Listen to this articleThe New York State Public Service Commission adopted a $42 million settlement with National Grid and two of its subsidiaries to resolve issues surrounding a bribery and kickback scheme by former utility employees.
The settlement announced Thursday stems from the 2021 arrest and conviction of five managers of National Grid companies for violating federal law by accepting hundreds of thousands of dollars in bribes and kickbacks in exchange for steering contracts to Long Island-based contractors with whom the company did business, according to a PSC statement.
One unnamed Long Island contractor secured more than $50 million in facility maintenance contracts from the utility during the time that the contractor was paying bribes to the defendants, according to the U.S. Attorney’s Office for the Eastern District of New York.
The former utility company managers, four from Long Island and one from Pennsylvania, solicited and accepted bribes and kickbacks from the owners of contractors between 2013 and 2020 in connection with the awarding of maintenance work contracts for National Grid companies, including KeySpan Gas East Corporation and Brooklyn Union Gas Company, according to the U.S. Attorney’s Office.
The federal criminal complaint raised “significant concerns related to the internal controls established and implemented by the companies,” according to the PSC statement. Besides directing the utility companies to file a report on its procurement, invoicing, ethics and investigation practices, the PSC required the companies to each collect $2.5 million of Brooklyn Union Gas Company’s and KeySpan Gas East Corporation’s revenue requirement through a rate adjustment clause.
“Today’s decision finalizes our investigation into the actions of now former employees of National Grid who were charged and convicted of soliciting and accepting improper payments from a contractor in connection with facilities’ department contracts in Long Island and New York City,” Commission Chair Rory M. Christian said in the statement. “In this proceeding, we examined potential imprudence, the adequacy of National Grid’s internal controls, and National Grid’s compliance with its own internal procedures as well as provisions of the Public Service Law, the commission’s regulations, and commission orders.”
PSC said the settlement provides a substantial financial benefit to customers as the companies’ shareholders will be responsible for $42 million associated with the case. The companies agreed to return to customers the full $20 million recovered over the term of the last rate plan through the rate adjustment clause, and not to seek recovery from customers of the more than $22 million incurred in connection with the companies’ own investigation and controls enhancement activities, according to the PSC statement. The $20 million component of the settlement money will offset ratepayer costs.
