 the laws of 1970, is amended to read as follows:

 

S 3. Department of public service. 1. There  shall  be  in  the  state
 government  a  department  of public service. The chairman of the public
 service commission shall be the chief executive officer of  the  depart
 ment.  He  OR  SHE  shall  appoint  and  shall have the power to remove,
 subject to the provisions  of  the  civil  service  law,  all  officers,
 clerks,  inspectors,  experts  and  employees  of the department, and to
 approve all contracts for special service.  The chairman shall designate
 one of the commissioners in the department or an officer of the  depart
 ment  to  act as deputy chairman during the absence or disability of the
 chairman and during such times such deputy chairman  shall  possess  all
 the powers of the chairman as chief executive officer of the department.
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 SA                                                         LBD02907-02-2
 
       S. 6136                             2                            A. 8957
 2.  THE  DEPARTMENT  SHALL, UPON NOTIFICATION TO THE LONG ISLAND POWER
 AUTHORITY, UNDERTAKE A COMPREHENSIVE AND REGULAR  MANAGEMENT  AND  OPER
 ATIONS  AUDIT  OF SAID AUTHORITY PURSUANT TO SUBDIVISION (BB) OF SECTION
 ONE THOUSAND TWENTY-F OF THE  PUBLIC  AUTHORITIES  LAW.  THE  DEPARTMENT
 SHALL  HAVE  DISCRETION TO HAVE SUCH AN AUDIT PERFORMED BY ITS STAFF, OR
 BY AN INDEPENDENT CONTRACTOR.  IN  EVERY  CASE  IN  WHICH  AN  AUDIT  IS
 REQUIRED  PURSUANT  TO SUBDIVISION (BB) OF SECTION ONE THOUSAND TWENTY-F
 OF THE PUBLIC AUTHORITIES LAW PERFORMED BY AN INDEPENDENT  AUDITOR,  THE
 DEPARTMENT  SHALL  HAVE  THE  AUTHORITY  TO  SELECT  THE AUDITOR, AND TO
 REQUIRE THE LONG ISLAND POWER AUTHORITY TO ENTER INTO  A  CONTRACT  WITH
 THE AUDITOR THAT IS CONSISTENT WITH THE CONTRACTING-RELATED REQUIREMENTS
 SPECIFIED  IN  SUBDIVISION NINETEEN OF SECTION SIXTY-SIX OF THIS CHAPTER
 AND THE REQUIREMENTS OF SUBDIVISION (BB) OF SECTION ONE  THOUSAND  TWEN
 TY-F  OF THE PUBLIC AUTHORITIES LAW. SUCH CONTRACT SHALL PROVIDE FURTHER
 THAT THE AUDITOR SHALL WORK FOR AND UNDER THE DIRECTION OF  THE  DEPART
 MENT  ACCORDING TO SUCH TERMS AS THE DEPARTMENT MAY DETERMINE ARE NECES
 SARY AND REASONABLE.
 

S 3.

Section 1020-f of the public authorities law, as added by chapter
 517 of the laws of 1986, is amended by adding a new subdivision (bb)  to
 read as follows:

 (BB)  COMPREHENSIVE  AND REGULAR MANAGEMENT AND OPERATIONS AUDITS.  1.
 THE AUTHORITY SHALL COOPERATE IN THE UNDERTAKING  AND  COMPLETION  OF  A
 REGULAR  AND  COMPREHENSIVE  MANAGEMENT  AND  OPERATIONS AUDIT CONDUCTED
 PURSUANT TO THE REQUIREMENTS OF THIS SUBDIVISION AND SUBDIVISION TWO  OF
 SECTION  THREE  OF  THE  PUBLIC SERVICE LAW. SUCH AUDIT SHALL REVIEW AND
 EVALUATE THE AUTHORITY'S OVERALL OPERATIONS  AND  MANAGEMENT,  INCLUDING
 THE  AUTHORITY'S OPERATIONS AND MANAGEMENT IN THE CONTEXT OF ITS DUTY TO
 SET RATES AT THE LOWEST LEVEL CONSISTENT WITH STANDARDS  AND  PROCEDURES
 PROVIDED  IN  SUBDIVISION  (U)  OF THIS SECTION, AND INCLUDE, BUT NOT BE
 LIMITED TO: (I) THE AUTHORITY'S CONSTRUCTION AND CAPITAL  PROGRAM  PLAN
 NING  IN  RELATION  TO  THE NEEDS OF ITS CUSTOMERS FOR RELIABLE SERVICE;
 (II) THE OVERALL EFFICIENCY OF THE  AUTHORITY'S  OPERATIONS;  (III)  THE
 MANNER  IN  WHICH THE AUTHORITY IS MEETING ITS DEBT SERVICE OBLIGATIONS;
 (IV) THE AUTHORITY'S FUEL AND PURCHASED POWER COST ADJUSTMENT CLAUSE AND
 RECOVERY OF COSTS ASSOCIATED WITH SUCH CLAUSE; (V) THE AUTHORITY'S ANNU
 AL BUDGETING PROCEDURES AND PROCESS; AND (VI) THE AUTHORITY'S COMPLIANCE
 WITH DEBT COVENANTS.
 2. THE DEPARTMENT OF PUBLIC SERVICE SHALL NOTIFY  THE  AUTHORITY  THAT
 SAID  DEPARTMENT IS IN THE PROCESS OF INITIATING A COMPREHENSIVE MANAGE
 MENT AND OPERATIONS AUDIT AS DESCRIBED IN PARAGRAPH ONE OF THIS SUBDIVI
 SION IN A MANNER THAT ENSURES THE  TIMELINESS  OF  SUCH  AUDIT,  AND  IN
 ACCORDANCE WITH THE FOLLOWING TIMEFRAME: THE FIRST COMPREHENSIVE MANAGE
 MENT AND OPERATIONS AUDIT SHALL BE INITIATED AS OF THE EFFECTIVE DATE OF
 THIS  SUBDIVISION  AND  UNDERTAKEN  IN A MANNER AND TO AN EXTENT THAT IS
 PRACTICABLE IN THE CONTEXT  OF  THE  AUTHORITY'S  TRANSITION  TO  A  NEW
 MANAGEMENT  SERVICE  STRUCTURE;  THE SECOND COMPREHENSIVE MANAGEMENT AND
 OPERATIONS AUDIT SHALL BE INITIATED NO LATER  THAN  DECEMBER  FIFTEENTH,
 TWO  THOUSAND  FIFTEEN;  AND ALL ADDITIONAL COMPREHENSIVE MANAGEMENT AND
 OPERATIONS AUDITS SHALL BE INITIATED AT  LEAST  ONCE  EVERY  FIVE  YEARS
 THEREAFTER.  WITHIN  A  REASONABLE  TIME  AFTER SUCH NOTIFICATION TO THE
 AUTHORITY, SAID DEPARTMENT OR THE INDEPENDENT AUDITOR  RETAINED  BY  THE
 AUTHORITY  TO UNDERTAKE SUCH AUDIT SHALL HOLD PUBLIC STATEMENT HEARINGS,
 WITH PROPER NOTICE, IN BOTH NASSAU AND SUFFOLK COUNTIES FOR THE  PURPOSE
 OF  RECEIVING  BOTH ORAL AND WRITTEN COMMENTS FROM THE PUBLIC ON MATTERS
 RELATED TO SUCH AUDIT AS DESCRIBED IN PARAGRAPH ONE OF THIS SUBDIVISION.
 
       S. 6136                             3                            A. 8957
 3. EACH SUCH AUDIT SHALL BE COMPLETED WITHIN EIGHTEEN MONTHS OF INITI
 ATION ABSENT AN EXTENSION FOR GOOD CAUSE  SHOWN  BY  THE  DEPARTMENT  OF
 PUBLIC  SERVICE  OR  THE  INDEPENDENT  AUDITOR  UNDER  CONTRACT WITH THE
 AUTHORITY WITH NOTICE OF SUCH EXTENSION TO THE GOVERNOR,  THE  TEMPORARY
 PRESIDENT  OF THE SENATE, THE SPEAKER OF THE ASSEMBLY, AND THE CHAIRS OF
 THE AUTHORITY AND THE DEPARTMENT OF PUBLIC SERVICE. SUCH AUDIT SHALL  BE
 PROVIDED  TO THE BOARD OF THE AUTHORITY IMMEDIATELY UPON ITS COMPLETION.
 THE DEPARTMENT OF PUBLIC SERVICE SHALL PROVIDE NOTICE OF  COMPLETION  OF
 SUCH  AUDIT  TO THE GOVERNOR, THE TEMPORARY PRESIDENT OF THE SENATE, THE
 SPEAKER OF THE ASSEMBLY, AND THE MINORITY  LEADERS  OF  THE  SENATE  AND
 ASSEMBLY,  AND  THE  AUTHORITY, UPON RECEIPT OF SUCH AUDIT, SHALL POST A
 COPY OF SUCH AUDIT,  INCLUDING  FINDINGS  AND  RECOMMENDATIONS,  ON  ITS
 WEBSITE.  UNLESS THE BOARD OF THE AUTHORITY MAKES A PRELIMINARY DETERMI
 NATION THAT ANY PARTICULAR FINDING OR RECOMMENDATION CONTAINED  IN  SUCH
 AUDIT  IS INCONSISTENT WITH THE AUTHORITY'S SOUND FISCAL OPERATING PRAC
 TICES,  ANY  EXISTING  CONTRACTUAL  OR  OPERATING  OBLIGATION,  OR   THE
 PROVISION  FOR SAFE AND ADEQUATE SERVICE, THE BOARD SHALL IMPLEMENT SUCH
 FINDINGS AND RECOMMENDATIONS IN ACCORDANCE WITH THE TIMEFRAME  SPECIFIED
 UNDER SUCH AUDIT.
 4. THE BOARD OF THE AUTHORITY SHALL MAKE ANY PRELIMINARY DETERMINATION
 OF  INCONSISTENCY  WITH  RESPECT  TO  ANY SUCH FINDING OR RECOMMENDATION
 WITHIN THIRTY DAYS OF RECEIPT OF THE AUDIT, WITH NOTICE AND THE BASIS OF
 SUCH DETERMINATION BEING PROVIDED TO THE DEPARTMENT OF  PUBLIC  SERVICE.
 SUCH  NOTICE AND BASIS SHALL BE POSTED CONTEMPORANEOUSLY ON THE AUTHORI
 TY'S WEBSITE AND THE BOARD SHALL, WITHIN THIRTY DAYS OF SUCH POSTING AND
 WITH DUE ADVANCE NOTICE TO  THE  PUBLIC,  HOLD  A  PUBLIC  HEARING  WITH
 RESPECT TO ITS PRELIMINARY DETERMINATION OF INCONSISTENCY. AT SUCH HEAR
 ING  THE DEPARTMENT OF PUBLIC SERVICE OR THE INDEPENDENT AUDITOR RESPON
 SIBLE FOR UNDERTAKING SUCH AUDIT SHALL PRESENT THE BASIS FOR  ITS  FIND
 INGS  AND  RECOMMENDATIONS AND THE BOARD SHALL PRESENT THE BASIS FOR ITS
 DETERMINATION OF INCONSISTENCY. THE AUTHORITY AND AUDITOR MAY DURING THE
 TIME PERIOD PRIOR TO SUCH PUBLIC HEARING  REACH  AGREEMENT  ON  DISPUTED
 ISSUES.  WITHIN  THIRTY DAYS AFTER SUCH PUBLIC HEARING, THE BOARD OF THE
 AUTHORITY SHALL ANNOUNCE ITS FINAL DETERMINATION AND PLANNED IMPLEMENTA
 TIONS WITH RESPECT TO ANY  SUCH  FINDINGS  AND/OR  RECOMMENDATIONS.  THE
 BOARD'S  FINAL  DETERMINATION  OF  INCONSISTENCY SHALL BE SUBJECT TO ANY
 APPLICABLE JUDICIAL REVIEW PROCEEDING, INCLUDING REVIEW AVAILABLE  UNDER
 ARTICLE SEVENTY-EIGHT OF THE CIVIL PRACTICE LAW AND RULES.
 

S  4.  Paragraph (b) of subdivision 4 of section 94-a of the executive
 law, as added by section 21 of part A of chapter 62 of the laws of 2011,
 is amended to read as follows:

 (b) The utility intervention unit shall have the power and duty to:

 (i) on behalf of the secretary, initiate, intervene in, or participate
 in any proceedings before the public service commission, to  the  extent
 authorized  by sections twenty-four-a, seventy-one, eighty-four or nine
 ty-six of the public service law or any other  applicable  provision  of
 law,  where  he  or  she  deems such initiation, intervention or partic
 ipation to be necessary or appropriate; [and]
 (ii) represent the interests of consumers of the state before federal,
 state and local administrative and regulatory agencies  engaged  in  the
 regulation of energy services[.]; AND
 (III)  ACCEPT  AND INVESTIGATE COMPLAINTS OF ANY KIND FROM LONG ISLAND
 POWER AUTHORITY CONSUMERS, ATTEMPT  TO  MEDIATE  SUCH  COMPLAINTS  WHERE
 APPROPRIATE  DIRECTLY  WITH  SUCH  AUTHORITY AND REFER COMPLAINTS TO THE
 APPROPRIATE STATE OR LOCAL AGENCY AUTHORIZED BY LAW TO TAKE ACTION  WITH
 RESPECT TO SUCH COMPLAINTS.
 
       S. 6136                             4                            A. 8957
 

S  5.  A  chapter  of the laws of 2011 amending the public service law
 relating to the Long Island power authority, as proposed in  legislative
 bill numbers S. 2581 and A. 3614, is REPEALED.
 

S  6.  This  act  shall take effect immediately; provided that section
 five of this act shall take effect on the same date as a chapter of  the
 laws of 2011 amending the public service law relating to the Long Island
 power  authority, as proposed in legislative bill numbers S. 2581 and A.
 3614, takes effect.

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