Back in 2019, the top executive of PSEG Long Island oversaw an entity that spent months preparing a bid to take over management of Puerto Rico's dilapidated electric system, according to documents obtained by Newsday.

The ultimately unsuccessful bid would have more than doubled PSEG's contract business managing grids outside its New Jersey base, and added more than $120 million a year annually to its coffers.

But within months of losing its Puerto Rico bid to Luma Energy in 2020, PSEG Long Island and its president, Daniel Eichhorn, were in the hot seat on Long Island.

In August, Tropical Storm Isaias walloped Long Island and left more than 535,000 customers in the dark, some for more than a week. The storm exposed deficiencies in PSEG's communications and outage computer systems, features it had touted as strengths in its bidding documents for the Puerto Rico contract. 

A PSEG spokeswoman didn't respond to Newsday questions about whether it ever informed LIPA of Eichhorn's dual roles. In the past PSEG has said its work in Puerto Rico had "no bearing" on its Long Island operations. 

In a statement Thursday, PSEG spokeswoman Marijke Shugrue said, "PSEG was pleased to have had the opportunity to bid on the energy business in Puerto Rico. We deliver best in class operations and processes for customers and communities where we operate."

The Puerto Rico contract, and PSEG's bid to win it, takes on new relevance because Luma is a joint venture of Houston-based Quanta Services, which in April was selected by top LIPA officials to replace PSEG on Long Island. However, that recommendation ultimately was rejected by six LIPA trustees in an unprecedented move that left LIPA with no choice but to negotiate an extension of PSEG's existing contract instead. Quanta is seeking reconsideration.

LIPA and Puerto Rico are the only utilities in the nation that have an investor-owned private utility company operating a publicly owned grid. LIPA pays PSEG around $80 million a year to manage its grid, but ancillary services push the contract toward $100 million. 

Eichhorn, according to the documents, was listed as president and chief operating officer of PSEG Puerto Rico, a "senior executive within PSEG with a long tenure and deep network" who would operate the company if PSEG won the bid.

On Long Island, Eichhorn spent two years under intense criticism from LIPA officials and its board of trustees over problems uncovered after the tropical storm, which caused more than 646,000 outages to 535,000 of LIPA’s 1.1 million customers. LIPA subsequently forced PSEG to migrate computer systems from New Jersey to Long Island, a process that has been beset by delays and cost overruns but is expected to be complete by December. Eichhorn retired in 2022.

An investigation by a LIPA task force that included state officials put the blame for the poor storm response squarely on "mismanagement" by PSEG, charging the company "did not adequately prepare" for the storm, didn’t properly stress-test computer and telecom systems, and didn’t have manual backup plans in place, according to a Newsday story at the time. 

PSEG acknowledged failures at the time and said it has worked to fix them, even though a recent report by PSEG found the company in 2024 missed key metrics for vegetation management (which can prevent downed wires in storms), outage duration and frequency, serious worker injuries, and customer satisfaction, Newsday reported.

A former LIPA official said that while the utility had known about the company's efforts in Puerto Rico, there was little LIPA could do to stop it. "It seemed like half of PSEG was interested in getting a gig in Puerto Rico," the former official said. "We were aware of it, but there was nothing we could do about it." It's one of the reasons LIPA later negotiated a tougher new contract with PSEG, with the direct involvement of then-Gov. Andrew M. Cuomo. 

Nevertheless, LIPA’s top officials in 2021 publicly criticized PSEG because its officials had been difficult to reach in 2020 in the lead-up to the storm. As reported by Newsday, PSEG Long Island’s top officials were so "closely involved with their parent company’s attempts to win a contract to operate Puerto Rico’s electric grid" that LIPA officials had to "reach out long distance to resolve issues back home."

A PSEG spokeswoman in 2021 defended the executives’ efforts in Puerto Rico, saying, "While members of PSEG Long Island management did participate in that endeavor, that had no bearing on PSEG Long Island and its activities."

She explained that the "successful" public-private model on Long Island was of "significant interest to Puerto Rico," and she said LIPA was "well aware of our involvement" at the time.

But LIPA, at the urging of the state Department of Public Service (then overseen by current LIPA acting chief John Rhodes), sued PSEG and considered terminating the contract for what LIPA termed "inattentive and unaccountable" management, Newsday reported.

After PSEG failed to win the bidding in Puerto Rico and Eichhorn retired, PSEG sought to replace him with a former senior PSEG executive named Rodney Dickens. The LIPA board, after interviewing Dickens, exercised their right of refusal and declined to approve his hiring. Dickens remains a senior executive adviser overseeing Long Island operations anyway. And PSEG has yet to name a permanent replacement for Eichhorn.

David Lyons, PSEG Long Island’s interim chief operating officer remains the utility’s highest paid executive, with total compensation last year at $832,000 — more than double that of LIPA’s top official. Dickens’ pay is not disclosed, and Eichhorn in a 2021 was reported to have received more than $899,000 in total compensation.

In April, a panel of three top LIPA managers (Rhodes, LIPA chief operating officer Werner Schweiger, a former top LILCO and Eversource executive, and Billy Raley, a senior vice president at LIPA with 35 years in the utility sector) selected Quanta’s bid as "exceeding expectations" above PSEG’s after a yearlong process, saying that PSEG offered a bid that "fell short of the grade of meeting minimum requirements."

But LIPA’s board rejected the recommendation and canceled the bidding process, choosing to negotiate an extension of LIPA's existing contract.

Problems with Puerto Rico's publicly owned, privately run electric grid have persisted for years, including persistent blackouts that have left large swaths of the territory in the dark for days. Quanta and LIPA officials say the problems are chiefly due to a lack of funds to upgrade the grid, and its antiquated, mostly oil-fired power plants, which don't produce enough energy during peak demand times. Luma doesn't manage the power-generation sector of the grid. 

A PSEG spokeswoman didn't respond to Newsday questions about whether PSEG Puerto Rico would have been able to avoid the blackouts and other problems that currently plague the bankrupt system.

Quanta critics say Luma’s reported failures in Puerto Rico are among the chief reasons it should not be handed the LIPA contract. In addition, LIPA chairwoman Tracey Edwards listed other qualms about Quanta, including that the company doesn't have "end-to-end" experience running a utility and that Quanta's bid "would not have been less expensive" over a 10-year period for LIPA.

Quanta, which has called for public release of the bidding documents, has called Edwards' claims into question, and said, "It remains a mystery as to why LIPA’s board ignored its own staff’s recommendation — the stronger proposal — and is now considering extending its contract with the current operator whose bid had not even met the minimum qualifications."

Quanta on Friday night sent a letter to LIPA trustees and Gov. Kathy Hochul, requesting that they reinstate the canceled bidding process and raising new concerns about the propriety of the board’s actions. “We ask that you review our letter as well as information gathered by the Office of the Inspector General who is also reviewing the propriety of LIPA’s actions,” a top Quanta official wrote to Hochul.

A spokesman for Quanta declined to comment beyond the letters.