REPUBLICANS ASK ASSEMBLY DEMOCRATS TO APPROVE RESOLUTION AUTHORIZING SUBPOENA OF BPU AUDIT
ALSO CALL ON U.S. ATTORNEY TO INVESTIGATE PROGRAMJune 6, 2006

Assemblywoman Alison Littell McHose/973-726-0954
Assemblywoman Amy Handlin/732-787-1170

Assemblywomen Alison Littell McHose and Amy Handlin today urged Assembly Speaker Joseph Roberts to post for a vote a resolution granting the Assembly Budget Committee subpoena power to access a Treasury Department audit of the Board of Public Utilities (BPU) investigating the misuse of nearly $100 million in clean energy program funding.

In a letter to the Speaker Roberts, McHose and Handlin announced that they will be introducing a resolution granting the Assembly Budget Committee subpoena power over this matter, and urged the Speaker to post that resolution for a vote.

"As legislators who must review a budget that includes numerous tax increases and a cut to higher education funding we have a right to see the details of a highly critical audit of the BPU's spending practices," said Assemblywoman Alison Littell McHose, R-Sussex, Morris and Hunterdon. "The BPU appears to be so ripe with waste, patronage and abuse that a shake-up of the agency’s budget could save our citizens a significant amount of money."

A copy of the Treasury Department audit of the clean energy program has not been made available to the budget committee despite a May 24 Assembly Republican Open Public Records Act (OPRA) request for a copy of that report. Fox testified at the June 1 meeting of the budget committee that the report cannot be released because it is not complete and it is therefore "under protective order."

"If there is a legitimate reason why this audit cannot be made public because of an on-going investigation we are willing to address that issue," said Handlin, R-Monmouth and Middlesex. "Aside from legitimate concerns about jeopardizing an investigation, we as members of the Legislature have every right to see the details of this audit which has apparently already been presented to the BPU."

According to newspaper reports, an audit by the Treasury Department of the BPU's clean energy program found the clean energy program to be rife with abuse. Investigators from the Attorney General's Office have been questioning agency officials about irregularities at BPU.

Among the problems alleged in the audit according to a memorandum obtained by The Star-Ledger were:

-The depositing of program funds in a bank account outside the state's financial systems with no controls;
-Funds being wasted on unnecessary bank fees;
-Program staff awarding funds through grants to friends and neighbors;
-Contracts being awarded with no competitive bidding or review process;

As a result of these problems, a career BPU employee filed a whistleblower lawsuit alleging retaliation by BPU officials for his role in disclosing these questionable practices. That lawsuit has led to BPU and the state hiring four private law firms to defend the agency and its officials.

McHose and Handlin also sent a letter to U.S. Attorney Christopher Christie, requesting that his office look into the possible misappropriation of utility ratepayer dollars by the New Jersey Board of Public Utilities through a clean energy program.

"In light of past connections of our own Attorney General to beneficiaries of programs that benefited from BPU contracts, we strongly feel your involvement is essential to ensure that a fair and impartial investigation is conducted," McHose and Handlin write in the letter.

Attorney General Zulima Farber served as an advisor to the Center for Energy, Economic, and Environmental Policy - one of the vendors that reportedly received funding from the BPU through the unusual account.

Just last week BPU President Fox announced that rates for all four major electric companies will go up anywhere from 12 to about 13 and a half percent - increasing from about 10 to 13 dollars a month for the average residential customer.

Handlin and McHose have introduced a bill, A-3031, establishing a permanent "State Authorities Review Commission" to review on a periodic basis the operation of State authorities and to report on December 1 of each year its findings and recommendations, if any, to the Governor and the Legislature.

McHose and Handlin said the abuse at the BPU is exactly the type of waste that this legislation seeks to eliminate, and they also asked Roberts to post A-3031 for a vote.

Copies of the two letters are attached.

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Dear United States Attorney Christie,

We respectfully request that your office look into the possible misappropriation of utility ratepayer dollars by the New Jersey Board of Public Utilities through a clean energy program. In light of past connections that our Attorney General has had with beneficiaries of programs which benefited from BPU contracts, we strongly feel your involvement is essential to ensure that a fair and impartial investigation is conducted.

As reported in the Star Ledger, the New Jersey Board of Public Utilities established a multi-million dollar account off the State's accounting system, in apparent violation of state budget and accounting rules promulgated by the Office of Management and Budget. Very few people, including the President of the Board of Public Utilities, Jeanne Fox, had authority to issue funds from the account. There was apparently no meaningful oversight. News reports indicated that funds were spent on no-bid contracts and various grants to neighbors, friends, and former colleagues of BPU staff.

Particularly troubling to us as legislators is that we are unable to obtain an audit of the program prepared by the Department of Treasury, We have requested a copy of the audit on a number of occasions and have been stonewalled at every request to see the document. At last Thursday’s meeting of the Assembly Budget Committee, Jeanne Fox indicated that the audit is under some sort of protective order stemming from a whistleblower lawsuit filed by the former chief financial officer of BPU who first reported funding irregularities. We have also been led to believe that there is a criminal investigation into the program by the Division of Criminal Justice at the Department of Law and Public Safety.

We have absolutely no confidence whatsoever that any kind of meaningful investigation of the program is being undertaken by our State. We note that our own Attorney General, Zulima Farber, has served as an advisor to the Center for Energy, Economic, and Environmental Policy - one of the vendors that reportedly received funding from the BPU through the unusual account.

In light of the heavy federal regulation, and funding, of state regulatory boards and utilities, including BPU, we respectfully request that you use your federal office to conduct a fair and impartial investigation of the BPU and its clean energy programs.

We have attached reports from the Star Ledger discussing the BPU, its clean energy programs, and the audit.

Sincerely,

Assemblywoman Alison Littell McHose
Assemblywoman Amy Handlin

Dear Speaker Roberts:

We respectfully request that you allow the General Assembly to vote on an Assembly Resolution we will be introducing conferring subpoena power on the Assembly Budget Committee in order to conduct an investigation into allegations of misconduct at the Board of Public Utilities (BPU) and gain access to an audit which the agency has, to date, refused to release.

According to news reports the Treasury Department audit of the BPU's clean energy program found the program to be rife with abuse including the depositing of funds in a bank account outside the state’s financial systems with no controls, the awarding of grants to friends and neighbors, and awarding contracts with no competitive bidding or review process.

At the Thursday, June 1 meeting of the Assembly Budget Committee, committee members requested a copy of this audit, but were told it could not be released because the BPU had not completed its "response" to the findings. Later in the hearing the committee was told that the audit was under "protective order."

It is our belief that the budget committee, and the Legislature as a whole, should be aware of the findings in this audit so that we can make an informed decision with regard to whether there is waste and abuse at BPU, the elimination of which could save tens of millions of dollars.

Pursuant to the rules of the General Assembly, it is the full Assembly which must vote to grant subpoena power to a standing reference committee. Granting the Budget Committee subpoena power would allow it to obtain a copy of this audit - many of the findings of which were reported in a newspaper story last month.

We also would like you to consider posting legislation we are advocating, A-3031, establishing a permanent "State Authorities Review Commission" to review on a periodic basis the operation of State authorities and to report on December 1 of each year its findings and recommendations, if any, to the Governor and the Legislature. The possible abuses at BPU are exactly the types of problems this bill seeks to address.

We thank you for your attention to this matter and your consideration of our request.

Sincerely,

Assemblywoman Alison Littell McHose
Assemblywoman Amy Handlin