By Scott DiSavino and Daniel Trotta
NEW YORK Nov 8 Damage from Superstorm Sandy to
the electricity system in the U.S. Northeast exposed deep flaws
in the structure and regulation of power utilities that will
require a complete redesign, New York Governor Andrew Cuomo said
"We're going to have to look at a ground up redesign," Cuomo
said while criticizing utilities he called virtual monopolies
run by nameless and faceless bureaucrats.
"The utility system we have was designed for a different
time and for a different place," Cuomo told a news conference.
"It is a 1950s system. ... They have failed the consumers. The
management has failed the consumers."
Sandy, which hit the U.S. East Coast 10 days ago on Oct. 29,
had knocked out power to almost 2.1 million New York customers.
The nor'easter, meanwhile, left more than 150,000 additional New
Yorkers without service and in the cold on Wednesday.
More than 285,000 homes and businesses in New York remain
without power after Sandy and the nor'easter.
For a factbox of the current Sandy and nor'easter related
The power companies in New York are units of Consolidated
Edison Inc, the state-owned Long Island Power Authority
(LIPA), the state-owned New York Power Authority (NYPA),
National Grid PLC, CH Energy Group Inc and
"I believe the system is archaic and obsolete in many ways.
They are basically one of the last monopolies. ... If you are
unhappy with the utility company, who do you fire? Who runs it?
Who owns it? Where do you get them?" Cuomo said Thursday.
CUOMO THREATENS OPERATING LICENSES
Last week, Cuomo sent a letter to the CEOs of the utilities
that operate in New York saying he would take appropriate action
against those utilities and their management if they do not meet
their obligations to New Yorkers in this time of crisis.
"It is your job to provide ... adequate resources and
support to get the job done in a timely and safe manner.
Utilities, like elected officials, are vested with the public's
trust," Cuomo said in the letter.
"In the case of utilities, in exchange for conducting
business and generating profits for their shareholders, they are
entrusted to provide safe and adequate utility service. When
they fail to keep the public's trust, they must answer," Cuomo
said in the letter.
"If you failed to prepare ... as evidenced by your response,
it is a failure to keep your part of the bargain," the governor
said in the letter.
For those utilities found to be unprepared for Sandy, Cuomo
threatened to order the Public Service Commission, the state's
utility regulator, to commence proceedings to revoke the
companies' certificates of public convenience and necessity,
which allow them to operate investor-owned power systems in the
"New Yorkers should not suffer because electric utilities
did not reasonably prepare for this eventuality," Cuomo said.
LIPA HIT HARDEST
With respect to LIPA, which the state controls, Cuomo said
he would "make every change necessary to ensure it lives up to
its public responsibility. It goes without saying that such
failures would warrant the removal of the management responsible
for such colossal misjudgments."
Sandy hit LIPA harder than any other power company. Sandy
knocked out more than 1 million of LIPA's 1.1 million customers
and the nor'easter knocked out 123,000 more customers - several
of which had their power restored after Sandy. Combined Sandy
and the nor'easter knocked out more homes and businesses on Long
Island than LIPA has customers.
"The governor is a very tough task master and we are doing
everything we can to get all power back," LIPA Chief Operating
Officer Michael Hervey said at a conference on Wednesday.
On Thursday, the governor echoed rumors of power equipment
supply shortages that were denied by LIPA and Con Edison on
Wednesday. Con Edison and LIPA are the two utilities still with
outages in the state.
Officials at Con Edison were not immediately available for
On Wednesday, LIPA's Hervey said the rumors about supply
shortages were wrong.
"We have the material ... the poles, wires and transformers
... we need. There are no material shortages," Hervey said
But Hervey's days as head of LIPA may be numbered.
"Part of this is the system. But with LIPA, I also believe
part of it is the management, which has been unacceptable. They
failed. They have failed the consumers. It is that simple,"
Cuomo said Thursday.
Officials at LIPA were not immediately available for comment