AG Reaches Settlement With National Grid Over LIPA Fraud

LONG ISLAND, NY — New York Attorney General Letitia James announced today that her office came to a settlement with National Grid to resolve allegations that it lied to the Long Island Power Authority and cost LIPA millions.

The fraud, which occurred before PSEG Long Island was involved with the electricity distribution, occurred when National Grid under-reported to LIPA the power output from homes where customers had moved out and new customers moved in. This cost the public utility millions of dollars.

The Attorney General's office reached a settlement of $6 million with National Grid, which will be used 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,” James said. “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.”

While LIPA provides the electricity for Long Island, it contracted National Grid to manage the operations. From October 2007 to Dec. 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 service, LIPA required National Grid to provide various 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.

The Attorney General’s investigation found that, between April 2008 and August 2012, National Grid knowingly provided LIPA with monthly reports and other statements that under-reported the number of advanced consumption accounts and the number of advanced consumption accounts that remained unresolved. In their internal communications, National Grid employees admitted that the numbers reported to LIPA were false.

The investigation found that National Grid under-reported the accounts to cover up its failure to resolve them in a timely manner. It caused LIPA to lose millions in unpaid bills.

A whistleblower lawsuit launched the investigation. The lawsuit was filed as part of the New York False Claims Act, which allows citizens to file civil actions on behalf of the government, and share in the recovery. The unnamed whistleblower in this case will receive $1.41 million.