PSE&G gets $80M deal to run Long Island power grid after official, wife's secret stocks sink bidding process
The Long Island Power Authority OK'd the new deal and scrapped a competitive bidding process after authority member John Rhodes and his wife were found to have financial ties to Quanta Services, the company lined up to replace PSE&G.
LIPA CEO John Rhodes and his wife owned up to $120,000 in company stocks with his wife through December 2024 — months after he helped form the selection committee and Texas-based Quanta was recommended as the new manager.
Rhodes pushed Quanta, one of only two finalists alongside PSE&G, saying the company offered better safety metrics and slightly higher customer satisfaction scores.
But LIPA's board members were skeptical.
Critics pointed to Quanta's management of Puerto Rico's electric grid, which has faced rolling blackouts and a government audit.
The LIPA board found out about the undisclosed stocks during an April review of the recommendation and rejected the bid in a 6-1 vote. Rhodes had dumped the stocks four months prior.
'John Rhodes does not own stock in Quanta Services, Inc. Previously, he did own stock in Quanta Services, Inc., having purchased shares in 2021, and sold immediately upon becoming aware of those holdings in December of 2024, prior to LIPA staff's recommendation of Quanta Services, Inc., for selection by the LIPA board,' LIPA spokesperson Jen Hayen told Long Island Business News.
On Thursday, the board voted to scrap the selection process altogether and just extend PSEG's $80 million-a-year contract, which was set to expire at the end of 2025.
The length of the extension hasn't been finalized, although the current deal includes an option for up to five more years.
PSE&G has run Long Island's power grid since 2014, though its performance has faced scrutiny — especially after Tropical Storm Isaias in 2020 left hundreds of thousands of residents in the dark for days.
That led to a restructured agreement in 2021 that tied $40 million of PSE&G's compensation to performance benchmarks, including reliability, storm response, and customer satisfaction.
'We are extremely disappointed by the LIPA Board's decision and the fact that Quanta was never given the opportunity to address any questions or concerns that any of the LIPA Trustees had raised,' a Quanta spokesperson told The Post.
'We hope the reported investigation into this decision sheds light on the procurement process as we can agree that LIPA's 1.2 million customers deserve the best service provider.'
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Within this, the one that matters the most for the renewables sector is the bill's measure to eliminate tax credits for clean electricity production and investment for projects starting after 2027, worth around $250bn over the next decade. 'I HATE 'GREEN TAX CREDITS' IN THE GREAT, BIG, BEAUTIFUL BILL. They are largely a giant SCAM.' Trump wrote on Truth Social in June. 'Windmills, and the rest of this 'JUNK' are the most expensive and inefficient energy in the world.' Federal subsidies for renewable energy have certainly increased the price advantage that renewable energy producers have selling electricity into Ercot, says Vegas. Of course, America's fossil fuel industry also gets massive subsidies to the tune of tens of billions per year. However, these subsidies do not flow directly through to the real-time market price for consumers in the same way that they do for renewables, says Vegas. Wind farms get production tax credits for every megawatt they produce. 'That is real-time revenue that can be priced into their economic dispatch,' says Vegas. As a result, the sudden loss of the tax credits means that fewer projects will be built and household energy bills will rise. According to Dan O'Brien, a senior analyst at Energy Innovation, the bill means Texas will miss out on about 77 gigawatts of new electricity generation capacity over the next decade, compared to the current trajectory. This will mean $52bn in lost GDP growth and a net loss of 94,000 jobs. It will also add 23pc to consumer energy prices and 54pc to industrial energy prices over the next decade, says O'Brien. This is after accounting for inflation. By 2030, annual household energy bills in Texas will be $220 higher because of the bill. By 2035, the extra cost will be $480. 'Instead of seeing prices come down as we add renewables, we're seeing prices go up because of the bill,' says O'Brien. Although it increases subsidies for oil and gas, fossil fuel production cannot be raised quickly enough to fill the hole left by fewer renewables. 'I am actually a proponent of phasing out the tax credits,' says Doug Lewin, the president of Stoic Energy Consulting. 'But actually phasing them out, with a ramp over 20 years as opposed to this cliff. 'Because what is mangled at the bottom of the cliff are consumers in the American economy. And if you're truly conservative from a market perspective, you should be in favour of phasing out oil and gas subsidies too.' 'It's going to raise the cost of building things and it's going to slow down the build-out,' says Aaron Zubaty, chief executive of Eolian, an investor behind several energy projects in Texas. 'Then less stuff will be built.' Such concerns are being raised amid a radical policy shift in government. This month, Doug Burgum, Trump's interior secretary, announced that renewable energy projects would only be allowed to progress on public lands if he or his deputy had personally approved them. 'What we have already seen is projects that are really good that we've been developing for a very long time have had their permits denied in the last few weeks, very surprisingly,' says Zubaty. 'We are already seeing multiple projects, tens of millions of dollars of investment, that within the last two weeks we are going to have to walk away from.' One now mothballed project was a 150-megawatt solar project in Virginia. Unsurprisingly, Davis is frustrated by the policy shift and the anti-renewables rhetoric. 'Rural Texas doesn't have very much economic development,' he says. 'That's what just doesn't make any sense, and that makes me frustrated as a conservative, as a Republican, as a rancher. My own party, it's like they're turning against us. It's wrong-headed.' Complaints of this nature are emerging in the wake of horrific flash floods that killed 137 people in Texas this month, sparking outcry over Trump's cuts to the National Weather Service. However, regardless of grumbles, Trump knows that he can probably still count on Texas for support. While he disagrees with the president over renewable energy cuts, Davis says in no way will they be enough to stop him from voting Republican. Even so, he'll keep fighting his case. 'Wind just makes sense,' says Davis. 'For me, I can't think of anything more conservative than to use what God gave us, wind and power.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Sign in to access your portfolio
