Buffalo developer Carl P. Paladino has filed separate lawsuits against National Grid and Verizon over what he claims are outrageous charges for moving utility lines and poles to accommodate new businesses.
Describing the utilities as “sick with greed,” Paladino says he has no choice but to take legal action because the state’s Public Service Commission has failed to hold “monopolistic” utilities accountable.
Paladino,a GOP politician, claims the utility companies refuse to detail how they arrive at prices when running lines to a newly constructed building or reconfiguring service to renovated properties.
The refusal, Paladino says, indicates the utilities have something to hide.
“In both cases, there has been collusion, overbilling, mis-billing and fraud,” he said.
Nonsense, say the utility companies, insisting they charge fair prices and dismissing Paladino as someone who files frivolous lawsuits.
“Mr. Paladino’s accusations of collusion and fraud are false,” said Verizon spokesman John Bonomo. “Verizon’s charges for its work are fair and reasonable.”
National Grid spokesman Stephen F. Brady added, “Regulations in the state require us to recover our costs, but without profit.”
This is not the first time Paladino has taken on adversaries much bigger than his development company.
In 2006, a lawsuit he filed against the state Thruway Authority was credited with spurring the removal of the Breckenridge and Ogden toll booths, collectively saving downtown commuters millions of dollars.
More recently, in July Paladino filed a complaint, which is still active, with the U. S. Attorney’s Office alleging that several Buffalo Public Schools officials, the teachers union president and a School Board member are involved in a conspiracy to benefit from school district business.
Paladino’s utility cases, which are now pending in State Supreme Court, involve a $45,441 charge for relocating a telephone line one block where he built a discount retail store; and a $41,000 bill for moving an electric line on the site of a new drug store.
Verizon, he said, charged an hourly rate of $139 for each of its construction crew workers. Based on a 40-hour work week, Paladino said the utility’s laborers would receive close to $300,000 annually.
He does not believe workers earn that kind of salary, but that the high hourly rate reflects efforts by the utility to make profits at the expense of developers and their customers.
Bonomo, the Verizon spokesman, said this latest court action is one of a series of misguided lawsuits filed against Verizon by Paladino’s company, Ellicott Development.
“In each case, Verizon provided Ellicott with reasonable cost estimates for work that Ellicott requested,” Bonomo said. “After receiving Ellicott’s approval, Verizon performed the requested work, including relocation of Verizon’s cables, poles and other communications facilities.
“Inexplicably, after Verizon completed the work, Ellicott demanded a refund of amounts already paid to Verizon,” Bonomo said.
Paladino says that he had no alternative but to initially go along with the pricing under protest, since Verizon and National Grid own the utility lines and the work might never get done.
National Grid, Paladino said, refuses to send him detailed bills on how expenses are incurred for moving lines and poles.
In a letter last month to National Grid, Paladino lambasted the company, saying, “I am tired of receiving your idiotic billings and taking them on faith that they are proper, correct and not a rip-off.”
National Grid, he said, owes it to its customers to provide bills that offer detailed explanations on how the construction billing is calculated, rather than “four-line invoices.”
An April 15 National Grid email to Shannon Heneghan, one of Paladino’s attorneys, cited “trade secrets” and “confidentiality” as reasons why the utility does not release additional information on how the cost of a project is determined.
“National Grid does not, as a matter of policy, provide more detailed information than that already provided. By law, National Grid is required to charge only the actual cost for work it performs in these situations,” the email stated.
To provide additional information might give “insights as to how the company manages its business,” particularly with how “National Grid’s cost accounting systems allocate costs across its business units,” the email said.
The utility, Heneghan also stated, “works very hard to obtain the best prices for all work,” whether it be for material purchases or the services of contractors, and to reveal actual prices of supplies and labor could impede future negotiations with those vendors.
Brady, National Grid’s spokesman, said bills provided to Ellicott Development are the same as statements sent to all of the utility’s customers.
“The format and the content of the bill that Ellicott Development received is fairly common in our industry,” Brady said.
Brady also disputed Paladino’s claim that the utility is profiting from the installation or relocation of utility lines, noting that the utility is precluded by the state Public Service Commission from making a profit.
While both lawsuits are in their early stages, Paladino said he eventually will present snapshots of typical work days for utility crews proving that there is collusion among the laborers and their bosses to pad costs.
Paladino says that when he complained about the lack of billing information to the state PSC, which regulates utilities, he received form letters explaining that his complaints have been referred to staffers, but no action is ever taken.
James Denn, the commission’s spokesman, said that he could not specifically address Paladino’s criticisms, but said the commission reviews every complaint filed with it.
“We deal with thousands of complaints a year and each complaint is closely reviewed,” Denn said. “The first step is for the consumers to work with the utility. If that fails, they are encouraged to come to the commission for resolution.”
Developers, Paladino said, are not the only ones facing high labor costs from the utilities.
“It could be anybody. What about the taxpayers when the utilities do work for the government?” he said.
Other smaller businesses, he said, are fearful of speaking out against the utilities.
“They either don’t have the resources to challenge them in court or they are afraid that if they complain, the work projects they’ve requested will be put to the bottom of the list by the utilities,” he said. “That’s why I’m suing the utilities.”
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