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Payments to MarketSpan Execs Targeted by Class Action

Payments to MarketSpan Execs Targeted by Class Action

A class action complaint was filed in the Supreme Court of New York in Nassau County against MarketSpan Corp. and former senior officers/directors of Long Island Lighting Company (LILCO). The class action was filed on behalf of current shareholders of MarketSpan who were stockholders of LILCO and/or The Brooklyn Union Gas (BU) or its successor, KeySpan Energy, at the time of the merger of LILCO and BU.

The complaint alleges defendants breached fiduciary duties by paying to former senior LILCO and current MarketSpan officers and/or directors about $67 million in retirement benefits and other compensation upon the separate mergers of certain LILCO assets with BU and other LILCO assets and stock with the Long Island Power Authority (LIPA), including about $42 million to former LILCO and current MarketSpan CEO William J. Catacosinos alone. The payments were criticized last week by New York Governor George E. Pataki. Richard M. Kessel, chairman of LIPA, also criticized the payments

"We have received the lawsuits and we are reviewing them and will respond in a timely fashion," a MarketSpan spokeswoman said.

Plaintiffs seek to obtain "equitable" relief, including disgorgement of the payments, an injunction preventing further payments, and accounting, and/or compensatory damages for defendants' breaches of their fiduciary duties to the plaintiffs.

In May, KeySpan Energy combined with LILCO to form holding company MarketSpan. Headquartered in both Brooklyn and Hicksville, MarketSpan owns LILCO's common plant, non-nuclear electric-generation assets and operations, and the regulated gas businesses of both LILCO and Brooklyn Union. In addition, MarketSpan owns KeySpan's unregulated subsidiaries and its investments in gas exploration, production and transportation - including a 66% ownership in Houston Exploration Co.

The Long Island Power Authority, LIPA became the authority providing electric service on Long Island. Brooklyn Union customers in New York City and on Long Island, in general, were to begin receiving an average reduction of 3.8% in their gas transportation rate. In New York City, the reduction resulted from the consolidation. On Long Island, the reduction resulted from both the consolidation and a 2.1% reduction set by a rate agreement with the New York State Public Service Commission Feb. 5.

Joe Fisher, Houston

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ISSN © 2577-9877 | ISSN © 1532-1266
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