State probe: NYPA handed out millions

As a state probe into funds handed out by the New York Power Authority under chief Richard Kessel progresses, new data show the agency gave out more than $2 million since 2009, including hundreds of thousands of dollars on Long Island.

The probe is focusing on payments the agency made, along with grants, donations, sponsorships and related giving to a wide range of organizations statewide; recipients include energy-related groups, business organizations, environmental advocates and volunteer fire departments. The key issue is whether the payments relate to NYPA's "core mission" of providing electricity.

One large contribution -- $485,124 -- went to the New York State Energy Research and Development Authority, based in Albany. The next largest were $75,000 to Groundwork Hudson Valley -- an environmental group -- in both 2009 and 2010, and $50,000 to the Boundary Waters Treaty Centennial Celebration Committee -- which marked a treaty sharing boundary waters between the United States and Canada -- in 2009. NYPA has said some of the payments were required under pre-existing agreements.

Of the total, $664,761 went to Long Island-based environmental, energy, and business groups and others, according to a review of records provided by NYPA. The biggest single contribution was a $500,000 grant for the Advanced Energy Research and Technology Center at Stony Brook University.

Other local recipients include the Stony Brook Foundation, $50,000 in 2010; Renewable Energy Long Island Inc., $10,000 in 2010; Long Island Regional Envirothon, $8,300 in 2009 and $4,837.50 in 2010; the North Bellmore Chamber of Commerce, $4,800 in 2009, and the Citizens Campaign for the Environment, $3,500 in 2010.

The payments were first reported on the StreetcornerConservative blog site run by George Marlin. Marlin, a member of the Nassau Interim Finance Authority board, said his issue is not with Kessel but with the spending practices. "It has nothing to do with my liking or disliking him," Marlin said. "It has to do with his competence to run a government agency."

Kessel defends spending

Kessel, who was embroiled in a similar controversy while chief executive of LIPA in 2007, declined to be interviewed. But he gave a spirited defense of the practices at a March 29 trustees' meeting. He noted that Long Island is part of NYPA's operating turf, and said contributions were vetted by NYPA legal staff.

"I don't want to become too defensive because I want you to know that I welcome a full review of this by the board independently, because it seems to me that people think there's something secretive here," Kessel told trustees. "Nothing could be further from the truth."

Reports of the investigation by the state inspector general have fueled a rash of stories suggesting Kessel would resign, but longtime Kessel spokesman Bert Cunningham denied it. "Richie has no plans to resign. He plans to continue to serve as president and CEO of NYPA," he said.

Several longtime recipients of NYPA donations from agencies Kessel has given to in the past have confirmed that they have received subpoenas or letters from the inspector general asking for information on how much, when and why NYPA gave. Jon Sorenson, a spokesman for Inspector General Ellen N. Biben, declined to comment.

Last month, state Attorney General Eric Schneiderman ordered Kessel to cease making donations with NYPA funds to entities outside its core mission, following reports on Marlin's blog that he had directed thousands of dollars to non-NYPA causes. A week later, the NYPA board announced an internal probe of the matter.

Not a new development

NYPA has declined to comment on the donations, sponsorships and grants that are the subject of the state probe. A person familiar with the agency noted that NYPA gave more than $1 million in each of the two years prior to Kessel's taking over. The person noted that numerous NYPA departments have discretion to give money for causes related to the state energy provider's mission.

When Kessel was at LIPA, the agency between 2003 and 2006 gave away more than $375,000 in donations, and spent another $1-million-plus attending and sponsoring events held by various business, academic and charitable groups, according to a 2007 Newsday analysis of LIPA records. Then-Attorney General Andrew M. Cuomo later reviewed the payments and ruled that LIPA and all other state agencies must confine their charitable giving and sponsorships to groups and projects that fit their core missions.

LIPA stopped making donations after the attorney general's 2007 ruling.

One of the largest Long Island recipients of NYPA funds was the Long Island Pine Barrens Society, which in 2009 honored Kessel at its annual gala, along with then-Gov. David A. Paterson.

Five months later, in March 2010, the environmental group wrote a grant request to NYPA "to do specific media work on energy for" NYPA, including "to promote them in print, radio and TV," according to Pine Barrens executive director Richard Amper. NYPA paid $25,000 for the work, said Amper, who acknowledged the Pine Barrens group had received a subpoena from the inspector general. He declined to comment on it, at the request of investigators.

A copy of the grant request supplied by Amper shows NYPA paid $18,000 for three TV appearances by Kessel on the Pine Barrens' public access TV programs, and $7,000 for inclusion of NYPA programs in the group's newsletter.

NYPA also made a donation to the 2010 annual gala of $4,850, Amper said. The check was written on Nov. 11, about a month after that year's event. Amper said it's not unusual for a group to donate after an event. "NYPA's donation to the gala were no different than any other corporation that contributes to any of our events," he said.

Vision Long Island, an advocacy group that promotes "smart growth" initiatives, confirmed it received $4,000 from NYPA for sponsorship of two events at which Kessel spoke.

Documents sought

Eric Alexander, the executive director, said the group had received a letter from the inspector general's office.

"We submitted paperwork tied to those two events," Alexander said. Vision Long Island has honored Kessel in the past, Alexander said, including when he left the Long Island Power Authority in 2007.

Bob Catell, former KeySpan chief executive and now chairman of the Advance Energy Research and Technology Center at Stony Brook University, said he recently received a request for documents related to NYPA's 2010 grant of $500,000 to fund operations at the center, which has not yet opened.

"I received an email from Stony Brook to produce any information I had with respect to those" grants, Catell said recently. Of Kessel, with whom he worked almost daily while Kessel was at LIPA, Catell said, "I have a lot of confidence in his honesty and integrity. He's very dedicated to public service."

Earlier this month the Merrick Chamber of Commerce confirmed it had been contacted by the inspector general about $4,750 it received in 2009 from the power authority. Randy Shotland, president of the chamber, said NYPA sponsored a festival that drew people from areas that receive power from NYPA, including Rockville Centre and Freeport. Kessel lives in Merrick.

"There was nothing inappropriate about it, and certainly nothing inappropriate about what the chamber did," Shotland said earlier this month.

An updated list of donations shows the Merrick chamber received a second payment of $9,425 in 2010. The chamber declined to comment Thursday about the second donation.

Ernest Fazio, director of Long Island Metro Business Action, a business group, said he fielded questions from state investigators about NYPA's payment of $800 in annual LIMBA dues. "They said, 'We need to see all your records.' I said, 'Help yourself,' " Fazio said.

Gordian Raacke, director of Renewable Energy Long Island, said state investigators contacted his group about $10,000 in funds received in 2010. "We confirmed that NYPA was a sponsor of -- and also purchased an ad in -- the SolarTour/Green Buildings Open House and our LIGreenGuide," Raacke said.

Kessel at the March 29 trustees' meeting said the NYPA payments were energy related. "We are giving grants or sponsorships to support energy-related activities . . . , " Kessel said. "It's been mentioned several times, the Merrick and Bellmore chambers of commerce. I am not a member of either. I do live in Merrick, but those are not charitable contributions."

With Kery Murakami