PUC refuses to give up control of National Grid fraud investigation

The Rhode Island Public Utilities Commission isn’t relinquishing control of its investigation into a multimillion-dollar fraud scheme by National Grid.

The commission in a unanimous vote Friday rejected a request by the Division of Public Utilities and Carriers to end its own probe into the state’s former gas and electric operator and let the division take over.

The investigation centers over an eight-year fraud scheme in which National Grid knowingly misfiled invoices for its energy-efficiency programs to make more money, overcharging customers as much as $2.2 million.

The commission and the division are two arms of the same state agency, and their roles overlap and intertwine. The division, headed by a single administrator, often participates in cases about energy rates and programs that come before the three-member commission. 

The division has played an active role in the commission’s investigation of alleged fraud by National Grid, requesting data from the former utility operator and its successor Rhode Island Energy, over the last 12 months. To give up that investigation, and the reams of publicly available documents unveiled through it, in order for the division to perform its own internal audit would be a serious loss for public transparency, Commission Chairman Ronald Gerwatowski said Friday.

“It can’t be done with the division running off doing something in secret and then saying here’s the final decision, now calculate the rate,” Gerwatowski said.

Push for transparency

The Rhode Island Attorney General’s office also sought to stop the ongoing investigation from being dismissed citing the need for a transparent process.

State law and a series of Rhode Island Supreme Court cases spanning the last 50 years further cement the commission’s authority over the case, according to Gerwatowski.

“What gives me confidence about this is all the research we did confirming that what we’re doing is the right thing,” Gerwatowksi said.

Once a formal, written order of the commission’s decision is sent out, likely next week, the investigation into National Grid will continue, said John Harrington, the commission’s deputy chief of legal services. It’s unclear whether the division can, or will, appeal the commission’s decision, Harrington said.

The division did not immediately return calls and emails for comment on Friday.

National Grid has acknowledged misconduct, stating in a March 10 report that company employees “acted inappropriately” by deliberately delaying invoices for the energy efficiency program.

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.

Fraud amount revised

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. 

The ongoing investigation aims to determine how to restructure the program to avoid future problems, and calculate how much National Grid owes ratepayers from its profit-making scheme.

National Grid in documents submitted to the commission said it has added worker training to make clear that out-of-cycle invoicing is not, in fact, OK and also credited $2.4 million to the energy efficiency fund.