Long Island Power Authority

Oversight of Contracts with National Grid

The Long Island Power Authority (LIPA) is the primary supplier of electricity on Long Island. Most of its day-to-day operations are performed by a private utility, National Grid PLC, under three 15-year contracts with LIPA that are set to expire in 2013. We examined whether LIPA was adequately monitoring National Gridís performance in implementing these contracts, and found that it was. LIPA received monthly reports from National Grid describing various aspects of its performance, verified the information in these reports against independent sources of such information, and took appropriate follow-up actions when National Grid failed to meet the performance targets specified in the contracts. LIPA also contracted with outside consultants for assistance in monitoring National Gridís performance, and had staff with offices onsite at National Grid facilities to oversee the utilityís operations.

However, improvements were needed in one area of LIPAís oversight: its monitoring of National Gridís sales of emission credits from its power plants. Contrary to contract requirements, National Grid did not report some sales to LIPA, and as a result, LIPA did not receive its share ($309,878) of the proceeds from these sales until we made LIPA officials aware of the issue. While the failure to report the sales appeared to be an oversight on the part of National Grid, LIPA needed to improve its monitoring to prevent such errors in the future and ensure that it received its full share of the proceeds from such sales.

For a complete copy of Report 2009-S-9 click here.
For a copy of the 90-day response click here.