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O&R Chastised and Moving Forward

Fortnightly Magazine - July 15 1996

The New York Public Service Commission (PSC) has approved an

$8.5-million refund for customers of Orange & Rockland Utilities, Inc. (O&R) in light of improprieties committed by some of the utility's former senior executives (Case 96039/95E0491). Since the investigation began, O&R has terminated or retired eight of 11 senior managers and replaced its external auditing firm. The PSC also required O&R to create positions for an inspector general and an ethics officer.

The refund concludes a PSC investigation of O&R's former vice president of external affairs, who was arrested in 1993 and charged with contributing to political campaigns under a false name, grand larceny, and commercial bribery. Two other former employees were also arrested and charged with embezzlement. The investigation uncovered inappropriate invoices, expense accounts, and excess costs associated with senior management compensation.

"I want to emphasize that in addition to the $8.5-million refund, shareholders have already absorbed nearly $12 million of costs incurred [by O&R] to either conduct its own investigations related to misconduct or to defend the company from actions stemming from this misconduct," said PSC chairman O'Mara. "The company was also forced to forgo possible rate relief in May 1994, when the commission dismissed its $17.1-million rate case based on the unreliability of the company's financial records."

The PSC also approved a three-year rate plan to reduce annual electric rates by $7.75 million (-2.3 percent), and a rate moratorium through April 30, 1999. A retail-access pilot program will be available to participants by January 1, 1997. (em LB

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