Regulators have cast a rare spotlight on Executive expenses at a major Utility company. National Grid, which supplies power to residents in New York, Massachusetts, New Hampshire and Rhode Island has been charging electricity users more than $26m in excessive costs, including management expenses for private school tuition fees and the transatlantic shipment of a wine collection.
The claims have come from New York and Massachusetts, where the heavily-regulated British electricity giant is trying to raise rates by $369m and $107m respectively in a crucial election year.
An investigation continues in New Hampshire where the company is accused by campaigners of killing a 54 year old woman by removing the power to her oxygen supply.
New York regulators are investigating $26m of expenses it terms “questionable” and the state’s Public Service Commission is now considering launching an inquiry into the company’s accounting practices. Last night National Grid was forced to reveal it had withdrawn $4m of expenses from its rate proposal for New York.
Martha Coakley, the Attorney General of Massachusetts, claims to have uncovered $300,000 of “red flag” expenses. She lists $35,700 tuition bill for an executive’s children at the British School of Boston, $1,200 for shipping a wine collection from the UK, and $1,200 for cat transportation.
“These expenses that we uncovered during our review certainly raised red flags and we requested the audit to ensure that ratepayers are protected,” a spokesman for Ms Coakley said.
Her office later found that one National Grid executive had put on expenses a $546.57 bill for face cream and another billed the company $443.93 for credit card fees that were accrued in a dispute over a $5,101.04 company-funded plane ticket.
Ms Coakley’s office also uncovered a bill of $1,600 for framed pictures to hang in the office of Tom King, National Grid’s US chief executive.
Mr King was paid £1.58m last year – a 14pc increase on the previous year – while Steve Halliday, the group chief executive, was paid £2.27m.
Although National Grid is listed on the stock exchange in London and primarily accountable to shareholders, it is heavily regulated in both the UK as a networks company and an energy supplier in the US.
There are strict restrictions on how much it can raise rates and what it can spend the extra money on – usually improving the state of its electricity and gas networks – because customers cannot move to another supplier.
The issue of higher bills has become particularly sensitive in the US as its politicians are about to face re-election and consumers are still suffering from high unemployment following the recession.
National Grid says any non-essential costs would have been a mistake, arguing that such expenses are for shareholders not customers to pay.
Its spokesman said: “Inappropriate expenses have not been passed on to bill payers. The company has picked up the expenses. We have also removed the potential for any inclusion in any future rates, including removing expatriate employee expenses.”
The spokesman said claims for shipping the wine and cat transportation, were a necessary part of transferring staff from the UK to the US. “The exchange of staff between the UK and US is an important part of the National Grid operating model, and brings benefits to us,” he said.
However, he said that rate cases should include employee expenses only if they were necessary to support the operation of the utility.”We have withdrawn $4m from our proposal in New York, and haven’t submitted yet for Massachusetts,” he said.
The company added that raising rates enabled the energy giant to invest in infrastructure, materials and supplies.