National Grid Agrees to Pay $36 Million Penalty for Gas Moratorium

The natural-gas war that has roiled New York for months is over. The winner: Gov. Andrew Cuomo. The loser: National Grid. 

In a stunning reversal, National Grid has agreed to end its moratorium on new natural-gas hookups for customers in Brooklyn, Queens, and Long Island – and pay a $36 million penalty to the state, Crain’s reports. The gas company said it would immediately resume connecting customers in those areas and would continue to do so for approximately the next two years. Of the penalty, $7 million will go to help customers who were caught short by the moratorium, and the rest will fund upgrading efficiency and clean-energy projects under the direction of the state. The agreement was announced prior to the deadline Cuomo had given the utility to come up with a plan or risk losing its license to operate in the state. The governor was infuriated by what he called the utility’s “reckless disregard” for its customers. 

National Grid had imposed the moratorium in May, immediately after the state Department of Environmental Conservation (DEC) blocked a proposed $1 billion natural-gas pipeline under New York Bay because of possible damage to the city’s waterways. Environmentalists applauded the move as the state tries to wean itself from reliance on fossil fuels. The next day, National Grid announced it had stopped processing new applications for all residential and commercial gas hookups, claiming its delivery capacity was maxed out and it could not guarantee uninterrupted service to existing customers without the new pipeline. Cuomo accused the utility of using consumers as hostages in what amounted to an extortion scheme. 

"This agreement is a victory for customers," Cuomo said in a statement. "National Grid will pay a significant penalty for its failure to address the supply issue, its abuse of its customers, and the adverse economic impact they have caused. The company is also working to address the long-term supply problem and will present options in the coming months to the people of Brooklyn, Queens, and Long Island." 

Meanwhile, National Grid is preparing the reapply to the DEC for approval of the $1 billion gas line, known as the Northeast Supply Enhancement pipeline.