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New York's Governor Cuomo blasts utilities for Sandy outages

By Scott DiSavino and Daniel Trotta and Cezary Podkul

Riverhead, NEW YORK (Reuters) - 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 on Thursday.

But at least some members of one utility oversight panel later fired back, saying it was the governor who should take responsibility.

"We're going to have to look at a ground-up redesign," Cuomo said while criticizing the 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 October 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.

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 Iberdrola SA.

Officials at the utilities were not immediately available for comment.

"I believe the system is archaic and obsolete in many ways. They are basically one of the last monopolies. ...," Cuomo said on Thursday. "If you are unhappy with the utility company, who do you fire? Who runs it? Who owns it? Where do you get them?"

At a separate meeting in Suffolk County on Thursday, some members of a panel set up by the legislature to oversee LIPA took the governor to task for not previously having taken a more active role in the state-run utility.

"The governor needs to take responsibility," said Matthew Cordaro, co-chair of the Suffolk County Legislature's LIPA Oversight Committee.

"He has not appointed the CEO for two years," Cordaro said, adding that "LIPA reports directly to the governor, so he can fire the chairman at will."

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 action against those utilities and their management if they do not meet their obligations to New Yorkers in this time of crisis.

For those utilities found to be unprepared for Sandy, Cuomo threatened in the letter 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.

"New Yorkers should not suffer because electric utilities did not reasonably prepare for this eventuality," Cuomo said.

Sandy hit LIPA harder than any other power company, knocking 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.

"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.

The governor echoed rumors of power equipment supply shortages that were denied by LIPA and Con Edison on Wednesday.

"We have the material ... the poles, wires and transformers ... we need. There are no material shortages," LIPA Chief Operating Officer Michael Hervey said on Wednesday.

Hervey said "the governor is a very tough task master and we are doing everything we can to get all power back." He also denied what he said were rumors that repair crews were sometimes idle.

RESIDENTS VENT FRUSTRATION

In Hampton Bays on Long Island's eastern end, longtime residents Ann and Pete Zullo said they lost power twice since the storm, in addition to seeing about $150,000 worth of flooding damage in their home. They say they are now used to losing power at least once a year, if not two or three times.

"We lost half our house, we can't live in our house, we can't do anything, a lot of the furniture's gone, everything's gone," said Pete Zullo, 78. "We want to retire here and enjoy our life, the rest of our life and we can't now."

At the LIPA oversight committee meeting on Thursday, homeowners vented frustration about not knowing whom to speak with at LIPA to get help.

"I'm out of power, and I've got no help," said Patrick Casas, 43, a UPS truck driver from Brentwood, Long Island, who has been out of power since Monday night. "There is no communications, their buildings are closed, there is no one to speak to."

(Reporting by Daniel Trotta, Scott DiSavino and Eileen Houlihan in New York; Editing by Diane Craft, Phil Berlowitz, Andrew Hay and Ken Wills)

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