New Jersey’s Public Service Enterprise Group (PSEG) will take over New York’s Long Island Power Authority (LIPA) operations beginning January 1, 2014. PSEG –the parent company of Public Service Electric & Gas (PSE&G)– will take over LIPA’s electricity grid as well as run some of the utility’s office operations. In the agreement, LIPA will control the approval of the annual budget and spending, allowing the company control over the allocation of its resources.

In fall of 2011, LIPA adopted an improved business model intended to improve several aspects of the utility’s operations, including the quality of customer service, long-term employment stability, and cost management that focuses on transparency and accountability. Later in 2011, the utility chose PSEG to carry out the new business model by running the day-to-day operations of LIPA’s electric utility services.

The improved business model will create a joint committee consisting of members of both companies that will oversee transparency, accountability, and control between the two companies. Efficiency is expected to be significantly improved as the two companies combine their expertise and resources to better serve customers under each company. The partnership is also expected to stabilize LIPA electricity rates.

Local Leaders Question the Partnership

Local leaders, such as Massapequa Park Mayor James Altadonna, have questioned the partnership, citing a lack of plan for the reassignment of human resources, customer service, and other office functions to PSEG. LIPA CEO, Michael Taunton has not yet publically addressed these concerns, nor has he addressed how the two companies would allocate resources during drastic events such as the 2012 superstorm Sandy.

Taunton did express that the partnership would help during storm and outage responses through increased transparency, “We want to become more transparent… One of the things we learned from prior storms is we’ve done a poor job communicating.”

Both PSE&G and LIPA had been highly criticized during the aftermath of Sandy. It is expected that specific questions will be addressed well before the 2014 implementation, but due to the controversy during Sandy, it is not surprising that local leaders and residents are questioning the legitimacy and effectiveness of the partnership.