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Fraud Becomes a Problem with Energy Efficiency Programs

image credit: Photo 27642293 / Fraud © Flynt | Dreamstime.com
Paul Korzeniowski's picture
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  • May 9, 2022
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Annually, every person in the US uses 282 million Btus of energy, according to the US Energy Information Administration (EIA). The government spends billions of dollars each year on energy efficiency programs, which are designed to lower that number. With so much money at stake, perhaps it is not too surprising that fraud arises.

Energy efficiency programs produce many benefits. They lower energy costs for customers, produce less carbon emissions, reduce energy inequities, relieve stress on the grid, and create a healthier environment.

As a result, the US Department of Energy as well as state and local government create a number of programs that encourage businesses and individuals to lower their energy consumption. Mass Save is one such program. Bershire Gas, Eversource, National Grid, Cape Cod Compact, Liberty, and Unitil are its sponsors. The multi-faceted program features energy audits designed to identify inefficiencies; provide information for buyers so they understand the benefits of and purchase efficient products; and offer incentives to builders and homeowners for installing modern energy efficient solutions. 

Bogus Mass Save Contacts

Two brothers, Christopher Ponzo and Joseph Ponzo, allegedly bribed an unnamed associate at a lead vendor for the Mass Save program to cheat the state out millions of dollars in contracts. The bribes started at $1,000 a week in 2013 and snowballed into $10,000 bonuses and expensive gifts, like an Apple MacBook and a John Deere tractor with a backhoe and loader, as the scheme became more complex and lucrative over time.

Mass Save disburses hundreds of millions of dollars energy efficiency funds to lead vendors, one of which the unnamed associate worked for. These companies are tasked with contracting energy conservation and improvement work for consumers.

Christopher Ponzo, an electrician, started bribing the associate to ensure the vendor granted his company, CAP Electric, millions in contract work. Joseph Ponzo was later looped in to his own contracts when the other two helped him create an insulation company, Air Tight, under his spouse’s name. Joseph Ponzo and his spouse have no experience in energy efficiency insulation.

The associate was allegedly paid extra to help out with the alleged Air Tight scheme, including helping it to become an approved Mass Save contractor and to handle billing and invoicing for projects.

Joseph Ponzo, who ironically is a Stoneham, MA police officer and his brother Christopher Ponzo, were recently indicted on one count of wire conspiracy and 12 counts of wire fraud. They await sentencing.

Energy efficiency funding is plentiful, which creates the potential for corruption. As a result, energy companies and the government need to put checks in place to ensure that such funds are properly used.

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Matt Chester's picture
Matt Chester on May 9, 2022

It's a shame that wherever there's money to be found, you'll find people trying to take advantage

Paul Korzeniowski's picture
Paul Korzeniowski on May 11, 2022

Matt,

True, but unfortunately part of human nature, just look at the multi-trillion business in computer hacking.

 

Paresh Trivedi's picture
Paresh Trivedi on May 18, 2022

I think every State has this kind of story and they need to be posted and put in table form for comparison. Even though one case gets caught it does not stop unless, system is in place to back the audit with diversity in auditors.  

Paul Korzeniowski's picture
Paul Korzeniowski on May 19, 2022

Sadly, I agree with you. I am not sure how many resources are expended to check these programs. or how sophisticated the checking is I am sure there are some checks in place. One problem is no matter what is put into place, criminals will find a hole and try to worm their way in. If only these individuals would use their skills for good rather than bad.  

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