Utility Regulators Ignoring “Conflict of Interest” Again in Massachusetts and Other States As Well

By B.N. Frank

Last year Activist Post reported about Massachusetts utility regulators being ordered to investigate one of their largest electric providers. It seems that they haven’t done a very good job.

From WBUR.org:

Utility Regulators Ignored Conflict Of Interest Concerns For National Grid Audit

Last fall, the state Department of Public Utilities was concerned enough about management issues at National Grid to order a broad audit of the company. But critics are calling into question the independence of the audit, which is being led by former National Grid employees over objections by the attorney general’s office.

The winning bid, for nearly $1 million, was submitted by FTI Consulting and was at least 50% higher than rival proposals. Attorney General Maura Healey’s office, representing consumers, said FTI lacked experience for the job and appeared to have a conflict of interest because two former National Grid employees — one formerly a high-ranking executive — would be key players in the audit.

Even so, the DPU in May approved National Grid’s contract with FTI.

“In order to have confidence that it truly is an independent audit, it helps to have people who didn’t work for the company,” said Rebecca Tepper, chief of the AG’s Energy and Telecommunications Division.

DPU ordered the audit after National Grid sought an electric rate hike back in 2018. The proposed rate increase came just months after 186,000 of the company’s 1.3 million electric customers in the state went without power for multiple days in a winter storm, and after a labor battle in which National Grid locked out gas workers without pay or benefits. Regulators raised concerns about the London-based utility giant’s failure to meet deadlines on solar and other projects, as well as a lack of adequate technology planning.

“In order to have confidence that it truly is an independent audit, it helps to have people who didn’t work for the company.”

Rebecca Tepper, attorney general’s office

The audit would investigate the company’s strategic planning and suspected management problems “to the highest levels of the organization.”

FTI Consulting’s John Cochrane previously had a long and high-level career with National Grid USA. He was chief financial officer and treasurer, in charge of finance and mergers, and later headed global business development, overseeing $27 billion in acquisitions, according to his biography in the proposal. He left in 2013 and now leads a Power & Utilities practice for FTI in Boston. His FTI colleague, Colin Hassett, was a National Grid project manager until 2015.

The AG’s office stated its position plainly in a May 12 letter to state regulators: “FTI should be removed from consideration in order to eliminate any question of bias or the appearance of a conflict of interest.” The letter also said that neither National Grid nor FTI were upfront about their prior relationship.

Cochrane, in a written response to the DPU on the issues raised by the AG’s office, denied there was a conflict of interest, saying neither he nor Hassett had worked for National Grid in over five years.

“There is no relationship with the current management of National Grid that exists to interfere with the process that we would undertake to conduct the management audit,” Cochrane wrote on behalf of FTI in the May 17 response.

However, WBUR found at least 12 current senior management employees who worked at National Grid when the two men did. Both Cochrane and Hassett declined to comment.

Cochrane has additional ties to National Grid. For instance, he serves on the board of Emera Energy Services, the U.S. subsidiary of a Canadian energy company, according to proposal documents. National Grid has a contract to buy gas from Emera through 2024, according to records filed with the New York Department of Public Services.

Cochrane disclosed to Massachusetts DPU that since leaving National Grid, he has worked on a regulatory report for the company in New York and also provided it free consulting.

FTI declined to comment for this story, saying the firm does not discuss clients. (On Thursday, a front page story in The New York Times detailed new revelations about the extent of FTI’s influence campaigns on behalf of the fossil fuel industry.)

National Grid executives also declined to be interviewed. Spokesman Robert Kievra, in a statement, said, “The company does not believe the selection of FTI presents a credible conflict of interest and their proposal was reviewed as part of the regulatory process and approved.”

The DPU declined to comment on Cochrane’s Emera relationship, and said in a statement, “FTI Consulting addressed any potential conflict of interest in a written response issued to the department.”

Regulators in New York took a different view on Cochrane in 2016. He was an FTI consultant on a bid for a management audit at Long Island Power Authority and PSEG, Long Island — which had had operating agreements with National Grid until the end of 2013. The audit was to involve areas that were part of Cochrane’s purview at National Grid. Regulators refused to consider the proposal unless Cochrane was replaced.

New York regulators said Long Island Power used a five-year guideline in determining conflicts of interest. Massachusetts’ utility regulator would not say if it has any such rule on how long a person must be gone from a company to avoid a conflict of interest.

“There are a lot of red flags here. The AG, I think, correctly pointed to and asked the department not to approve this hiring. But the department [DPU] inexplicably went forward and did it.”

Itai Vardi, researcher at Energy and Policy Institute

Critics say the process of hiring an auditor for National Grid in Massachusetts was marked by missteps that raise questions about the independence and seriousness of the review regulators had said they wanted.

“There are a lot of red flags here,” said Itai Vardi, a research specialist at the Energy and Policy Institute, a watchdog group that monitors utilities and the fossil fuel industry. “The AG, I think, correctly pointed to and asked the department not to approve this hiring. But the department [DPU] inexplicably went forward and did it.”

National Grid first had to modify its request for proposals after the AG’s office pointed out “serious deficiencies that threatened to undermine the independence of the Management Audit, and the ability of any consultant to conduct a meaningful review.”

Then, the company failed to post the request for proposals on its website, as required by the DPU, and received only two bids. National Grid said the omission was in error and posted the document after the AG’s office complained, attracting a third bid.

The AG’s office recommended an FTI competitor, Schumaker & Co., of Ann Arbor, Michigan, which said it had performed more than 100 utility consulting jobs, compared with just one example in the FTI proposal.

DPU had the final say and approved FTI. The audit is due in March.

WBUR’s Christine Willmsen contributed reporting to this story.

This segment aired on November 12, 2020.

Activist Post reports regularly about utility commission and utility company scandals and shenanigans (see 1, 2, 3, 4, 5, 6, 7, 8). Much of it has to do with the rollout of 2-way transmitting “Smart” Meters.

In 2009, American utility companies were offered a combined total of $3.4B to install “Smart” Meters. People worldwide DO NOT WANT THEM – electric, gas, or water (see 1, 2). These meters are so awful that a documentary was produced about them – Take Back Your Power.

Customer rates are usually increased for their installation (see 1, 2). Unlike original analog meters, they need to be replaced frequently and the cost for this is also usually passed on to customers (see 1, 2, 3). Tens of millions of “Smart” Meters have been installed and millions more are planned despite all their problems – fires, explosions, measurement errors, serious cybersecurity risks (see 1, 2), and more.

Utility companies continue to install “Smart” Meters because they are profitable for THEM. These meters allow them to remotely turn off services as well as ration energy. Because these meters are 2-way transmitting, they also allow utilities to collect minute-by-minute customer usage data 24/7. They collect and analyze this data so they can market more products and services to customers and/or sell data to 3rd parties.

In addition to causing fires and explosions, “Smart” Meters emit high levels of harmful electromagnetic radiation that can cause dangerous electrical issues as well as make people, plants, and animals sick (see 1, 2, 3, 4, 5, 6,). None of the above is making America great.

Activist Post reports regularly about “Smart” Meters and other unsafe technology. For more information, visit our archives and the following websites:

Image: Pixabay

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