Rhode Island Energy Settles Fraud Case for $8 Million

Categories: Rhode Island Business NewsRhode Island News

Emphasizing the importance of energy efficiency programs in Rhode Island's fight against climate change.

News Summary

Rhode Island Energy has settled a fraud case involving its predecessor, National Grid, for nearly $8 million. The settlement, approved by the Rhode Island PUC, addresses allegations of billing manipulation that impacted the state’s energy efficiency program. National Grid’s mismanagement resulted in overcharges of approximately $2.2 million to customers. The funds will support the storm contingency fund while independent audits will ensure compliance moving forward. This case highlights the need for accountability and transparency within energy providers in Rhode Island.

Rhode Island – Rhode Island Energy has agreed to pay nearly $8 million as part of a settlement approved by the Rhode Island Public Utilities Commission (PUC) linked to a fraud case involving its predecessor, National Grid. This settlement aims to resolve allegations of a billing manipulation scheme that had implications for the state’s energy efficiency program, which is recognized as one of the most effective in the nation.

The settlement concludes a lengthy investigation into the mismanagement practices of National Grid that persisted for over a decade. It has been revealed that National Grid engaged in intentional misfiling of invoices related to the state’s energy efficiency program to gain higher shareholder incentives, which resulted in overcharging customers by approximately $2.2 million.

The settlement agreement includes Rhode Island Energy, the Division of Public Utilities and Carriers, and the Rhode Island Attorney General’s Office. As part of this financial resolution, the $8 million payment will be allocated to the Rhode Island Energy storm contingency fund, which is currently facing significant deficits. This fund is critical for emergency responses during storms.

Prior to this settlement, National Grid had already credited $2.4 million to the energy efficiency fund following investigations into the company’s improper billing practices. These practices included delaying the submission of invoices, actions that circumvented annual caps on allowable payments for performance incentives related to energy conservation efforts in both residential and business settings.

Significance of the Energy Efficiency Program

The energy efficiency program, funded by surcharges on customer utility bills, provides essential financial incentives for energy-efficient upgrades aimed at reducing energy consumption in homes and businesses. This program, with a budget of $134 million for the year, plays a key role in Rhode Island’s initiative to decrease greenhouse gas emissions.

The reported manipulations of invoices have sparked concerns regarding accountability within utility companies. Rhode Island Energy, while not responsible for the original issues, has stated it is committed to resolving these matters for the benefit of its customers. The settlement also requires independent audits of Rhode Island Energy’s energy efficiency program over the next five years to ensure strict compliance and accountability standards are met.

Responses to the Settlement

Pearl Gerwatowski, Chairman of the PUC, described the previous management’s conduct as “egregious” and highlighted that the repayment amount represents an unprecedented case for a utility in Rhode Island. Governor Dan McKee also expressed contentment with the settlement, framing it as a step towards holding National Grid accountable and preventing future irregularities within the state’s energy efficiency program.

Future Implications

The ramifications of this settlement extend beyond financial compensation; it also indicates a shift towards greater regulatory scrutiny of energy providers in Rhode Island. With independent audits mandated over the next five years, there remains hope that the integrity of the energy efficiency program can be safeguarded, ensuring that it continues to benefit the state’s residents effectively.

This case underscores the critical need for transparency and accountability within utility management, particularly in programs designed to foster energy savings and environmental stewardship. As Rhode Island moves forward, it will strive to maintain its reputation as a leader in energy efficiency while addressing the challenges of past mismanagement.