Suffolk Closeup - National Grid Shareholders To Pay $36 Million Penalty

SUFFOLK CLOSEUP

By Karl Grossman

When the Long Island Power Authority sought a partner in 1998 to work with it in operating Long Island’s energy system, it selected what it—and many—considered the best utility in the New York Metropolitan Area: Brooklyn Union Gas Company.

Especially under the leadership of Eugene Luntey, who spent 39 years with Brooklyn Union, including as its chairman and CEO (he’s now retired with a home on Shelter Island), it had a superlative record. With a changed name, KeySpan, it joined up with LIPA.

But then, suddenly, in 2006, KeySpan was bought for $7.3 billion by a London, England-based company, National Grid. As a division of National Grid, what was the top utility in this region fell quickly in providing services. Its poor performance when Superstorm Sandy hit Long Island in 2012 and nearly all of LIPA’s 1.1 million customers suffering a black-out resulted in Governor Andrew Cuomo orchestrating a change at LIPA—kicking out National Grid and replacing it with a New Jersey-based utility, Public Service Electric & Gas.

National Grid, meanwhile, although then no longer involved with electricity on Long Island, remained in the gas business. And in recent months its reputation descended further. 

Although there are utilities and governments across the nation focusing on renewable energy in a time of climate change caused largely by the burning of fossil fuels—coal, oil and, yes, gas—National Grid remained devoted to gas. 

It fought for a pipeline to be trenched under New York Harbor to south of the Rockaways bringing gas produced by fracking in Pennsylvania to this area. Environmentalists challenged the plan—because of fracking being a terribly polluting process, gas-burning contributing to climate change, and oil and gas pipelines being known to leak.

To push its pipeline scheme, National Grid declared a “moratorium” on new gas installations. Thousands were denied new service. Several companies thus decided to abandon Long Island and move elsewhere. 

Laura Shindell of the environmental organization Food & Water Action, charged: “National Grid is holding New Yorkers hostage in order to lobby for a dirty pipeline that would devastate New York Harbor….The Williams pipeline is an expensive, unnecessary project that threatens our water and would deepen our dependence on dirty fossil fuels.”

Peter J. Gollon, former energy chair of the Long Island Sierra Club and now a LIPA trustee, in a Long Island Business News piece titled “Natural gas is not the long-term solution for Long Island,” wrote that “failure to stop the burning of fossil fuels [will] lead to catastrophic global warming” including having a “long-lasting and detrimental effect right here on Long Island. Montauk is already considering how to retreat from a shoreline that has been battered by strengthened coastal storms made more severe by rising sea levels.” The “characterization of gas as a ‘bridge’ to renewable energy is misleading. The fact is that methane produced and released by fracking is a far more potent greenhouse gas than carbon dioxide.” Dr. Gollon, a nuclear physicist, called for implementation of wind and solar power—which “are the least expensive sources of electricity”—and other green energy technologies.

Governor Cuomo, as he did post-Sandy, challenged National Grid declaring: “We’re against the pipeline” and if National Grid was involved in manipulating gas service “to create political pressure….that’s extortion. That’s a crime.” He informed National Grid that its license to operate in downstate New York would be revoked if it continued with its “moratorium” and pipeline push. He commented: “They’re not the only utility in the world, and a lot of companies would like to have this franchise.”

National Grid gave in last week. It agreed to a settlement that includes a $36 million penalty to “compensate customers adversely affected by the moratorium”—to be paid by shareholders, not ratepayers—and pay $7 million to help customers impacted by the stoppage, and also to promptly do the hook-ups it had refused to make. “Today,” said Mr. Cuomo, “it was made clear that we will not allow any business—big or small—to extort New Yorkers in order to advance its own business.”

Also last week, National Grid, as the Newsday headline heralded, “finds gas to resolve supply problem.” It advised the state Public Service Commission that it will connect to the Iroquois gas pipeline—that just happens to run from Canada to Commack.

But the overriding question remains: will National Grid ever get off its allegiance to gas and endeavor to provide green energy which doesn’t contribute to climate change?

Karl Grossman is a veteran investigative reporter and columnist, the winner of numerous awards for his work and a member of the L.I. Journalism Hall of Fame. He is a professor of journalism at SUNY/College at Old Westbury and the author of six books.