Fight for control over invoicing fraud investigation heats up PUC meeting
Who will get to audit National Grid successor Rhode Island Energy?
The Division of Public Utilities and Public Utilities Commission are squabbling over who takes the lead in investigating the invoicing practices of Rhode Island Energy’s predecessor, National Grid. (Photo by Janine L. Weisman)
A turf war has broken out between the dueling divisions of the state utility agency.
The territorial battle centers on who should lead the investigation of a multi-million dollar corporate fraud case by former utility operator National Grid: the three-member Public Utilities Commission or the Division of Public Utilities and Carriers, which is headed by a single administrator.
The Public Utilities Commission has been heading up the investigation since it discovered in December 2021 that National Grid knowingly misfiled invoices for its energy-efficiency programs to make more money, overcharging customers as much as $2.2 million.
After a year-long deep dive in which National Grid — as well as its successor Rhode Island Energy — submitted reports and spreadsheets outlining the eight-year mismanagement practices, the Division of Public Utilities and Carriers wants to take over.
In a motion filed in January, Margaret Hogan, an attorney representing the division, asked to have the commission’s case dismissed, with plans for the division to conduct its own, independent audit.
Speaking at a meeting Tuesday, Hogan said the division wanted to launch a separate, “more formal type of audit,” akin to the division’s 2019 investigation of the Aquidneck Island gas outage.
But the commission isn’t giving up the reins so easily.
Commission Chairman Ronald Gerwatowski in a public meeting Tuesday peppered Hogan with questions, often cutting her off from fully answering them, as he sought more explanation for why the two groups couldn’t investigate together, or simultaneously.
Later, his voice grew louder and his tone seemingly more frustrated after Hogan made reference to the integrity of the investigation.
“Do you think that having us investigate taints things?” he asked.
The Rhode Island Attorney General’s office has also sought to stop the ongoing investigation from being dismissed, noting that it would erase the year of publicly available documents and research.
“Our interest is in a transparent investigation into very serious misconduct that the company has already admitted to,” said Nicholas Vaz, special assistant attorney general.
Indeed, National Grid in a March 10 report submitted to the commission acknowledged that company employees “acted inappropriately” by deliberately delaying invoices for the energy efficiency program.
Do you think that having us investigate taints things?
– Public Utilities Commission Chairman Ronald Gerwatowski to Division of Public Utilities and Carriers attorney Margaret Hogan
The program, which is paid for with a surcharge on customers’ bills, gives home and business owners money for lighting and appliance replacements, insulation improvements and other projects that increase energy efficiency. The utility operator, in this case National Grid, gets a financial incentive for helping the state meet its energy saving targets, although the annual payment is capped.
Initial findings submitted by Rhode Island Energy in June suggested that National Grid made an extra $2.2 million in incentives from 2012 to 2020 by delaying the billing of invoices to avoid surpassing the payment cap. However, the latest report estimates the company pocketed far less: $320,000 in extra, unearned incentives over an eight-year period.
National Grid also noted in its new report that the fraud was not intentional, nor necessarily profit-driven.
Instead, workers believed the proactive was a “permissible” way to avoid turning down customers who wanted to participate in the program even when funding was running out.
“When faced with what they believed to be a choice between shutting down a program or shifting invoices out-of-period, employees viewed out-of-period invoicing to be the better alternative,” the report stated.
We’re not hiding anything.
– Robert Humm, an attorney representing National Grid
National Grid has since improved training to make sure workers know that out-of-cycle invoicing is not, in fact, OK and also credited $2.4 million to the energy efficiency fund, based on the highest estimate of what was overcharged to customers, the report stated.
Robert Humm, an attorney representing National Grid, asked both regulatory arms of the state agency to review and discuss the latest report before deciding whether a separate investigation is necessary.
“A substantive, voluminous amount of work has been undertaken,” he said. “If the work has been done, then what is the purpose of another forensic audit?”
Humm also said, “we’re not hiding anything.”
The commission has not scheduled a vote on the division’s motion to dismiss the ongoing investigation as of Wednesday.
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