Under Article 14-A of the General Municipal Law, counties, towns, cities, and villages in New York State are permitted to establish public utility companies. Section 360 of the State General Municipal Law provides that, “any municipal corporation may construct, lease, purchase, own, acquire, use and/or operate any public utility service within or without its territorial limits, for the purpose of furnishing to itself or for compensation to its inhabitants, any service similar to that furnished by any public utility company specified in article four of the public service law. ‘Municipal corporations’ as used in this article shall mean a county, city, town or village.”
Indeed, there are over 40 municipalities across the State of New York, which have established municipal power companies, including a few on Long Island such as the villages of Greenport, Freeport, and Rockville Centre. However, since 1986, local governments on Long Island have been prohibited from forming a new municipal utility. The reason: the law that created the Long Island Power Authority (LIPA), a state authority, preempts counties, towns, villages, and cities from establishing a municipal power company within LIPA’s service area.
Today, Assemblyman Fred W. Thiele, Jr. (I, D, WF-Sag Harbor) has introduced legislation in the State Assembly which would end the state preemption of new municipal power companies on Long Island and would permit local governments to consider the creation of municipal power companies in the future.
Thiele stated, “The original intent of LIPA was twofold: (1) to prevent the unsafe Shoreham Nuclear power Station from operating, and (2) to eliminate LILCO, a private utility and replace it with a public authority governed by a Board elected by the people of Long Island. The second goal, a true public utility governed by Long Islanders, has never been fulfilled as it was envisioned in 1986. It has never been governed by Long Islanders, and it has never been a “real” public utility. It has never been more than a “shell” corporation operated by political appointees who then contracted out operations to another private company. The perversion of this intent has meant disaster for Long Island, most recently manifested by the LIPA response to Superstorm Sandy.”
Thiele added, “It is clear that the intent of the 1986 law and the goal of a state public utility for Long Island are not going to be fulfilled. LIPA will remain as an empty shell and the day to day operations of Long Island’s electric service will be performed by an out-of-state private utility company. The details of this proposal are still to be worked out. Whether this model will result in an accountable and transparent management structure that will provide reliable power and long term stable rates is also unclear. However, the possibility of public power should not be fully abandoned and the home rule powers of local government on Long Island should be restored. My bill would do both. In the future, Long Islanders should have the ability to choose municipal power, if they believe it would be superior to the proposed near-privatization model currently under consideration. We should never limit any future options that could improve electric service for Long Islanders. Long Island should not be treated differently than the rest of the state.”