A price-fixing scheme allegedly concocted by Morgan Stanley and KeySpan, and involving Astoria Generating Co., may have overcharged New Yorkers for electricity while garnering Morgan Stanley and KeySpan millions, according to published reports and two area politicians outraged at the scheme: Councilman Peter Vallone Jr. (D-Astoria) and state Sen. Mike Gianaris (D-Astoria).
But Morgan Stanley, who allegedly pocketed $21.6 million as a result of the deal, may only receive a $4.8 million fine based on a Department of Justice recommendation, the politicians said. Vallone called the fine “chump change.”
Between 2006 and 2009, a given New Yorker most likely overpaid about $40 for electricity, according to articles in the New York Post, a sum Vallone said “probably means more to the average ratepayer” than the $4.8 million fine will mean to Morgan Stanley.
Vallone and Gianaris have written two letters, one to Manhattan federal judge William H. Pauley — who is adjudicating the case against Morgan Stanley — and one to the Department of Justice.
KeySpan, which ran the Ravenswood power plant in Long Island City — the company is now owned by National Grid and the plant by TransCanada — has already been fined $12 million for its involvement in the affair, a sum the politicians say is also too low given that the scheme cost ratepayers nearly “$300 million,” as they wrote in their letter to Judge Pauley.
John Reese, senior vice president of U.S. Power Generating Co., which owns Astoria Generating, the other power company involved, said the deal was brokered by Morgan Stanley and involved Astoria Generating Co. without its knowledge. He said that KeySpan and Morgan Stanley had conspired to artificially raise electricity prices and benefitted, while Astoria Generating Co. did not.
Which is why, Reese said, “no fines were levied against us.”
Gianaris and Vallone would like any illegally-obtained money taken from New York ratepayers to be returned.
“What’s clear to me is that the settlement recommendations are inadequate,” Gianaris said. “These companies ... made millions and millions of dollars in inappropriate profits from this swindle.”