PSEG wins contract to oversee Long Island Power Authority grid for 10 years
Updated Mar 30, 2019; Posted Dec 20, 2011
By Eliot Caroom/The Star-Ledger
The company will manage electric transmission and delivery for 1.1 million customers in Long Island.
Public Service Enterprise Group has won a 10-year contract to manage the non-profit Long Island Power Authority's electric transmission and distribution system, which should benefit shareholders of New Jersey's largest utility.
The deal means a new subsidiary, PSEG Long Island, will manage the grid for 1.1 million customers on Long Island for an average payment of $40 million annually, with possible incentives of up to 15 percent more depending on the company's performance.
"Our cultures, we believe, are a very tight match, between our company and their company," said LIPA chief operating officer Michael Hervey at a news conference Thursday announcing the decision. "They have a culture of transparency, of customer service, have perpetually year in and year out have been among the top in customer service in their own service territory, and we certainly look forward to bringing that here to Long island."
LIPA's business is a mix of transmission, distribution, customer service and also includes a partial interest in the Nine Mile Point 2 Nuclear Station in upstate New York.
The authority considered PSEG, Con Edison and incumbent manager National Grid for the contract over the last two years. Hervey said that widespread outages following Hurricane Irene in Public Service Electric & Gas territory didn't dissuade LIPA from its pick.
"After looking at it, the board decided that the storm performance of all (three of) the utilities in Irene and the Halloween storm did not drive us to change the decision any," Hervey said.
PSEG hired Lockheed Martin as a subcontractor to help with a two-year transition from current manager National Grid. After that, PSEG will take sole control of the grid on Jan. 1, 2014, and its 10-year contract will begin.
The 1,800 or so employees who currently maintain lines, trim trees and route electricity for National Grid will be kept on in their positions, according to Scott Jennings, vice president of mergers, acquisitions and development for PSEG.
Jennings said they will be managed by a team of about 20 to 25 senior PSEG and Lockheed Martin employees.
PSEG spokesman Mike Jennings, who is not related, said those positions would be an increase in manpower and New Jersey customers won't be at all affected by the new LIPA contract.
That's because LIPA will set its own budgets and no costs will be passed on to PSEG in its management role.
Eliot Caroom: (973) 392-7919, ecaroom@starledger.com and @eliotter on Twitter