Company InformationFacts Regarding LIPA's Fuel Costs
The following are facts regarding how LIPA recovers the costs associated with increasing fuel and purchased power costs from its customers.
- LIPA does not make a profit. As a municipal electric
utility, LIPA seeks to recover only enough money from its
customers to cover its operating costs, maintain reserve
accounts as required by good business practices, and for
emergencies such as damage caused by a severe storm.
- LIPA sets its annual budget in December of each year,
and future fuel cost projections are made based on future
market indicators (projections) in national and world oil
and natural gas markets.
- In recent years the oil and natural gas markets, which
are the primary fuels needed by LIPA’s electricity suppliers
to produce the electricity consumed on Long Island, have
been extremely volatile.
- This year alone, the price of a barrel of crude oil has
almost doubled.
- LIPA seeks to keep its Power Supply Charge, which is the
cost of the electricity used by customers, as steady as
possible.
- Funds collected in 2007 from customers that exceed
LIPA’s fuel and purchased power expenses for 2007 will be
applied to next year’s budget to reduce expected increases
in fuel costs as oil approaches the 100 dollar per barrel
mark, and perhaps even higher in 2008.
- Since LIPA does not have any stockholders, none of the
funds collected from customers are used as “profits” for
investors.
- LIPA’s proposed budget for 2008 will be released to the public shortly. LIPA customers will have an opportunity to review the proposed budget when it is posted on LIPA's Web site.
- And, as in the past, LIPA’s customers will have the opportunity to comment on the budget at a public session that will be announced when the budget is released, and when the LIPA Board of Trustees reviews the budget at its December meeting.
