FINANCES UNDER SCRUTINY

Comptroller, inspector general look at spending

LARRY RULISON
Section: Main,  Page: A1

Date: Saturday, September 21, 2013

Albany


NYSERDA, the state authority that oversees $700 million in energy programs, is facing investigations into its financial practices by both the state comptroller and inspector general.


The board of the New York State Energy Research and Development Authority has been aware of the investigations since at least the beginning of the year. It has also been dealing with a harsh internal audit that found problems with the quality of data the agency keeps on its energy efficiency programs.


The inquiries, which appear to be unrelated, come at a time when Cuomo has installed new leadership at the authority.


It also comes as the authority's mission appears to be evolving into a more sophisticated conduit to support state energy and environmental goals. Cuomo installed his energy "czar" Richard Kauffman as chairman of the board in June. On Monday, the panel approved another Cuomo appointee, John Rhodes, as CEO, replacing Frank Murray.


Kauffman and Rhodes, both of whom have investment backgrounds, are launching Cuomo's $1 billion Green Bank, which will help the state push its energy policy using more private-sector funding.


According to video recordings of meetings of NYSERDA's audit committee, and a review of the committee's minutes, the inspector general told the authority of two matters, including an anonymous email complaint that management had been using contractors and temporary staff and overpaying them to conduct the "day-to-day" operations of the authority. The inspector general's office only referred that issue to the authority and did not launch its own investigation.


A second matter, which is still under review by the inspector general, concerned alleged favoritism by NYSERDA in helping an unnamed contractor win contracts with the authority.


NYSERDA spokeswoman Kate Muller said Friday the authority takes such complaints "very seriously" and is cooperating with the inspector general, although she said she could not comment due to the ongoing investigation.


"However, it should be noted that NYSERDA has a robust internal audit function to ensure an independent and objective review of its programs, procedures and internal controls, and to look for ways to improve our overall performance and operations," Muller added.


The authority gets most of its budget from fees charged on gas and electric utility bills. The fee, which can add several dollars a month on the typical residential bill, is designed to subsidize energy efficiency programs that reduce energy usage at homes and businesses. The fee is also used for grants to support clean and renewable energy companies to build the state's "green" technology sector in areas like solar that have struggled to take root in the state. Utility bill fees bring in roughly $500 million a year, according to budget figures, although NYSERDA also gets funding from the state and federal government.


The comptroller's audit was launched a year ago as part of a wider investigation of eight authorities across the state.


NYSERDA was told the comptroller has specifically decided to audit "discretionary" expenses on items like industry conferences, training, credit-card purchases, travel and entertainment.


Mark Johnson, a spokesman for state Comptroller Tom DiNapoli, confirmed the audit into discretionary spending at NYSERDA, although he said his office does not comment on the specifics of pending audits.


"The report should be released in a few months," Johnson said.


lrulison@timesunion.com - 518-454-5504 - @larryrulison