Large nuclear debt leaves Long Island utility unable to cope with Sandy

Nearly three weeks after Hurricane Sandy slammed into New York and New Jersey, the lights and heat have finally come back on across most of the region.

But nowhere was the wait for power longer than on Long Island, where about 1,000 customers are still in the cold and dark, and utility mismanagement has deep roots.

McCallion says to understand what ails LIPA, you have to go back to its roots. The Long Island Power Authority is a state agency that was formed to take over a private power company — one with a deeply troubled history — called Long Island Lighting Company, or LILCO.

In the 1960s, when LILCO started building Shoreham, the utility said it would cost between $65 million and $75 million. The final bill was 100 times larger — more than $6 billion.

"LIPA really takes over as the utility on Long Island from LILCO," McCallion says, "but is saddled with this multibillion-dollar Shoreham debt."

Financially, Grossman says, it was a bad deal for consumers, but Long Islanders backed it anyway because the LIPA takeover meant the Shoreham nuclear plant would never open.

"The sentiment at the time was very clear — better our money than our lives," Grossman says.

Today, the Long Island Power Authority is still deeply in debt. Long Island consumers pay some of the highest electric rates in America. But most of LIPA's cash goes to debt service. And that's likely one reason it was so unprepared for Sandy and its aftermath. Recording. Transcript.