LIPA audit finds missing National Grid payment

As the Long Island Power Authority seeks bidders to operate the regional electric grid, a state audit has found that LIPA has "adequately" monitored the current provider, National Grid.

However, the audit by state comptroller Thomas DiNapoli's office found that London-based National Grid failed to send LIPA a payment of $309,878 from the sale of emission credits. The payment was made after auditors found the discrepancy. In a response, LIPA said it had taken steps to improve oversight of the payments.

"LIPA has been adequate in its monitoring of National Grid's performance," DiNapoli said in a statement Monday. "But we shouldn't set the bar at adequate. LIPA must continue to monitor the existing agreements closely and make sure Grid makes all the appropriate payments."

Michael Hervey, LIPA's chief operating officer, said Tuesday that an auditor only has the choice of describing something as adequate or not.

"We were surprised that the comptroller chose to represent this as not the bar," he said, adding the utility was happy the audit found no substantial problems other than the credits oversight, "which was immediately fixed by us."

The audit covered August 2007 to January 2010.

Under an agreement in February, the penalties for National Grid's failing to meet customer service standards have doubled from $1 million to $2 million. National Grid also agreed to add staff on Long Island and link executive and management compensation directly to improved customer satisfaction.

The audit said LIPA has taken appropriate actions based on National Grid's performance. For instance, when National Grid failed customer service standards in 2006 and 2007, it paid $1 million fines each year. But when National Grid provided extra capacity, LIPA increased its payments by $1 million a year.