New York regulators on Wednesday opened an investigation into an alleged bribery scheme involving National Grid’s natural gas distribution company facilities in New York City and Long Island that federal prosecutors say has been running for seven years and affected tens of millions of dollars in maintenance deals.
Acting in his capacity as CEO of the Department of Public Service, interim Public Service Commission Chair John Howard issued the order launching the investigation, citing the June 17 indictment of five former National Grid employees by the U.S. Attorney for the Eastern District of New York (21-M-0351).
“The allegations presented in the complaint raise significant concerns related to the internal controls established and implemented by National Grid … to ensure the integrity of the companies’ contracting process,” the order said.
National Grid said it is fully cooperating with the FBI investigation and that it was not aware of the scheme, which prosecutors say involved maintenance contracts for Brooklyn Union Gas and KeySpan Gas East. The company stated that the contracts did not involve critical gas infrastructure, so public safety is not at risk.
“In this proceeding, we will examine potential imprudence, the adequacy of National Grid’s internal controls and National Grid’s compliance with its own internal procedures as well as provisions of the public service law, the commission’s regulations and commission orders,” Howard said in a statement.
The legal troubles come at an awkward time, as National Grid last month made a joint proposal to the PSC in May 2021 for a three-year, $193 million increase in revenues for its gas infrastructure maintenance.
Newsday last week reported that the Long Island Power Authority, PSEG Long Island and the state DPS plan to review whether payments made to any contractors and subcontractors were billed to the utilities’ ratepayers, as PSEG leases space at facilities owned and operated by National Grid.
National Grid’s downstate gas distribution utilities serve 1.9 million customers, employ 4,600 workers and have 12,400 miles of gas distribution and transmission pipe.
Lacking a Quorum
With three newly confirmed commissioners not yet seated and one absent, the PSC lacked a quorum for its regularly scheduled session June 17, so it scrapped its consent agenda and only reviewed the investor-owned utility performance for 2020 in electric reliability service, gas safety, electric safety and customer service.
The reviews led the commission to cut the revenue of Consolidated Edison Company of New York by $5 million and that of New York State Electric and Gas (NYSEG) by $7 million for failing to meet reliability targets. The PSC cut NYSEG revenue by an additional $1.4 million and that of Rochester Gas and Electric by $1.8 million for poor performance on measures of customer service established within their respective rate case proceedings. Because of the impacts of COVID-19, NYSEG and RG&E have filed a petition to waive meter reading requirements, which is pending before the commission.
By its next scheduled regular session July 15, the PSC should have its full complement of seven commissioners.
The New York State Senate voted June 10 to confirm three new commissioners to serve six-year terms: former state Sen. David Valesky; longtime Cuomo aide John Maggiore; and Rory Christian of Concentric Consultants. It also confirmed Commissioner James Alesi to a second term.
PSC spokesman James Denn told RTO Insider that, “since the three recently appointed commissioners are still being onboarded, including necessary steps such as signing the oath of office, and given the practical reality that there was insufficient time for them to be fully briefed for the June session, they were not in a position to vote.”
Meanwhile, Howard issued several one-commissioner orders, in addition to the one launching the investigation into National Grid.
A June 23 order granted Con Ed rate recovery for expenses up to $5.9 million between now and 2023 on two “non-pipeline alternative” (NPA) natural gas load relief programs: the Behavioral Demand Response Program and the Heat as a Service Financing Program. “These programs will help the company reduce gas demand in a constrained portion of its service territory and simultaneously advance the state’s energy policy goals” (19-G-0066). The commission denied $1.1 million in funding for a Solar Photo Voltaic Heat Recovery program.
The commission also authorized Con Ed to spend $5 million to continue implementing its Gas Demand Response Pilot Program through March 31, 2022 (17-G-0606).
The term of Con Ed’s existing gas rate plan ends on Dec. 31, 2022, so if the company were to file for new rates in 2022 and include the terms of a gas DR proposal within such filing, tariffs reflective of the commission’s decision regarding that filing would not be effective until Jan. 1, 2023, at the earliest, which is midway through the 2022/2023 Winter Capability Period, the order said.
Howard also signed an order granting a certificate of public convenience and necessity and providing for lightened regulation for Con Ed’s 100-MW East River energy storage facility in Astoria, Queens (21-E-0122). (See “New York Supports Con Ed Project,” NYPSC Considers Two Utility Storage Petitions.)