white-flag-150x150-5645925In buckling under to pressure and threats from Governor Andrew Cuomo, National Grid has firmed up a troubling new normal of regulatory policy in New York State.

Cuomo announced yesterday that National Grid had agreed to end its self-imposed moratorium on new downstate natural gas hookups—which the utility had justified on grounds that the state’s opposition to a new gas pipeline would pinch supplies. 

The company will, among other things, pay $36 million in penalties, and submit “a long-term options analysis” exploring how it can meet demand. In return, the state Public Service Commission (PSC) has agreed not to force the company to sell off its assets and cease operations in Queens, Brooklyn and Long Island.

In threatening to pull the utility’s franchise—a power that only the PSC, National Grid’s regulator, ultimately exercises—Cuomo picked a fight in uncharted legal territory. But rather than waiting for PSC action and then taking the matter to court, National Grid effectively surrendered (and agreed to remain silent about last month’s closed-door discussions with the governor’s appointees).

The settlement allows National Grid to count on “additional [gas] capacity to constrained portions” of Long Island from upgrades at four compression stations (two in upstate and two in Connecticut) on the Iroquois pipeline, which it doesn’t own. That smacks of hypocrisy, considering that the PSC and Cuomo came down hard on National Grid for previously relying on a different company’s upgrades (the Northeast Transmission Enhancement) to provide more gas.

Looking beyond the settlement to the PSC’s statutory role to ensure utility reliability, New Yorkers remain in the dark about the underlying questions that precipitated this fight: future supplies of natural gas downstate. Even Cuomo publicly chided the PSC chairman for being caught flat-footed about the “obvious supply issue.” A statewide analysis of gas supply adequacy expected in July was never made public, and Cuomo has shown no indication that he’ll stop blocking gas pipelines.

Cuomo’s tip jar

One of the provisions of National Grid’s settlement with the Cuomo administration is cause for special concern.

Most of the penalty—$20 million—will go toward “clean energy projects and/or investments in New York-based startup energy businesses and technologies to reduce reliance on fossil fuels.”

But the destination isn’t as suspect as the manner in which the money will move.

“Given the potential need for consultation from several agencies,” the settlement reads, “the Division of the Budget [DOB] will be responsible for directing the use of these funds.” [emphasis added]

This means the projects will be handpicked by the governor, to which DOB directly reports.

This is not the first time the Cuomo administration has squeezed regulated companies for funds ultimately controlled by the governor. The administration extracted $2 billion from the proceeds of Centene’s acquisition of healthcare non-profit Fidelis Health Care last year, and forced Aetna and CVS to kick up $40 million as part of getting its merger approved. The merger between Cigna and Express Scripts was also conditioned on a contribution to what the Empire Center’s Bill Hammond described as the administration’s “tip jar”.

Those healthcare funds, which were collected and spent without the Legislature’s approval, were used to fund a Medicaid reimbursement rate increase that appears to be linked to about $1 million in campaign contributions to benefit the governor’s 2018 re-election bid.

National Grid’s decision to back down all but cements the PSC, and its broad powers, as an extension of the governor’s office, and normalizes Cuomo’s practice of wetting his beak in regulatory matters. The utility deprived New Yorkers of an overdue confrontation against executive overreach—putting it in the company of New York’s state lawmakers who have also taken a powder on the matter.

You may also like

Medicaid’s Missing Million

The Health Department has been either unable or unwilling to document the eligibility status of almost one million Medicaid recipients, raising further concern about the possibility of large-scale over-enrollment. Read More

New York’s Medicaid Spiral Is Worse Than Hochul Admitted

Although Governor Hochul said last week that the current trajectory of Medicaid spending is "not sustainable," the upward trend is even steeper than she and her budget director have acknowledged. Read More

NY’s Road To Electric School Buses Gets Bumpy

New York in 2022 told school districts they’d be barred from purchasing gasoline- or diesel-powered buses after 2027, and instead have to buy electric buses at more than double the upfront cost. “The purchase of new electric buses will help grow the market,” officials later pledged, “which will in turn help reduce prices.” Unfortunately for taxpayers, those reductions aren’t materializing—because state officials put the prices, and future increases, on cruise control. Read More

Hochul Shows a Jarring Lack of Direction on Health Care

Financing and regulating health care delivery is one of the biggest responsibilities of state government, yet Governor Hochul had remarkably little to say on that topic in her State of the State speech on Tuesday. Read More

Hochul’s Pushing Affordability. It Would Cost A Lot.

Governor Hochul is hammering an “affordability” theme in the leadup to Tuesday's 2025 State of the State address. But her campaign, dubbed "Money In Your Pockets," has so far featured little that would reduce the cost of providing, and therefore buying, goods or services in New York. Instead, the biggest announced and expected elements reflect Albany's waning interest in growing the state economy—and a greater appetite to redistribute what it produces. Read More

Unions Reprogram NYS To Do Less With More

Governor Hochul on Saturday signed an innocuous-sounding bill to “regulate the use of automated decision-making systems and artificial intelligence techniques by state agencies.” But the “Legislative Oversight of Automated Decision-making in Government,” or LOADinG Act, wasn’t about protecting New York from self-aware computers trying to wipe out humanity. Instead, it was an early Christmas present for the state's public employee unions—and a lump of coal for New Yorkers hoping for more efficient state government. Read More

Former Utility Regulator Warns State Lawmakers They’re On the Naughty List

A legislative hearing into spending by the state’s sprawling energy agency featured a surprise guest who offered sober warnings about Albany’s energy policy. Read More

New York’s Public Employee Shortage Is Over

Public employee unions complained loudly when New York's state government workforce shrank during the coronavirus pandemic, using that decrease as pretext to press Governor Hochul and state lawmakers for more hiring and costly giveaways to benefit their members. But the latest data show nearly every state agency has more employees than it did a year ago, and that by at least one key measure, the state workforce is larger than it was before COVID. Read More