Ratepayers On the Hook for Costs Associated With Missing Salvage and Recycled Material Costs?
Posted on August 15, 2011 by lipa oversight
With every storm restoration event the goal and objective is pretty straight forward which is to repair all transmission and distribution damage that occurred with the end result of zero customer power outages. As such, materials are withdrawn from LIPA’s prime sub-contractors warehouse, National Grid, to aid in completing this end result.
However, for the March 2010 storm, recycled and salvaged materials were not credited back to the storm account which consequently put the ratepayer on the hook for the cost of the missing materials. It is estimated that these costs were in excess of one million dollars for this storm alone.
To illustrate this point, for MArch 2010 storm approximately 1000 damaged poles were replaced with associated attachments, which may include cable, insulators, and clamps, essentially anything that is attached to the pole itself. It is often more expeditious to not reuse these “attachments” in the field but rather to use new materials to rebuild the pole to its undamaged condition.
At the end of each day the attachments from the pole would have been brought back to the NG warehouse to be recycled for reuse or sold for scrap value, in the case of cable/wire. The pole itself is cut up and disposed of. The residual scrap value credit and recycling credits are often significant.
To further illustrate this point and using the cable as an example, ¾ million feet were withdrawn from the NG warehouse with a total cost of $570,000 to the ratepayer. Since this cable was to be used, for the most part, to replace existing damaged cable and not new construction, approximately ¾ million of cable should have been brought back to the warehouse to be sold for scrap with the value being credited to the storm account.
This also holds true for all the attachments to the pole, such as insulators, clamps, etc. The following are total quantities of some of the attachments that should have also been recycled and credited back, in effect, to the Ratepayer.
* 33,000 Clamps at a cost of $368,000
* 220,000 Connectors at a cost of $582,000
* 15,000 Insulators at a cost of $104,000
So the question is:
Why should the Ratepayer be on the hook for the cost of the missing scrap and salvaged material?