Long Island Power Authority proposes increase for fuel surcharge

Long Island Business News, Dec 27, 2002 by Ben Abelson

The Long Island Power Authority proposed a 2003 budget that would increase the size of a 2-year-old "fuel surcharge" by 3 percentage points to 8.8 percent.

The hike, if approved by LIPA trustees in January, would mean another $2.80 a month on the average residential customer's bill starting in March. It would help cover higher than anticipated expenses in 2002 and additional costs projected for 2003, LIPA said.

LIPA noted that it would be passing on to consumers only a small portion of the additional costs, which would have likely meant a 12 percent hike in 2003 and would have cost the average consumer $11.20 a month.

LIPA Chairman Richard Kessel said the increase "protects ratepayers from rate shock" and keeps "LIPA a strong entity."

But critics argued LIPA is imposing a nearly 9 percent de facto rate hike under the guise of a fuel surcharge. The additional costs come from a wide range of sources beyond simply the purchase of gas and oil.

LIPA can unilaterally impose a fuel surcharge, but must go before the Public Service Commission for rate increases of 2.5 percent or more.

"First LIPA called it a temporary fuel surcharge to avoid PSC review," said Gordian Raacke, director of Suffolk-funded Citizens Advisory Panel. "Now they're adding a surcharge to the surcharge."

At the meeting, Kessel also proposed shifting away from LIPA's current method of adjusting rates once a year through surcharges based on costs.

Instead, Kessel proposed a "real time" surcharge that would let the authority adjust rates more frequently during the year.