* LIPA COO Hervey resigns due criticism over slow response * NY governor begins probe of state power companies * Flood-damaged homes need repairs before power restored * Over 8,000 LIPA customers that can receive power still out By Scott DiSavino NEW YORK, Nov 14 (Reuters) - The Long Island Power Authority (LIPA) is close to restoring electric service to the last 7,000 Long Island, New York, homes and businesses able to receive power, the company said on Wednesday, 16 days after Hurricane Sandy battered the U.S. East Coast. However, another 38,000 customers in the flooded areas of Long Island have yet to be surveyed for damage or may need repairs and certification by an electrician before the company can restore service. LIPA Chief Operating Officer Mike Hervey tendered his resignation late on Tuesday after harsh criticism from customers and politicians over the still ongoing restoration of service from the superstorm two weeks ago and a nor'easter last week. That resignation will be effective at the end of the year. LIPA, however, is a state-owned shell company that has only about 100 employees. It has outsourced the operation of its electric system to a unit of British power company National Grid PLC, which has said it is responsible for implementing LIPA's restoration plan. "Right now, our focus remains on helping the communities we serve recover and rebuild from the devastation brought by Hurricane Sandy and the Nor'easter," National Grid said in an email response. Hervey's resignation came on the same day New York Governor Andrew Cuomo announced an investigation into the state's utilities. He said the problems exposed by the storm would require a major overhaul of the power industry. "We will cooperate fully with (governor's) commission, and look forward to the dialogue," National Grid said. Other hard-hit New York and New Jersey utilities had restored power to most customers able to take service by last weekend. Of the LIPA customers unable to receive power, 26,600 are on the Rockaway Peninsula in New York City, fewer than 10,000 are in Nassau County, about 1,500 are in Long Beach and 300 are in Suffolk County. Sandy knocked out power to about 8.5 million customers in 21 states after hitting New Jersey on Oct. 29. More than 1 million of LIPA's 1.1 million customers lost power due to Sandy. A nor'easter storm last week knocked out 123,000 more customers - thousands of whom had power restored after Sandy. Combined, Sandy and the nor'easter knocked out more homes and businesses on Long Island than LIPA has customers. LIPA was not the only power company with damaged homes that cannot take power. More than 80,000 homes and businesses in New Jersey and New York, including those on Long Island, will remain dark, due primarily to flood damage, until owners make repairs. In New York City, Consolidated Edison Inc said this week that it still had about 16,300 customers in flood-ravaged areas of Brooklyn, Queens and Staten Island who could not regain electric service until they fixed their internal equipment. In New Jersey, FirstEnergy Corp's Jersey Central Power and Light utility has said about 30,000 customers on the barrier islands and shoreline communities could not have power restored due to infrastructure damage in that area.