The Maine Public Utilities Commission announced Monday that it will investigate allegations raised in a lawsuit filed in federal court against Central Maine Power’s parent company.
Commissioners said the purpose of the investigation is for the PUC to obtain information necessary to assess whether the alleged capital expenditure costs specified in the lawsuit against Avangrid are being recovered in CMP’s rates or may be included in future rates charged to Maine consumers. CMP has been given until Jan. 17 to provide commissioners with a report and supporting documentation.
The announcement by the PUC comes amid mounting pressure for the state to take action, including a letter sent last week by a bipartisan group of legislators asking the PUC to launch an immediate investigation.
“Mainers deserve to know the truth behind these allegations, and it is the responsibility of the Commission to determine the extent to which ratepayers may have been impacted by the impropriety alleged by the plaintiff of this case,” Rep. Nathan Carlow, R-Buxton, said in a statement attached to the bipartisan letter. “The letter is simple, if the law was violated, then penalties must be imposed. This is a foundational principle and that’s why there is cross-party support for this investigation.”
Security Limits Inc., based in Jessup, Pennsylvania, accused Avangrid Networks, Inc. and Avangrid, Inc. – CMP’s parent company – of rigging bids, racketeering and buying unnecessary equipment so it could charge higher electricity rates to customers and increase its profits. Neither CMP nor any of its executives are mentioned in the lawsuit. Security Limits CEO Paulo Silva seeks damages of more than $600 million, including punitive damages. The complaint, dated Nov. 29, was filed in the U.S. District Court for the Southern District of New York.
In the notice of summary investigation posted on its website Monday, the PUC cites Silva, the plaintiff, as alleging the utility “deliberately engaged in waste and abuse to inflate its CAPEX (capital) expenditures.”
“Specifically, the plaintiff alleges that the utility defendants intentionally overpaid for equipment and infrastructure to inflate CAPEX so that, through the utility ratemaking process, there would be enhanced profits paid for by utility ratepayers. The complaint includes an allegation that Avangrid paid to have structures erected in Maine and New York “to house the dust gathering hardware that lacked any discernible purposes.”
Avangrid has denied the allegations made by Silva and described the plaintiff as a disgruntled former subcontractor who is bitter because the company chose not to continue awarding him new contracts. Avangrid filed a countersuit claiming defamation and extortion. Security Limits, through other subcontractors, provided information technology services to Avangrid in 2018 and in 2019.
“Avangrid will fully cooperate with this inquiry by the Maine Public Utilities Commission, though we are disappointed that the MPUC is doing so before the court has a chance to weigh in on the allegations made by Paulo Silva and his company,”Avangrid said in a statement spokesperson Catharine Hartnett issued Monday night.
“Mr. Silva is a disgruntled subcontractor, bitter he didn’t win competitive procurements and that his relationship with the contractor soured. It is notable that Silva never took his claims to regulators in the states where he claimed the activities took place. Instead, he first made these defamatory allegations publicly during hearings related to Avangrid’s pending merger in New Mexico, a state that plays no role in his claims other than the fact that it served as a public venue for him to defame and extort Avangrid.”
New Mexico’s Public Regulation Commission voted unanimously last week to deny the merger. All five elected commissioners agreed the deal would not be in the public’s interest, citing concerns about customer service problems and reliability issues in other states where Avangrid operates, including Maine.
“Avangrid is proud of its track record on compliance and ethics and has been recognized as one of the world’s most ethical companies three years in a row by the Ethisphere Institute and will continue to vigorously defend itself against Silva’s claims,” the company said in its release.
Susan Faloon, spokesperson for the PUC, said that PUC staff will review the documentation provided by CMP, but no determination has been made as to what, if any, steps could be taken after Jan. 17.
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