National Grid has agreed to pay $6 million to settle charges that it knowingly falsified reports to LIPA detailing unbillable electric use and its progress in resolving the money-losing problem, the state Attorney General's Office said Monday.
In a settlement agreement released by Attorney General Letitia James, investigators found National Grid from 2008 through August 2012 issued reports to LIPA that "falsely underreported" the number of accounts consuming electricity for which the utility had no customer of record to bill.
In 2009 alone, National Grid said it had only 436 such accounts when in fact, the settlement says, there were at least 1,347. Those accounts occur when a new customer moves into a home or business with service but has yet to become the customer of record. The practice can lead to millions of dollars in lost revenue for the utility, the AG's office said.
National Grid also allegedly underreported its progress in resolving the so-called advanced consumption accounts, even though internal communications obtained by James' office showed National Grid employees had "admitted that the numbers reported to LIPA were false."
National Grid reported to LIPA in early 2012 that it had "completed" advance-consumption account work in February and anticipated that it would "resolve" all such accounts in March of that year. Yet, there were 3,639 such accounts still unresolved, the settlement papers say.
National Grid, in a statement, said it "cooperated fully" in the attorney general's investigation of "activities that took place nearly ten years ago."
The company said it is "committed to the highest ethical standards for our company and our employees, and we are pleased that a resolution has been reached that will allow all parties to move forward."
The case was sparked by a whistleblower who will receive $1.41 million in proceeds from the case, James' office said, extending thanks to the unnamed person for revealing information that "might have remained concealed." LIPA also assisted in resolving the matter, James' office said.
Margaret Finerty, a lawyer for the whistleblower, said in a statement, "Public utilities hold a unique position of trust in our society and directly impact the lives of their customers. This case makes plain that when that trust is violated in New York State, there will be meaningful consequences."
Under terms of the settlement, a portion of the settlement will be used by LIPA to subsidize the installation of energy-efficient heat pumps to 350 low- to moderate-income families, according to James' office.
"For more than four years, National Grid undercounted and falsely reported electrical usage of more than 1,000 homes and businesses, costing the Long Island Power Authority and the state millions," James said in a statement. "We’re holding National Grid responsible for their shocking behavior and delivering $6 million to help low- and moderate- income Long Islanders modernize and replace their heat pumps."
National Grid operated the LIPA system under contract from 2007, when it bought KeySpan, until 2013, when LIPA awarded the contract to PSEG Long Island, following harsh criticisms of National Grid's response to Superstorm Sandy.
LIPA, after months of criticism of PSEG after failures during Tropical Storm Isaias, is now renegotiating the PSEG contract.