National Grid Knowingly Misreported Number of Accounts Using Electricity
Without Being Billed to Long Island Power Authority
Agreement Will Fund Low-Income Heating Assistance Program
NEW YORK – New York Attorney General Letitia James today announced that her office has secured $6 million from National Grid to resolve allegations that it knowingly provided false reports to the Long Island Power Authority (LIPA) on the amount of electricity that was being delivered, but not billed for at homes and businesses across Long Island. LIPA powers homes and businesses across Nassau and Suffolk counties and the Rockaways, but while LIPA provides the actual electricity to customers, the company contracted with National Grid to manage its operations, which included reading meters, collecting payments, providing customer service, and more. Over the course of more than four years, National Grid underreported to LIPA power output from homes where customers moved out and new customers moved in, costing the state public authority millions. Today’s agreement collects $6 million from National Grid to subsidize heat pump modernization and replacement for low- and moderate-income Long Islanders.
“When powerful companies skirt the law at the expense of the state, we will not hesitate to step in and hold them accountable,” said Attorney General James. “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. 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. These upgrades will not only help lower the energy costs for 350 families across Nassau and Suffolk counties — especially important as so many continue to suffer the detrimental financial impacts of Hurricane Ida — but will provide Long Islands homes with the necessary improvements to utilize cleaner energy options.”
“The settlement funds recovered for LIPA customers by the Office of the New York Attorney General will be used to establish a new program to assist low-income Long Island and Rockaways residents to replace fossil-fuel powered home heating systems with clean, lower-cost electric heat pumps and home efficiency upgrades,” said LIPA Chief Executive Officer Thomas Falcone. “LIPA appreciates the opportunity to work with the Office of the Attorney General to ensure that the benefits of this settlement are directed to helping communities in need make the transition to cleaner, more affordable energy.”
During the period from October 2007 to December 31, 2013, National Grid managed and operated LIPA’s electricity transmission and distribution system, and was contractually obligated to bill and collect for all electric service provided on behalf of LIPA. In order to ensure that National Grid was meeting its obligations to timely bill for electric service, LIPA required National Grid to provide various regular reports, including on the amount of advanced consumption. “Advanced consumption” occurs when a meter reflects that electricity is being used but there is no party of record to bill. For example, advanced consumption can occur when a residential tenant moves out of an apartment building, the meter is not turned off, and a new tenant moves into the apartment and begins using the electricity without establishing a new account.
Attorney General James’ investigation found that, between April 2008 and August 2012, National Grid knowingly provided LIPA with monthly reports and other statements that falsely under-reported the number of advanced consumption accounts and the number of advanced consumption accounts that remained unresolved. Specifically, National Grid reported to LIPA that, at the end of July 2009, there were 436 advanced consumption accounts that had not yet been resolved. But a contemporaneous snapshot of National Grid’s internal advance consumption database revealed that there were at least 1,347 unresolved advance consumption accounts. And in their internal communications, National Grid employees admitted that the numbers reported to LIPA were false.
Additionally, on June 7, 2012 a National Grid manager who was responsible for generating the reports to LIPA on advance consumption admitted that although National Grid was “reporting on a monthly basis that we are completing” certain advance consumption accounts, those accounts were “not complete from LIPA’s perspective, because [they are] still advancing.” The National Grid manager repeatedly conceded that National Grid’s reports to LIPA regarding advance consumption were “not true.”
National Grid’s false reporting covered up National Grid’s failure to address many advanced consumption accounts in a timely manner. Further, National Grid’s failure to issue timely bills for these accounts directly caused a monetary loss to LIPA, a state public authority.
The investigation began with a whistleblower lawsuit filed under the qui tam provisions of the New York False Claims Act, which allows people to file civil actions on behalf of the government and share in any recovery. The whistleblower here will receive $1.41 million of the proceeds for bringing National Grid’s misconduct to light.
The proceeds of this agreement will allow LIPA to completely subsidize the installation of more efficient heat pumps for roughly 350 Long Island families with low or moderate incomes. Heat pumps are typically two to three times more efficient than electric resistance and oil and gas heating systems, and thus they are both cheaper to operate and better for the environment. But the significant up-front installation costs often prevent low- and moderate-income New Yorkers from upgrading their existing heating systems.
The Office of the Attorney General (OAG) extends its appreciation to the whistleblower, without whose information the misconduct might have remained concealed, and to the whistleblower’s attorneys. The OAG also wishes to thank LIPA for their assistance in this matter.
“This settlement is a win for Nassau families, as it will deliver cleaner and cheaper heating systems to hundreds of low- to moderate-income households,” said Nassau County Executive Laura Curran. “I thank Attorney General James for her continued fight on behalf of Nassau County residents.”
“I thank Attorney General James for uncovering National Grid’s deceitful business practices that ripped off taxpayers,” said State Senator Jim Gaughran (NY-05). “Thank you, Attorney General James, for your unwavering commitment to holding unscrupulous actors accountable.”
“The message today is clear: Powerful companies cannot get away with unlawful acts at the expense of the public,” said State Assemblymember Fred Thiele (NY-01). “I thank and applaud Attorney General James for her successful investigation into National Grid’s unlawful practices and for ultimately securing funds from the settlement to establish a low-income heating assistance program that will not only greatly benefit our communities but also our environment.”
“I applaud Attorney General Tish James and her team for their diligence and commitment to protecting taxpayers and public utility customers on Long Island,” said Suffolk County Presiding Officer Rob Calarco. “While the falsification of such data is appalling, this settlement will help those who need it most, while also addressing environmental concerns related to power consumption. It is essential to the function of government that we hold those accountable who seek to circumvent the law, and this settlement does just that.”
The case was handled by Senior Counsel Bryan Kessler, with the assistance of Legal Support Analyst Iuliia Belyshkina — both of the Taxpayer Protection Bureau. The Taxpayer Protection Bureau is led by Bureau Chief Thomas Teige Carroll and Deputy Bureau Chief Scott Spiegelman, and is part of the Division for Economic Justice, which is led by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy.