The action underscores an ongoing politically messy and high-stakes dispute at LIPA related to who will operate the system serving more than 1.2 million customers through 2030. 

Quanta had sought the order ahead of the board vote, arguing that the meting agenda signaled imminent action to extend the management services role of PSEG Long Island, a unit of New Jersey-based Public Service Enterprise Group Inc., a publicly traded diversified energy company. 

A leading power contractor in North America generating over $20 billion annually in revenue, Quanta has historically concentrated on utility infrastructure, pipelines and transmission projects. In recent years, the company has expanded into utility operations, most prominently through its joint venture LUMA Energy, which manages Puerto Rico’s electric grid.

Quanta filed an Article 78 petition last week—a legal action under New York law used to challenge state or local agency decisions—in state Supreme Court contesting LIPA’s April rejection of its bid to take over operations and the board’s subsequent cancellation of the procurement process in May. 

On Sept. 23, Quanta requested a temporary restraining order from Acting Supreme Court Justice Philippe Solages. Newsday first reported details of the motion, with the court issuing an order to show cause; ENR has been unable to confirm whether the court issued a TRO ahead of the Sept. 25 vote.

Calls by ENR to Quanta and LIPA for additional comment were not returned.

Even with the board’s approval, the contract requires review by the state attorney general and comptroller under New York’s Public Authorities Law before taking effect Jan. 1. 

Quanta, which has worked for LIPA as a power supply contractor, argues the evaluation process was “deeply flawed” and that its 10-year proposal offered stronger performance in storm response, safety, customer service and reliability. 

A LIPA management selection committee, headed by then-acting utility chief John Rhodes, recommended selection of the firm for the contract In April. But six utility trustees voted against the award, with one in favor and two abstaining.

Rhodes defended his panel’s recommendation at the April 30 meeting, saying the company’s proposal delivered “superior value, superior performance potential, and a stronger operational fit for Long Island’s needs.” The award also had staff and consultant recommendations in Quanta’s favor.

Trustees, led by board chair Tracey Edwards, disagreed. “Quanta did not demonstrate the experience as an end-to-end service provider,” she said during the meeting, adding that its "only demonstrated experience operating as an end-to-end service provider is in Puerto Rico.” 

Edwards also raised concerns about call-center management and customer engagement. “Quanta’s main customers are utilities. They are companies. They are municipalities. They are not ratepayers."

Documents later showed Rhodes initially owned shares in Quanta stock, although he divested before the recommendation. Trustees cited that issue, along with concerns over leaks and “intimidation tactics” during the procurement, when they voted to cancel the request for proposals in May.

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Under the new amendment, LIPA will pay PSEG Long Island roughly $80 million annually to operate the system, with fees reduced by an estimated $17 million over the five-year period. The deal raises PSEG’s annual liability cap to $55 million from $40 million, ties more than half of its compensation to performance metrics and tightens budget controls.

PSEG Long Island first took over operation of LIPA’s system in 2014, with the current “reformed” contract structure negotiated in 2021 and 2022 in response to state regulators' demand for stricter accountability following storm-response failures.

Puerto Rico Record in Spotlight

Quanta’s record in Puerto Rico loomed large in the Long Island debate. In 2020, the company joined with Canada-based ATCO to form LUMA Energy, which in June 2021 assumed a 15-year contract to operate Puerto Rico’s transmission and distribution system. 

Homes in Puerto Rico were left damaged and without power after Hurricane Fiona struck in September 2022, exposing vulnerabilities in the island’s electric grid managed by LUMA Energy, a joint venture of Quanta Services and ATCO. Image courtesy of WPST-FM

That deal, awarded by the island’s Public-Private Partnerships Authority, placed Quanta in the role of grid operator rather than contractor.

LUMA has since faced sharp criticism from regulators and residents over persistent outages and slow grid modernization, controversies that LIPA trustees cited when rejecting Quanta’s bid. In its filings, Quanta argued that Puerto Rico’s unique power supply challenges—including underinvestment and generation shortfalls—made the comparison unfair.

The dispute arises amid scrutiny of LIPA’s procurement. In May, the authority announced that it had hired law firm WilmerHale for an internal ethics review. The New York Inspector General is also investigating whether undue influence affected board decisions.

LIPA, a state-owned utility, serves Nassau and Suffolk counties, as well as part of the New York City borough of Queens, with over 1 million residential and 134,000 commercial accounts. It has contracted with private operators since 1998. 

Some New York officials have proposed full municipalization of operations rather than outsourcing to private companies such as PSEG Long Island or Quanta.

As the trustees approved the contract extension, the litigation left the outcome unsettled. "In essence, this case is about power,” Quanta said in its petition, “but not just the provision of energy services and grid operation vital for Long Island residents who would have benefited from Quanta’s demonstrated expertise and experience.”