The panel, which was appointed by Gov. Andrew M. Cuomo after the hurricane and is known as a Moreland Commission, said it would refer its findings to federal prosecutors in Brooklyn to determine if criminal charges were warranted against officials of the power authority or the consultancy, Navigant.
Sorting out who was involved in what might be difficult, the commission said, because "there was a disturbing revolving door" between the authority and Navigant. Most notably, Michael D. Hervey, who was the acting chief executive of the authority when Hurricane Sandy struck last fall, has been working for Navigant since January.
"Hurricane Sandy exposed the incompetent and unacceptable response of power utility companies throughout downstate New York during one of our state's most vulnerable periods," the governor said in a statement on Saturday.
Mr. Cuomo added that the commission's report raised "a series of questions regarding LIPA's management of a consulting contract that passed unexplainable costs to ratepayers and involved exorbitant expenditures that appear to have nothing to do with providing power to Long Island residents. I second the commission's call for a full and thorough investigation by a prosecutorial body."
Mr. Hervey left the authority late last year amid strong disapproval of the authority's response to the storm. More than 90 percent of the authority's 1.1 million customers lost power, and many of them still had no electricity weeks after power had been restored to much of New York City and other parts of the metropolitan area.
An examination by The New York Times late last year showed that the power authority had repeatedly failed to plan for extreme weather, despite extensive warnings by government investigators and outside monitors.
At a meeting of the agency's trustees four days before Hurricane Sandy struck, the approaching storm was discussed for only 39 seconds.
Last week, Mr. Cuomo and state lawmakers approved legislation that would largely eliminate the authority's role in overseeing how utility companies distribute electricity on Long Island. On Jan. 1, a New Jersey-based utility company, Public Service Enterprise Group, is scheduled to assume operation of the power grid on Long Island, replacing National Grid.
"The problems the commission found at LIPA are extremely troubling and some of them need to be further investigated by criminal prosecutors," said Benjamin M. Lawsky, co-chairman of the commission. "Our extensive investigation uncovered breathtaking waste and inefficiency at LIPA that helped jack up rates for Long Island families."
Over four years, the authority paid about $65 million to consultants, of which $28 million went to Navigant, the commission said. In 2010, Mr. Hervey signed a $23 million contract that extended Navigant's utility contracting services for five years. The following year, he approved about half of the $7.2 million billed to the authority by Navigant, the commission said.
Navigant was by far the largest contractor to the authority in each of the years the commission studied, the report shows. But the investigators started taking a hard look at the firm only after discovering that Mr. Hervey had gone to work there so shortly after resigning from the authority, members of the panel said. They soon learned that other senior managers either had gone to work at Navigant or had worked at the consulting firm before joining the authority, they said.
The commission found that more than 50 consultants at Navigant billed the authority at rates of $300 to $500 an hour, the report states. It also found that some of the consultants billed the authority for more than 1,800 hours a year, with one of them charging for 3,500 hours in a single year — or about 70 hours a week.
According to the report, a single Navigant employee billed the authority more than $4.5 million for his work over five years; from 2008 through 2011, the authority paid more for his services alone than it did for those of any entire firm — legal, accounting, financial or other — the report shows.
The report also detailed travel expense reimbursements for Navigant consultants that it said were "exorbitant." In one case, a consultant based in Washington billed for an unexplained trip to Puerto Rico that included a seaplane flight from San Juan to a resort island, it said.
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