National Grid's storm expenses questioned

It was from all appearances a routine repair.

After a truck struck a utility pole and knocked it and an oil-filled transformer to the ground, National Grid on Aug. 30, 2010, dispatched environmental firm Waste Recycling Solutions to the Smithtown crash to clean it up. A five-man crew spent 16 hours at the site, and Waste Recyling later sent an invoice for $6,908.40.

So how did it happen that National Grid presented this invoice to the Long Island Power Authority for reimbursement as part of the $34.5-million tab for the response to Hurricane Earl? The storm glanced Long Island five days after the truck accident.

"That's just wrong, it's clearly not storm-related," said Michael Hervey, chief operating officer of LIPA.

One of thousands reviewed

The invoice is one of thousands that LIPA has sent back to National Grid for review after finding some $5.5 million in Earl-related expenses that LIPA says the British-based utility misclassified, failed to document or improperly charged. In addition, at least two state agencies are looking into storm charges, along with other LIPA issues. LIPA has asked National Grid to review all $223 million it charged for storm response last year.

Officials at Waste Recycling, whose invoice was proper and is not being questioned, referred calls to National Grid.

Some see the Smithtown charge as the tip of the iceberg.

Utility watchdog Peter Schlussler, who worked for National Grid's predecessor, KeySpan, and now sits on the Suffolk Legislature's LIPA Oversight Committee, said he believes about $20 million to $25 million in charges in 2010 had nothing to do with storms.

Charges 'out of control'

"It's out of control," said Schlussler, a former KeySpan engineer who has spent months reviewing documents obtained by National Public Radio's local WSHU affiliate under a Freedom of Information Act filing.

Because National Grid submitted the Smithtown bill as a storm expense, it did not have to pay the cost from its regular budget to handle LIPA work. When a storm hits and LIPA either activates its storm account or more than 15,000 customers lose power, a fund of about $15 million is available to National Grid to cover costs in the field and elsewhere.

"There's always a suspicion," said LIPA's Hervey. "At best they [National Grid billing] were sloppy, and they got real sloppy on Hurricane Earl. I want them to go back over [the charges] so I'm confident there isn't a bigger problem."

National Grid is "in the process of reviewing invoices as part of our overall assessment," spokeswoman Wendy Ladd said in a statement. "We are also currently working with LIPA to review our policies and procedures, and modify them if required to ensure that all storm costs are appropriate and will continue to be going forward. Any expenses that are determined to be inappropriate will be absorbed by National Grid."

State investigators will be looking into these questions now that Gov. Andrew M. Cuomo has called for an inspector general audit of LIPA. Comptroller Thomas DiNapoli also has asked for more information from the authority on Earl-related expenses.

Schlussler's review of the expenses on a database shows that many invoices were for work or materials purchased before or after the storm.

Raising red flags

Among the thousands of pages of Earl-related expenses he says raise red flags:

$3,259 in auto parts from Steinway Automotive Group in Maspeth for vehicles at National Grid's Bridgehampton yard; the charges include dozens of wiper blades, vehicle lightbulbs, oil- and air-filters, and other regular maintenance items that Schlussler said would not be covered under the storm expenses. "That large a quantity [of parts], it really calls it into question," Hervey said.

$322.88 for four car batteries bought at Parts Authority in Rockville Centre on Sept. 9, 2010 -- five days after the last unused crews were sent home from the expected storm work.

$380 for tire repair from Barnwell House of Tire in Ronkonkoma for work done on Sept. 8.

Salary expenses for three Asplundh general foremen logged on Sept. 5 -- a day after the storm and after LIPA declared its storm response ended -- along with $31,884 in meal charges for Asplundh tree crews during the expected storm days -- roughly $435 per man per day, Schlussler calculated. Asplundh spokeswoman Kristen Wild said, "We carefully follow our customer's billing processes and requirements." She referred calls to National Grid.

None of the companies that provided the services has been accused of wrongdoing.

After learning of the charges this week, William Reynolds, a spokesman for state Comptroller DiNapoli said, "We asked for those invoices toward the end of last year. We made another request" for them Wednesday.

Danny Kanner, spokesman for Attorney General Eric Schneiderman, said, "We cannot comment on potential or ongoing matters before our office."