LIPA postpones choice between two bidders for electric grid contract 

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The Long Island Power Authority was slated to choose a company to manage Long Island’s electric grid at its board meeting on Wednesday, but the item was pulled from the agenda, and the decision has been delayed. 

LIPA is considering companies that responded to its May 2024 request for proposals for the contract to manage the Long Island electric grid beginning Jan. 1, 2026, after the current $80 million contract with PSEG expires on Dec. 31, 2025.

A LIPA spokesperson decline to comment on its RFP process but acknowledged that the agenda for Wednesday’s meeting “was amended to provide ample time for the Board of Trustees to discuss the topic.”  

The choice, according to a source close to the situation, is down to just two firms, including PSEG, the Newark, N.J.-based company which has managed the Long Island power grid since 2014, and Quanta Services, a Houston-based conglomerate and construction contractor specializing in power delivery infrastructure. 

Both candidates have experienced some stormy issues. After performance failures following Tropical Storm Isaias in August 2020, LIPA and PSEG Long Island entered into a restructured management contract in Nov. 2021 that included reforms and greater oversight on the utility. The contract increased the amount of PSEG Long Island’s annual compensation at risk from $10 million to $40 million, including automatic reductions for failures to meet minimum emergency response, customer satisfaction, and reliability standards, and a new state Department of Public Service investigative process for failures to provide safe, adequate, and reliable service to customers. 

In January, it was announced that a PSEG affiliate lost its contract for LIPA power and fuel supply management, which had been assigned to PSEG Energy Resources & Trade LLC since Jan. 1, 2014. The contract, last valued at about $20 million, was awarded to The Energy Authority, a Jacksonville, Fla.-based nonprofit controlled by six public utility companies.

“Since taking over operation 10 years ago, PSEG Long Island has transformed the electric grid to become the number one overhead utility in New York State in both reliability and customer satisfaction,” a PSEG spokesperson told LIBN. “We hope to be selected as the next service provider and to continue to serve our customers for the next 10 years.”  

Meanwhile, Quanta Services has found itself in hot water on another island. A subsidiary called LUMA Energy, which is co-owned by Quanta and Canadian firm ATCO Electric, is at risk of being booted from managing Puerto Rico’s electric grid. A recent analysis commissioned by Puerto Rico’s Public-Private Partnerships Authority found that LUMA has breached its contract which may be cancelled by the government for noncompliance, according to a report in NotiCel, a media outlet that covers Puerto Rico.  

LUMA’s alleged transgressions include “blackouts, lack of maintenance, failure to maintain the balance between energy supply and demand within the system, and lack of cooperation with the government to oversee its performance,” according to NotiCel. 

In addition, the Federal Emergency Management Agency (FEMA) found that LUMA illegally contracted with a subsidiary of its parent Quanta Services during Hurricane Fiona. FEMA announced in December that it would not cover the estimated $95 million in expenses contracted to Quanta Services Solutions PR LLC, according to the NotiCel report. 

A Quanta spokesman responded that the company is “incredibly proud” of its joint venture partnership with LUMA and that it has resulted in “historic progress being made to improve electrical service despite a legacy of failures, mismanagement and neglect by the prior utility operator. Our partnership has not only mobilized to restore power faster than ever before following devastating storms, it has also done more to advance FEMA-funded projects and improve customer service and storm response than ever before.” 

The spokesman said that Quanta has “a proven record of accomplishment spanning decades,” providing energy infrastructure services to utilities and millions of utility customers across the country. 

“We are excited about the opportunity to serve Long Island electric customers who expect and deserve a better energy future, and we are committed to following LIPA’s and the State of New York’s procurement process,” the spokesman said. 

The service provider chosen to operate LIPA’s electrical transmission and distribution system would be responsible for day-to-day operations, maintenance, emergency preparedness and response, customer service, billing and collection, and meter reading, according to LIPA. 

A push to municipalize the management of the Long Island electric grid has since short-circuited and LIPA has been left to choose between the two remaining bidders to continue the public-private partnership overseeing Long Island’s power operations. 

The LIPA Board of Trustees will meet in executive session on Monday, April 7 to consider the matter, the LIPA spokesperson said, adding that the board will take up the vote on the Operations Services Agreement on a yet-to-be-determined date.