Rhode Island Energy is on the hook for nearly $8 million to make up for an alleged fraud scheme by its predecessor under a settlement agreement approved Wednesday by the Public Utilities Commission (PUC).
The settlement marks the closing of an investigation that looked into mismanagement practices by National Grid extending back over a decade. Pennsylvania-based PPL Corp. took over National Grid’s electric and natural gas business in Rhode Island in May of 2022, creating Rhode Island Energy.
In December 2021, the PUC discovered that National Grid knowingly misfiled invoices for its energy efficiency program over an eight-year period to make more money, overcharging customers as much as $2.2 million.
The commission voted 2-0 to approve the settlement, which was reached between the energy provider, the Division of Public Utilities and Carriers, and the Rhode Island Attorney General’s Office. The commission has three seats, but one is vacant.
“While Rhode Island Energy did not create this issue, we are taking responsibility for resolving it in a way that benefits our customers,” Rhode Island Energy spokesperson Caroline Pretyman said in a statement.
Attorney General Peter Neronha lauded the settlement as a way to provide relief to Rhode Island’s ratepayers.
“At a time when the cost of energy is extremely high, every little bit helps,” Neronha said in a statement.
Gov. Dan McKee said in a statement he was pleased to see the agreement be reached.
“This settlement not only holds National Grid accountable but also puts directives in place to prevent any similar issues,” he said.
The energy efficiency program is funded by a surcharge on customers’ bills. It provides home and business owners with financial incentives for energy-efficient upgrades such as lighting and appliance replacements, insulation improvements, and other projects.
National Grid acknowledged in a 2023 report to the commission that company employees “acted inappropriately” by deliberately delaying invoices for the energy efficiency program. Any fraud was not intentional nor necessarily profit-driven, according to the report.
Under the settlement, Rhode Island Energy will credit customers $7.9 million from its storm contingency fund, reducing future storm-related costs.
“The money is coming back to the benefit of ratepayers,” said Tom Kogut, spokesperson for the division. “It’s a way to offset costs that would otherwise have to be captured by ratepayers.”
The utility company will also conduct independent audits of its energy efficiency program over the next five years. National Grid has already credited $2.4 million to the energy efficiency fund following the allegations from the PUC.
PUC Chairman Ronald Gerwatowski called the terms of the settlement an unprecedented hit to a utility carrier, but appropriate.
“The admitted conduct was egregious in my estimation,” Gerwatowski said during the commission’s meeting, which lasted under 10 minutes. “The invoice manipulation was a major black eye on what was otherwise an outstanding nation-leading energy efficiency program.”
This story was originally published by the Rhode Island Current.
