Since early June ¬ since almost literally ¬ the state takeover of LILCO became a reality the consummated deal has been mired in controversy.

It all started when Governor George Pataki, LIPA Chairman Richard Kessel and many others claimed to have been blind-sided by the payouts the former LILCO board of directors approved for top company executives and continues on through today.

Only now the political powers that be aren't claiming to have been blatantly cheated or deceived, but that the payouts were unethical because the former LILCO executives immediately became Marketspan executives.

Just this morning, Stanley B. Klimberg, the general counsel for LIPA, sent us over a copy of the agreement and plan of merger, dated June 26, 1997, between the Long Island Lighting Company and the Long Island Power Authority.

Funny, but it seems that right here, on page 11, is clear indication that the payouts would occur and that LIPA was fine with it.

Forgive the legalese, but here is the passage at the bottom of that page:

"Consummation of the transaction contemplated by the agreement could result in payments to each officer of Company and acceleration of benefits under the Officers Supplemental Retirement Plan pursuant to employment agreements entered into with each officer and acceleration of other accrued compensation or benefit payments as a result of the termination of executive and employee employment at LILCO as such employees become employed at the Parent."

How then could the fact that the compensation package was awarded have come as a surprise to anyone at LIPA or in the governor's office?

Even if they got bored attempting to read the entire report, they should have at least gotten to page 11. I mean, wouldn't they have had a responsibility to read that far?

It's also hard to see why there's such controversy over the size of the payouts to LILCO executives.

Yes, the $42 million awarded to Dr. William Catacosinos might seem like a pretty penny to you and me, but in the scheme of corporate payouts, it's not that much ¬ especially given the former LILCO chairman's job performance and his ability to secure big returns for the utility's stockholders.

Incidentally, did you know that Dr. Catacosinos' payout was entirely funded by the stockholders, and that ratepayers aren't being asked to pay for it?

LIPA, it seems, has gotten off to a shaky start as Long Island's energy provider. Though we personally like Richard Kessel, it is hard to see how the new state-controlled arrangement will overcome its newly acquired image of know-nothingness with Kessel as chairman and the current LIPA Board in place.

Once the dust settles, it's our hope that Governor George Pataki, or whomever is governor six months from now, take a fresh look at the make-up of LIPA.

One possible successor to Kessel may well be Gregory P. Peterson, former Hempstead Town supervisor and now CEO at the profit-making Nassau Downs OTB.

Peterson long ago established his reputation for forthrightness and hands-on leadership. He's also a solid professional when it comes to dealing with the media and the pressures of making deliberate governmental decisions.

With Greg at the helm, LIPA very well could become the energy provider we all are depending on it to be.

Daniel J. McCue