A $110m lawsuit alleges that Iberdrola stores unused equipment in warehouses, making a profit from its customers. (Image Credit: qimono/pixabay)
Security Limits Inc, a cybersecurity company, filed a $110m lawsuit against the Spanish global energy company Iberdrola and Avangrid for bid-rigging and racketeering. The 72-page federal court complaint alleges that Iberdrola executives spent millions of dollars on data equipment, which sits unused in warehouses, to turn a profit from its utility customers in New York, Connecticut, and Maine. This scheme benefitted both Avangrid and Iberdrola since they could then report the expenditures to the public utility commissions to increase rate hikes in the states, including Maine, where the companies distribute power.
Paulo Silva, CEO of Security Limits Inc., filed the complaint in New York last week. He was a subcontractor at Avangrid for two years and complained in 2018 about the company's overspending on equipment. He also says that Anagrid executives manipulated the bidding process and pushed advantageous contracts toward five companies linked with Iberdrola.
The complaint also alleges the companies were charged with purchasing equipment for new data centers, which charged Avangrid markups of 40% or more. Most of this equipment was never used but stored in a warehouse that required three expansions over several years.
The complaint states the companies "actually paid to have structures erected to house the dust-gathering hardware that lacked any discernible purpose apart from serving as a vehicle for the [companies'] accounting misfeasance."
U.S. legislators and environmentalists criticized the company for price gouging tactics, attributing to Maine's rising electrical bills and lengthy power outages ever since Avangrid took over the state's utility company.
According to new estimates provided by the energy regulator, the U.K. government's process to boost the failed energy supplier Bulb could be £400m more costly than its alternative. Such a cost is required to prevent other energy companies from failing in the future. However, people argue that private energy companies reap the profits while taxpayers pay for the losses.
Court documents revealed that Ofgem recommended going with the expensive approach since the supplier's collapse could cause a domino effect. Ofgem helps failed companies' customers move to a new supplier, also called the Supplier of Last Resort (SoLR) process. However, Bulb's size meant that it qualifies for the Special Administration Regime (SAR), allowing it to run as normal but with an administrator in charge. Ofgem estimates that the SoLR process could have cost the new supplier £1.28bn. Additionally, Ofgem says it was unsure if every Bulb customer could transition to a new supplier. The regulator said it could precipitate another failure down the road.
Rough times for the energy sector.
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