Quanta Asks Judge to Block Award of Long Island, NY, Grid Contract to PSEG

Quanta Companies has requested a Nassau County, New York, choose to dam the Lengthy Island Energy Authority (LIPA) from extending its grid administration contract however the trustees voted Sept. 25 to approve a five-year modification price almost $400 million, holding PSEG Lengthy Island in place by 2030.

The Houston-based contractor’s petition underscores a high-stakes dispute over who will function the system serving greater than 1.3 million clients. 

Quanta had sought a short lived restraining order forward of the vote, arguing that the agenda signaled imminent motion to increase PSEG’s function. Nevertheless, the board authorized the extension in a decision adopted on Thursday. 

A number one specialty contractor in North America producing over $20 billion yearly, Quanta has traditionally targeting utility infrastructure, pipelines, and transmission tasks. 

In recent times, it has expanded into utility operations, most prominently by its three way partnership LUMA Vitality, which manages Puerto Rico’s electrical grid.

The corporate filed an Article 78 petition final week—a authorized motion below New York regulation used to problem state or native company choices—in state Supreme Courtroom contesting LIPA’s April rejection of its bid to take over operations and the board’s subsequent cancellation of the procurement course of in Might. 

On Sept. 23, Quanta requested a short lived restraining order from Performing Supreme Courtroom Justice Philippe Solages. Newsday first reported particulars of the movement, with the courtroom issuing an order to indicate trigger; ENR has been unable to substantiate whether or not the courtroom issued a TRO forward of the Sept. 25 vote.

Quanta argues the analysis course of was “deeply flawed” and that its 10-year proposal supplied stronger efficiency in storm response, customer support and reliability. In April, nevertheless, six trustees voted in opposition to awarding the contract to Quanta, with one in favor and two abstaining.

Then-acting LIPA chief John Rhodes, who chaired the administration committee, defended his panel’s suggestion on the April 30 assembly, saying the corporate’s proposal delivered “superior worth, superior efficiency potential, and a stronger operational match for Lengthy Island’s wants.”

Trustees, led by board chair Tracey Edwards, disagreed. “Quanta didn’t show the expertise as an end-to-end service supplier,” she mentioned through the assembly. “Their solely demonstrated expertise working as an end-to-end service supplier is in Puerto Rico.” 

Edwards additionally raised issues about call-center administration and buyer engagement. “Quanta’s primary clients are utilities. They’re corporations. They’re municipalities. They aren’t ratepayers. They aren’t householders. They aren’t low-income residents [who] are struggling to pay their payments.”

The board’s rejection got here regardless of employees and advisor suggestions in Quanta’s favor. Paperwork later confirmed Rhodes initially owned shares in Quanta inventory, although he divested earlier than the advice. 

Trustees cited that concern, together with issues over leaks and “intimidation ways” through the procurement, once they voted to cancel the request for proposals in Might.

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Beneath the brand new modification, LIPA can pay PSEG roughly $80 million yearly to function the system, with charges diminished by an estimated $17 million over the five-year interval. The deal raises PSEG’s annual legal responsibility cap to $55 million from $40 million, ties greater than half of its compensation to efficiency metrics and tightens funds controls.

Even with the board’s approval, the contract requires assessment by the state lawyer basic and comptroller below New York’s Public Authorities Legislation earlier than taking impact Jan. 1, 2026. 

PSEG first took over operations of LIPA’s system in 2014, with the present “reformed” contract construction negotiated in 2021 and 2022 in response to state regulators’ demand for stricter accountability following storm-response failures.

Puerto Rico File in Highlight

Quanta’s file in Puerto Rico loomed massive within the Lengthy Island debate. In 2020, the corporate joined with Canada’s ATCO to kind LUMA Vitality, which in June 2021 assumed a 15-year contract to function Puerto Rico’s transmission and distribution system. 

Houses in Puerto Rico have been left broken and with out energy after Hurricane Fiona struck in September 2022, exposing vulnerabilities within the island’s electrical grid managed by LUMA Vitality, a three way partnership of Quanta Companies and ATCO. Picture courtesy of WPST-FM

That deal, awarded by the island’s Public-Personal Partnerships Authority, positioned Quanta within the function of grid operator fairly than contractor.

LUMA has since confronted sharp criticism from regulators and residents over persistent outages and sluggish grid modernization, controversies that LIPA trustees cited when rejecting Quanta’s bid. Quanta, in its filings, argued Puerto Rico’s distinctive challenges—together with underinvestment and era shortfalls—made the comparability unfair.

The dispute arises amid scrutiny of LIPA’s procurement. In Might, the authority introduced that it had employed white-shoe regulation agency WilmerHale for an inside ethics assessment. The New York Inspector Basic can also be investigating whether or not undue affect affected board choices.

LIPA, a state-owned utility, serves Nassau and Suffolk counties, in addition to a part of the New York Metropolis borough of Queens, with over 1 million residential and 134,000 business accounts. It has contracted with personal operators since 1998. 

Some New York officers have proposed full municipalization of operations fairly than outsourcing to personal corporations comparable to PSEG or Quanta.

Because the trustees authorized the contract extension, the litigation left the result unsettled. “In essence, this case is about energy,” Quanta mentioned in its petition, “however not simply the availability of power providers and grid operation important for Lengthy Island residents who would have benefited from Quanta’s demonstrated experience and expertise.”

Calls by ENR for added remark to Quanta and LIPA weren’t returned.