Shortly before requesting a substantial rate increase in August of 2022, the CEO of Avangrid, which owns gas and electric utilities in Connecticut, tried to improperly influence the state’s top utility regulator, documents reviewed by the Energy and Policy Institute allege.

Pedro Azagra Blazquez, the CEO of Avangrid, made “thinly veiled” threats that unfavorable decisions by Connecticut’s Public Utility Regulatory Authority (PURA), under its Chair Marissa Gillett, would lead the company to reduce investment in the state, according to a letter memorializing the meeting written by PURA’s General Counsel, Scott Muska. At the same time, Azagra Blazquez seemed to have extended to Gillett a vague offer of future career opportunities.

Muska penned a harsh letter on August 30, 2022 to the General Counsel of United Illuminating, one of Avangrid’s utilities operating in Connecticut, summarizing a meeting between Azagra Blazquez and Gillett on August 25, and expressing concern that “executives of Avangrid … recently demonstrated a brazen disregard for well-established procedural protections, posing a significant risk to the public’s trust in the agency. Such efforts must cease immediately.” Muska copied Paul Mounds, then the Chief of Staff to Connecticut Gov. Ned Lamont, and Nora Dannehy, then Lamont’s General Counsel and now a Connecticut Supreme Court Justice.

The existence of the letter was first reported earlier this month by the CT Mirror, which obtained it through an open records request.

In the letter, Muska described a virtual meeting between Avangrid and United Illuminating executives and Gillett a number of days earlier, noting that Azarga Blazquez had “scheduled individual meetings with two of the Authority’s three commissioners under the pretense of a courtesy communication regarding United Illuminating’s imminent filing of its rate case.” Gillett, Muska, Azagra Blazquez, and Frank Reynolds, President and CEO of United Illuminating, attended the video conference. The letter did not specify which PURA Commissioner took the other referenced meeting with Azagra Blazquez.

The letter asserts that Azagra Blazquez soon began to communicate on substantive topics in a way “reasonably perceived as an effort to influence the Chairman’s consideration of matters pending before the Authority affecting Avangrid and its subsidiaries.”

Specifically, Muska wrote, Azagra Blazquez listed Avangrid’s investments in the state, including in wind, hydrogen, and other renewable energy projects, and added a number of “overt references” to the company maintaining its corporate headquarters in the state.

“Mr. Blazquez then stated that Avangrid has been disappointed by what he deemed to be adverse rulings by the Authority,” Muska wrote. “In a thinly veiled effort, he stated that such adverse decisions have caused investors to challenge Avangrid’s regulatory standing with the state and whether Avangrid should continue to invest here. During his soliloquy, he made no less than three separate references to unfavorable decisions by the Authority resulting in investors advocating for a change to Avangrid’s financial relationship with Connecticut.”

In a footnote, Muska wrote that, “Notwithstanding the adverse rulings, Mr. Blazquez offered to assist Chairman Gillett by providing opportunities for ‘international exposure’.”

Avangrid is owned by Iberdrola, which is based in Bilbao, Spain, and has offices throughout Europe and globally.

The letter concluded that these communications raise serious ethical and legal issues. “Through this communication, Mr. Blazquez was plainly implying that the Authority should weigh Avangrid’s corporate investment strategy in the State when ruling on matters related to Avangrid’s subsidiary public service companies. The timing of Mr. Blazquez’s communications is particularly disconcerting given the imminent filing of Ul’s rate case application and the pendency of several appeals of Authority decisions by Avangrid.”

Muska instructed Avangrid to cease undocketed communications through any medium with commissioners or PURA’s decisional staff without the presence of the agency’s legal counsel.

An Avangrid spokesperson did not specifically respond to a question from EPI about the allegation that Azagra Blazquez offered “opportunities for ‘international exposure’,” instead generally defended the company’s behavior in the meeting.

“This meeting, which took place in August of 2022 – nearly 18 months ago – was meant as an opportunity to establish a good working relationship between Avangrid, United Illuminating, and the Public Utilities Regulatory Authority, which we strongly believe is to the benefit of our customers, stakeholders, and the communities we serve,” Sarah Wall Fliotsos, an Avangrid spokesperson, told the Energy and Policy Institute in an email. “In any such meeting, we always adhere to the highest ethical standards, including our own code of conduct, and as standard practice offer opportunities to share our view of global energy policy, regulatory approaches, and collaboration across all of the markets we operate in worldwide.”

“We believe the opportunity for company officials and regulators to sit down and have productive conversations is critical to advancing state policies and critical energy goals,” Wall Fliotsos added.

The year following the meeting, in July 2023, PURA signaled that it intended to largely reject United Illuminating’s rate hike request. In response, the company embarked on a bitter political influence campaign that centered on attacking Gillett. In an unprecedented move, the utility mobilized its own employees to rally in front of PURA’s offices. A company lobbyist ghostwrote letters of support submitted to PURA by a number of employees and charitable organizations funded by the utility. United Illuminating has recently sued PURA for its decision; the case is pending before the state’s Superior Court.

Wall Street Pressure

The alleged Azagra Blazquez episode highlights a trend of utilities and their investors on Wall Street trying to exert influence on Connecticut’s utility regulators outside of their filings in dockets. In reports from recent months, financial analysts characterized Gillett’s actions as “zealotry” while describing PURA’s other commissioners, Michael Caron and Jack Betkoski, as “rational actors,” the CT Mirror reported.

In a June 2023 email, PURA’s General Counsel Muska warned commissioners that meetings requested by equity analysts might violate ethics rules.

The Energy and Policy Institute obtained the email through an open records request.

“To be more direct,” Muska wrote, “the analysts are looking for insight into how the Authority might rule on current and impending dockets, which falls squarely within the prohibition on ex parte communications as well as raising some State Ethics Code issues. For example, an analyst’s recommendation to buy or sell a utility stock after a private meeting with a member of the Authority might have significant ramifications.”

Muska offered commissioners counsel to navigate these cases.

Corruption Allegations

Accusations of illegality have dogged Spain’s Iberdrola, Avangrid’s parent company, for years, though the company has largely avoided criminal accountability.

Iberdrola’s Chief Executive Ignacio Sanchez Galan had been investigated in 2021 for the allegation that Iberdrola had hired a former police chief to spy on corporate rivals and their executives. A court dropped those charges in 2022 due to a statute of limitations.

A Spanish court recently acquitted Iberdrola and four of its executives of fraudulently increasing electricity prices in 2013.

In the U.S., a cybersecurity vendor of Avangrid’s alleged in a lawsuit that Iberdrola fraudulently profited from wasteful equipment purchases that drove up customer rates. The company dropped the case after Avangrid filed a defamation lawsuit against it, but the vendor said he stood by his claims.

In October 2023, Avangrid created a new Compliance Unit, which it said will be responsible for compliance with the company’s Code of Business Conduct and Ethics.

The alleged comment by Azagra Blazquez to Gillett about “opportunities for ‘international exposure’” could have been at odds with that Code, which reads:

“You are strictly prohibited from influencing or attempting to influence others in the exercise of their duties by offering gifts or other promises of reward or benefit. Take extra care when interacting with government officials to avoid even the appearance of such impropriety.”

“Many of us work with government employees, such as staff for New York PSC, Maine PUC,
Connecticut PURA and federal agencies such as FERC and the EPA,” the Code continued. “This collaboration is important and in the public interest, but these relationships must be carefully managed to avoid ethical risks.”

Posted by Itai Vardi