A contractor at the center of a Moreland Commission report detailing excessive spending and questionable expenses at the Long Island Power Authority is defending its work in the face of a possible federal investigation.
Navigant Consulting Inc., a Chicago-based utility consulting firm that has for years advised LIPA on nearly all aspects of its operation, has been accused of submitting bills with costs of $300 to $500 an hour, and charging LIPA for costly hotel stays and executive-level flights.
Gov. Andrew M. Cuomo's Moreland Commission also found a "revolving door" between LIPA and Navigant in which high-level officials, including LIPA's past acting chief executive, took top positions at the contractor and vice versa.
Navigant, in a statement responding to Newsday, said it was reviewing the claims by the Moreland Commission.
"Navigant and our professionals adhere to the highest industry standards of ethics and integrity," the statement says. "We were not aware of the claims in the Moreland Commission report until it was publicly released."
The statement continued: "We take the questions raised by the commission in its report very seriously and are closely reviewing the facts related to each question in detail. We will cooperate fully with authorities seeking any further information."
The Moreland Commission found that some $28 million of LIPA's $64.8 million budget for consultants between 2008 and 2011 went to Navigant. Navigant is still under contract to LIPA for more than $26 million through 2015, but the utility recently has reduced its reliance on the company, and no funds have been paid to it since January, according to the state comptroller's website listing LIPA contractors.
The commission identified other problems at LIPA.
The commission found that LIPA may have intentionally understated a rate increase to avoid "criticism" and possibly a review by the Public Service Commission, which would have been triggered if the increase had been slightly higher.
LIPA in 2010 increased its electricity delivery charge by 1.9 percent. But after analyzing LIPA's charges that year, the commission and the state inspector general found that LIPA spread charges that should have been included in the delivery charge into other portions of the bill, such as the power supply and renewables charges. The actual increase was 4.3 percent -- well above the 2.5 percent threshold for a PSC review.
"It appears that LIPA may have known that they were raising the delivery charge by 4.3 percent, but publicly stated that the increase was only 1.9 percent to avoid criticism," the report states.
LIPA officials said in a 2010 Newsday story that they had the prospect of a PSC review "in mind" when they raised the rate. But they said it was "not built on trying to avoid" the review.
John McMahon, LIPA's newly named chief operating officer, said in a prepared statement: "LIPA will move expeditiously to address the findings and serious concerns identified by the Moreland Commission."