NYSEG accused of war against customers

Former HR chief complains to PSC

By Jeff Platsky

Gannett News Service



Officials of New York State Electric & Gas Corp. and its parent, Energy East, called an initiative to drive down employee wages and benefits “operation rape and pillage” and said they wanted to avoid sharing any excess earnings with customers, a former top-level utility employee claims.



NYSEG labeled the allegations as “baseless and without merit.”



The charges are contained in a four-page statement submitted to the Public Service Commission last year by Mark Corbett, who was NYSEG human resources director until April 2005. The statement is contained in the official record of the Public Service Commission proceedings compiled in the utility's recent electric rate case.



Two people in charge of the initiative to trim benefits and salaries were given the nicknames of “shock” and “awe” in a direct reference to the Iraq war, Corbett alleges in his statement. Despite pleas from employees, Corbett said NYSEG refused to divulge the reasons for its actions on wages and benefits to the work force.

“It's garbage,” Clayton M. Ellis, spokesman for the utility, said of the allegations, but beyond that NYSEG refused comment because it is involved in a lawsuit with Corbett.



Corbett has brought a Sarbanes Oxley Whistleblower action against Energy East, alleging the company retaliated against him after he uncovered fraud. The original action was dismissed by a Department of Labor Administrative Law Judge because the suit wasn't filed in a timely manner. However, Daryll Bolduc, Corbett's Charlotte, N.C., lawyer, said he is appealing the decision based on conflicting information on Corbett's dismissal date.



The alleged fraud involves NYSEG's negotiations on a union contract about three years ago.



Corbett said NYSEG officials also provided false information to its union about health benefit caps during contract negotiations in 2004. Corbett said company officials told him “to lie to the union and inform them that the union had committed to cap retiree medical in perpetuity” during previous negotiations.



“Energy East knew this was a lie,” Corbett said in his letter to state regulators. “The entire NYSEG negotiating committee knew this was false.”



Corbett, who characterized himself as the “chief negotiator,” said the company agreed to cap medical benefits only for those who retired during the term of the 2000 contract agreement. “This ruse shifted $117 million in medical costs from NYSEG to NYSEG retirees,” he said in his statement.



Bolduc said he has affidavits from Energy East employees that attest to Corbett's version of events involving contract negotiations. Though Bolduc said he has no affidavits attesting to the conversations about employee benefits and business policies, he has spoken to Energy East employees who verify the nature of Corbett's charges.



“Corbett really got a bad shake,” Bolduc said of the 14-year NYSEG employee. “He's an honorable guy.”



NYSEG offered a settlement to Corbett, but he refused to accept the offer.



According to Corbett's filing with the Public Service Commission, NYSEG officials said they were “at war” with employees and ratepayers, and their paramount concerns were for the shareholders.



“Executive compensation, including substantial bonuses and options, were restructured to reflect this business model and drive this behavioral change,” Corbett said.