By Scott DiSavino and Daniel Trotta
NEW YORK (Reuters) - Damage from Superstorm Sandy to the electricity system in the 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.
"We're going to have to look at a ground up redesign," Cuomo said while criticizing 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.
"I believe the system is archaic and obsolete in many ways. They are basically one of the last monopolies. ... If you are unhappy with the utility company, who do you fire? Who runs it? Who owns it? Where do you get them?" Cuomo said Thursday.
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 appropriate action against those utilities and their management if they do not meet their obligations to New Yorkers in this time of crisis.
"It is your job to provide ... adequate resources and support to get the job done in a timely and safe manner. Utilities, like elected officials, are vested with the public's trust," Cuomo said in the letter.
"In the case of utilities, in exchange for conducting business and generating profits for their shareholders, they are entrusted to provide safe and adequate utility service. When they fail to keep the public's trust, they must answer," Cuomo said in the letter.
"If you failed to prepare ... as evidenced by your response, it is a failure to keep your part of the bargain," the governor said in the letter.
For those utilities found to be unprepared for Sandy, Cuomo threatened 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 in the state.
"New Yorkers should not suffer because electric utilities did not reasonably prepare for this eventuality," Cuomo said.
LIPA HIT HARDEST
With respect to LIPA, which the state controls, Cuomo said he would "make every change necessary to ensure it lives up to its public responsibility. It goes without saying that such failures would warrant the removal of the management responsible for such colossal misjudgments."
Sandy hit LIPA harder than any other power company. Sandy knocked 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.
"The governor is a very tough task master and we are doing everything we can to get all power back," LIPA Chief Operating Officer Michael Hervey said at a conference on Wednesday.
On Thursday, the governor echoed rumors of power equipment supply shortages that were denied by LIPA and Con Edison on Wednesday. Con Edison and LIPA are the two utilities still with outages in the state.
Officials at Con Edison were not immediately available for comment.
On Wednesday, LIPA's Hervey said the rumors about supply shortages were wrong.
"We have the material ... the poles, wires and transformers ... we need. There are no material shortages," Hervey said Wednesday.
But Hervey's days as head of LIPA may be numbered.
"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.
Officials at LIPA were not immediately available for comment on Thursday.
(Reporting by Daniel Trotta, Scott DiSavino and Eileen Houlihan in New York; Editing by Diane Craft, Phil Berlowitz and Andrew Hay)