LIPA's Transmission Line $4 Million Over Projected Cost
Bridgehampton - cost overrun incurred by the Long Island Power Authority (LIPA) for the underground installation of high voltage transmission lines along a 4.5 mile scenic corridor in Southampton, has called upon New York State Comptroller Thomas DiNapoli requesting an expanded audit of the power company now in progress.
The cost overrun for the underground installation has been estimated by LIPA officials to be approximately $4 million, raising the project total to $12 million over the estimated $8 million to $10 million purported during the construction phase. According to the terms of a court ordered settlement this cost overrun will be passed on to a segment of Southampton Town residents in April 2009 when the surcharge, referred to as a Visual Benefits Assessment (VBA) goes into effect.
Assemblyman Thiele has called for the audit to determine the exact cost overrun and examine the $4 million gap between the initial $10 million figure, that dropped to $8 million once the project was put out to bid, and the $12 million now being quoted by LIPA.
“We feel it is necessary to audit this project in order to ensure that costs are apportioned properly,” Thiele said in a letter to DiNapoli dated Nov. 7, 2008.
In this communication Thiele indicated the Comptroller should determine the total cost of the project as well as the cost of the underground installation along the 4.5 mile route to ensure that area residents will not be unfairly charged for the project.
The usage-based surcharge is expected to add an estimated $2.50 a month to residential users bills based on average consumption of 775 kilowatt hours.
Edward Dumas, LIPA’s vice president of Communications, noted figures for commercial users were not available at this time. However, previous estimates released by LIPA indicated commercial users could expect to see a $10 monthly increase on their bills.
Dumas also noted commercial users could estimate their anticipated VBA rate hike by multiplying their monthly kilowatt usage by three-tenths of a cent.
The surcharge will remain in effect for 20 years and will be charged to Southampton Town residents from east of the Shinnecock Canal to portions of Sag Harbor Village. The Tuckahoe section of Southampton and the Shinnecock Nation will not be subject to the surcharge.
LIPA officials have not received any requests for additional information from DiNapoli’s office as a result of Thiele’s request according to Dumas, who noted the power company welcomed the audit.
“We are not sure what the final cost will be yet,” Dumas explained, noting LIPA was still negotiating with its suppliers and contractors now that the project has been completed. Dumas also noted LIPA had to spend more money than anticipated to comply with requests from Southampton Town regarding paving and roadwork along the route.
“Whatever it is, whether it turns out to be $11.1 million or $10 million, we are obligated to proceed under the terms of the court ordered settlement,” Dumas maintained, noting the terms of the agreement required the town to indemnify the cost overrun involved in the underground installation project along the scenic corridor does not cap a specific dollar amount.
“We have an agreement,” Dumas said, “that resulted from lengthy and sophisticated negotiations so we could honor this unprecedented request.”
LIPA crews at work “burying the lines" to preserve the scenic vista.
The VBA was initially well received by the community as the Town, and the public took LIPA to task demanding the transmission lines be buried along the entire nine-mile transmission route while rejecting LIPA’s compromise hybrid plan that proposed a 55/45 percent alternative proposal that would have resulted in a section of aboveground high transmission lines running along the scenic back roads from Water Mill to Bridgehampton.
According to LIPA officials, the cost of installation for the aboveground route was estimated at $10 million for the entire Southampton to Bridgehampton project. The hybrid plan was estimated at $20 million, while cost estimates for the entire underground project were placed at $30 million.
After months of contentious public hearings, and negotiations with officials of Southampton Town, LIPA’s battle with the town ended up in court as Town officials moved to stop the project unless the lines were buried along the 4.5 mile route, effectively compelling LIPA to underground the entire project.
According to LIPA officials, the $10 million cost for an overhead installation to provide the East End with upgraded service would have been borne by LIPA’s entire ratepayer base. LIPA officials, while sympathetic with the community’s desire to preserve its scenic vistas, remained firm in their view that the cost should not be borne by ratepayers across the region as a whole. Their proposed 55/45 hybrid plan would also have been absorbed by LIPA’s entire customer base. The surcharge came into play, according to LIPA, when the aboveground company was compelled to install the lines underground