MORELAND COMMISSION ON UTILITY STORM PREPARATION AND RESPONSE FINAL REPORT June 22, 2013 Co-Chairs Robert Abrams Benjamin Lawsky Appointed by Governor Andrew M. Cuomo TABLE OF CONTENTS Letter to the Governor .................................................................................................................................................................................. 5 1 Executive Summary ............................................................................................................................................................................. 8 2 Background ........................................................................................................................................................................................... 14 3 LIPA Investigation .............................................................................................................................................................................. 15 3.1 LIPA’s Continuous Struggle to Meet its Mandate ................................................................................................. 15 3.2 Consultants ........................................................................................................................................................................... 16 3.2.1 Navigant Consultant Billing Issues .................................................................................................................. 17 3.2.2 Questionable Reimbursement of Navigant Consultant Expenses ...................................................... 18 3.2.3 Revolving Door Issues ........................................................................................................................................... 20 3.3 Accounting Practices ......................................................................................................................................................... 21 3.3.1 The 2011 Delivery Charge Increase ................................................................................................................ 21 3.3.2 LIPA’s Debt Level ..................................................................................................................................................... 22 3.3.3 Debt RePayment Practices................................................................................................................................... 22 3.3.4 The $231 Million Error Related to Line Loss .............................................................................................. 23 3.4 Conclusion ............................................................................................................................................................................. 26 4 Analysis of Energy Efficiency Programs ................................................................................................................................... 27 4.1 Competition of Program Administrators ................................................................................................................. 28 4.1.1 APProaches for Eliminating Program OverlaP ........................................................................................... 29 4.1.2 Issues Identified During Program Overlap Analysis ................................................................................ 31 4.1.3 Discussion of Program Overlap Recommendations ................................................................................. 33 4.2 Level of DPS/PSC Oversight ........................................................................................................................................... 34 5 Utility Infrastructure Investment ................................................................................................................................................ 35 5.1 Need for Better Resiliency .............................................................................................................................................. 35 5.2 Improving Infrastructure Under A Cost Constraint ............................................................................................ 37 5.2.1 Options for Funding Infrastructure Improvements ................................................................................. 38 6 Improving Regulatory Deficiencies ............................................................................................................................................ 40 6.1 PSC Technical Qualifications ......................................................................................................................................... 41 6.2 Ex Parte Communications ............................................................................................................................................... 42 6.2.1 APProaches to Managing Ex Parte Communications ............................................................................... 43 6.3 Consumer Advocate .......................................................................................................................................................... 44 7 The Commission’s Investigation .................................................................................................................................................. 47 7.1 Investigative Summary .................................................................................................................................................... 47 7.1.1 Lack of Preparation for Risk of Flooding. ..................................................................................................... 47 2 7.1.2 Lack of Localized Estimated Restoration Times (ETRs) ........................................................................ 47 7.1.3 Unreliable Technology in Major Storms ........................................................................................................ 48 7.1.4 Coordination with Local Governments .......................................................................................................... 48 7.2 Industry Reforms and Recommendations .............................................................................................................. 48 7.2.1 Mutual Assistance System Needs Reform ..................................................................................................... 48 7.2.2 Coordination With Telecommunication and Cable Providers ............................................................. 51 7.2.3 Coordination Between Utilities and Government to Create Automated Emergency Waiver Protocols ...................................................................................................................................................................................... 52 7.2.4 Communications with life SuPPort Equipment Customers .................................................................. 53 7.3 Workforce Deficits and Adverse Impacts on Storm ResPonse ....................................................................... 54 7.4 Unify Flood Inspection Procedures ............................................................................................................................ 55 7.5 Con Edison ............................................................................................................................................................................. 57 7.5.1 Con Edison’s Preparation and Response to Coastal Flooding was Inadequate ........................... 58 7.5.2 ETR Problems ............................................................................................................................................................ 62 7.5.3 Con Edison’s Crew Allocation Methodology Is Ad Hoc ........................................................................... 63 7.5.4 Con Edison Experienced Resource Shortages ............................................................................................ 64 7.5.5 Con Edison Needs Earlier, More Proactive Public Outreach ................................................................ 65 7.5.6 Liaisons Lacked Essential Information to be Meaningful Resources to Local Officials ............ 66 7.5.7 Critical Infrastructure ............................................................................................................................................ 66 7.6 Orange and Rockland........................................................................................................................................................ 67 7.6.1 Resource Sharing Between O&R and Con Edison Was Inefficient, Causing Confusion and Disorganization ......................................................................................................................................................................... 67 7.6.2 O&R Was Unable to Issue Localized ETRs .................................................................................................... 71 7.6.3 O&R’s Outage Map was Inaccurate and Suffered Glitches..................................................................... 72 7.6.4 O&R Did Not Effectively Coordinate Wires Down With Local Governments ................................ 73 7.6.5 O&R’s Municipal Liaisons Were Largely Ineffective ................................................................................ 74 7.6.6 Housing of Foreign Crews ...................................................................................................................................