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Grid and Bear It

September 22, 2010

National Grid is struggling with a PR disaster … again. 

Grid is one of the nation’s largest utilities and is a major player in New York.  The company recently submitted a rate hike proposal to the Public Service Commission in which company officials say they need greater revenues to invest in aging infrastructure. 

In theory, this request is defensible. Unfortunately for the company and it customers, there’s suddenly a controversy over the company’s accounting practices. 

No, this isn’t Enron or anything like it. Instead, it involves a relatively small amount of ill-advised, but not illegal, expenses.  We’re talking about things like a $1,200 bill for an executive to transfer his wine collection from the U.K to the U.S. (The company is British-owned.) 

The revelations come after another recent controversy involving outsourcing of jobs in New York. That episode incensed one Chuck Schumer, who thought he had an agreement with the company to do abandon that particular plan. 

Schumer and Kirstin Gillibrand are now expressing their outrage about the company’s expense reporting. Lawmakers are planning public hearings.  And the PSC has launched a full audit. 

Of course it’s piling on. But Grid, known for its arrogance and layers of bureaucracy, asked for it. 

Insiders we consulted say that there are likely to be additional embarrassing revelations about Grid, particularly with regard to executive compensation. “Anybody who takes a close look at executive pay and benefits in this company will be shocked. They have scores of VPs and department managers making extraordinary salaries for which they simply don’t produce,” said one industry watcher. 

We’ll be fascinated to see how this situation unfolds. Will the company move aggressively and try to get ahead of the problem. Will it come clean and adopt new expenditure guidelines? Or will it dither and deny the problem and give election-year pols a perfect punching bag?

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