Association for a Better Long Island calls for investigating bankruptcy option for LIPA
NEW YORK, Jan. 28, 2013 /PRNewswire/ -- The Association for a Better Long Island (ABLI), representing many of the major energy users in the bi-county region, is calling for a study that would allow the Long Island Power Authority (LIPA) to declare bankruptcy and renegotiate its crushing debt, a legacy of the Shoreham atomic energy plant closed in 1989 without ever producing a single watt of commercial power.
ABLI's Executive Director Desmond Ryan stated, "Preventing LIPA from creating a system that can respond to severe weather is the combined $17 billion burden of Shoreham debt and debt service created from shutting down that nuclear power plant a generation ago. It doesn't matter if you privatize LIPA or dismiss all its current executives. That financial obligation will continue to distort the region's economy for generations to come unless we address it now and bankruptcy is a viable path."
ABLI executive board member and former LIPA Board member Vincent Polimeni called for the utility authority to declare bankrupt years ago. "We are all realists and we recognize that a Chapter 11 plan faces tough going. We also know the State of New York will be aghast at the prospect, but bankruptcy isn't a `get out of jail free card.' LIPA would still have debt obligations, but the process would compel a restructuring of how and who gets paid under the supervision of a judge."
Ryan reminded, "The size of that debt unravels any plans you have to storm proof the electrical system or install a better communications system with your consumer. Then add the fact that you have obsolete and unused electrical generating stations paying millions in property taxes that the ratepayer is responsible for and you have one perfect storm."
Ryan stated that this would not be unprecedented. "Look to other utilities to create a LIPA bankruptcy roadmap. In 2001, Pacific Gas and Electric Company filed for bankruptcy protection after the energy crisis left it with a $9 billion debt and no viable solution to protect the ratepayer. Back in 1992, the El Paso utility in Texas filed for protection because of the debt created by the construction of a nuclear power plant. In both instances it was painful, the legal process uncertain and the markets were very unhappy, but it was the right course of action in moving past a debt that was devastating to the ratepayer" he stated.
As noted, the ABLI membership comprises the largest group of electrical ratepayers on Long Island. The group says even the threat of such an action by LIPA would force elected officials to recognize that the current situation is untenable. By even asking the question, "Whose interest is paramount, the consumer or the creditor?' Long Island can begin to examine other issues such as the current policy of LIPA power plants sitting dark and idle while providing the surrounding community with tens of millions of dollars in payments in lieu of taxes (PILOTS) equals 14% of the current burden shouldered by the all ratepayers," Polimeni reminded.
Ryan agreed, "We need to appreciate that no matter how many utility poles are replaced or how many trees are pruned, we are in crisis a without restructuring the Shoreham debt. And now LIPA is talking about 20% increase while Wall Street is openly hostile to privatization. It's time to break the Gordian knot tied around Long Island's neck because of the Shoreham debt."
SOURCE Association for a Better Long Island, Inc.