LIPA COO Resigns Amidst Sandy Criticism

The chief operating officer of the Long Island Power Authority submitted a letter of resignation Tuesday evening amid criticism of the utility’s response to Hurricane Sandy.

After 12 years at LIPA, Mike Hervey tendered his resignation as COO, a position he has held for the past two years.

“Mike has played a leadership role in connection with the planned structural changes at LIPA going forward, which will result in better service and accountability to LIPA’s customers in the years ahead,” said authority chairman, Howard Steinberg.

Hervey told the Wall Street Journal that he had planned to step down for months because there were not "further opportunities" for him at LIPA, and that the storm delayed his resignation.

He offered to leave on Thursday, but after discussing the matter with lawyers and trustees, decided to stay through the end of the year.

In the weeks following Hurricane Sandy, which wiped out power to almost 90% of its 1.1 million customers, the utility received widespread criticism of its slow restoration of power.

By Nov. 11, power had been restored to 95% of the system, which serves Nassau and Suffolk Counties and the Rockaway Peninsula, but 62,000 outages still remained.

“There is a failure of leadership at LIPA headquarters and we are now communicating directly with substations to restore power to Suffolk County residents,” said the county’s executive, Steve Bellone.

New York Gov. Andrew Cuomo has also said that LIPA’s management has failed and on Tuesday announced an investigation into the response of New York’s power utility companies with major storms hitting the state over the past two years.

In addition to LIPA, a new commission will examine the New York Power Authority, the New York State Energy Research and Development Authority, and the Public Service Commission.

“As we adjust to the reality of more frequent major weather incidents, we must study and learn from these past experiences to prepare for the future,” Cuomo said in a statement.

On Monday Fitch Ratings revised the outlook on the utility’s $6 billion of outstanding bonds to negative from stable, saying storm costs will challenge LIPA’s already tight finances.

Fitch said future actions to the A rating will depend on LIPA’s ability to maintain financial flexibility.

Moody’s Investors Service had also warned that storm costs could further weaken its A3 rating on LIPA’s debt.

Standard & Poor's, which rates LIPA's debt at A-minus, said its rating remains unchanged despite the effects of Sandy, but that they will continue to monitor the utility.