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New York commission recommends privatizing Long Island Power Authority

(Reuters) - A New York state commission on Monday recommended privatizing the Long Island Power Authority (LIPA), which was slow to restore power to customers on Long Island following Superstorm Sandy in October.

LIPA, a state-owned entity with just 100 employees, provides power on Long Island through a services agreement with UK power company National Grid Plc.

The Moreland Commission, set up by New York Governor Andrew Cuomo, found that LIPA had a "dysfunctional management structure" that led to an operational and communications disconnect between LIPA and National Grid and an inadequate response to Sandy.

The storm left more than 90 percent of the 1.1 million LIPA customers on Long Island without power, some for more than two weeks.

LIPA's services agreement with National Grid is due to expire at the end of 2013. At that time, a unit of New Jersey power company Public Service Enterprise Group Inc is set to take over as the system's operator.

Cuomo set up the Moreland Commission to investigate why it took so long for some of the state's utilities, including LIPA and Consolidated Edison Inc, to restore power after Sandy, and to make recommendations to improve the state's power sector.

The commission recommended a complete overhaul of LIPA and the system by which power is delivered on Long Island.

It recommended that a private utility buy LIPA. Alternatives, it said, include LIPA assuming management of its own operating system, or another public power authority like the state-owned New York Power Authority (NYPA) taking over responsibility for LIPA.

NYPA is a state-owned generating company that operates about 1,400 miles of transmission lines in the state.

(Reporting By Scott DiSavino; editing by John Wallace)

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