The IRS has approved New York State’s contract with PSEG, clearing its way to take over Long Island’s electric grid.

The New Jersey-based PSEG will replace the Long Island Power Authority’s brand on New Year’s Day.

LIPA will become a financial holding company with a reduced staff.

The IRS approval was the final regulatory hurdle that the utilities had to clear before the changeover could take place.

Gov. Andrew Cuomo announced the approval on Thursday.

He said “Long Islanders will finally benefit from a privatized utility operation with improved disaster response and customer service.”

Cuomo said the IRS ruling “means better service and cost savings for ratepayers.”

(AP)