Eversource sued for $10M, as consultant says big utility crushed his small firm by refusing to pay for work performed
A small father-and-son consulting firm in Rocky Hill has is suing for at least $10 million in damages from Eversource after the big utility suddenly stopped paying for work performed this year, resulting in the furlough of nearly all the consultant’s 13 employees and imminent insolvency.
PenangBenny Consulting LLC — co-owned by founder-president Loon-Kar “Benjamin” Tan and his son and chief operating officer, Alan Tan — filed the lawsuit in Superior Court in Hartford this week.
The Tans claim Eversource told them to keep performing work and submitting invoices in the months after its contract expired at the end of 2019, but now has refused to pay about $2 million it still owes for that work even after the consulting contract’s renewal in July.
Eversource spent months “obfuscating, inveigling, and otherwise deceptively avoiding payment on plaintiffs’ past-due invoices under the pretense of claiming said invoices were insufficiently detailed despite containing the same level of detail that they had for the previous three years in which [the utility] timely paid all of plaintiffs’ invoices,” the suit says.
The consulting firm will be broke at the end of this month, say the father and son.
“After six months of nonpayment from Eversource, my son and I had fully leveraged all credit lines available to us to keep everyone employed and the company operational. Last week I had the hardest day of my life when I had to furlough most of my employees indefinitely,” Loon-Kar Tan said in a written statement to Government Watch.
“The few that remain are voluntarily holding their paychecks, essentially lending the company money, until we can afford to pay them,” he said, adding that “this illustrates how our company operates as a mutually-supportive ’work family.’ “
Eversource spokesman Mitch Gross issued a short statement Wednesday in response to The Courant’s request for a company response: “We have received the lawsuit and are reviewing it.”
The lawsuit’s claim that Eversource has defrauded and not dealt in good faith with a diligent contractor comes at a time when the company faces intense scrutiny from state legislators and utility regulators over sharp rate hikes that took effect July 1 and its heavily criticized response to the Aug. 4 Tropical Storm Isaias.
After the tropical storm came a political storm that now has the state Senate poised to vote in a special session next week on a utilities reform bill. The bill could require financial credits to electric customers after 72-hour outages and stronger state regulation. The House would vote on it around the end of the month.
Now comes a legal storm.
The Tans’ attorney, Michael Rose, said Wednesday that “in light of recent events, Eversource is under a microscope — and if this is how they act when they’re under a microscope, one can only imagine how they’ll act when they think no one is looking.”
‘The American Dream’
Loon-Kar Tan, in his statement explaining the lawsuit, said he came here from Malaysia four decades ago to work hard and raise a family while working for the very utility he’s now suing. That was back when it called itself Northeast Utilities before the merger that made it into Eversource: “I am a first-time business owner who immigrated to the U.S. from Malaysia over 40 years ago. I came to the United States for an education, to build a family and live the American Dream … I am an Eversource Energy retiree who dedicated almost 30 years of my life to that company.”
“I raised my three sons in Rocky Hill, Connecticut with my wife while I worked for Northeast Utilities,” he said. “A few years after I retired, I was given an opportunity by a former colleague to utilize my company, PenangBenny Consulting, to help Eversource with their transmission business. I thought that this would be a great opportunity for me to make a little bit of money to allow me to visit my family back in Malaysia.”
“I also wanted to give my son, who has a disability, an opportunity to demonstrate organizational leadership while I was away,” he said. (Alan Tan has hemiplegic migrane, a neurological condition that causes intermittent weakness. On a bad day it puts him in a wheelchair while on good days he can move freely.)
Tan’s consulting work for Eversource began in 2017, and, the father’s statement continued, “The business grew as Eversource’s needs grew, and I was able to grow my company to a team of 13 people. I am proud that I was able to create jobs for these hard-working men and women who I consider family.”
“I was not looking to create a big company, as Eversource is our only client and they kept us very busy,” the elder Tan said.
In its work for Eversource, the consulting firm said it has provided advice and services in various areas involving the utility company’s transmission inspection program. It says it has “focused on process improvement to convert existing paper-based processes to electronic-based inspection by utilizing Eversource’s chosen technology.”
For example, it has “assisted in integrating and improving the utility company’s selected software used in inspecting and maintaining electric transmission lines.” That software enables field inspection data to be sent from inspectors’ mobile devices reliably into the overall Eversource system “for back-.office engineering review, as well as to schedule needed construction and maintenance,” the consultants said.
‘We are not wealthy people’
The trouble arose suddenly, Loon-Kar Tan said.
“PenangBenny had been working successfully with Eversource for three years, until 2020. In early 2020, without warning, Eversource began refusing to pay PenangBenny for work already performed, and did not sign our yearly contract until July of this year,” he said. “We understand that some of these delays may have been due to the COVID-19 pandemic, so we were patient while Eversource worked out their internal issues.
He went on: “In order to buy Eversource time, I used my home equity line of credit on my three-bedroom ranch home, and with the help of my son, took out multiple business loans and applied for a Paycheck Protection Program loan all so that my company could meet its minimum, mandatory financial obligations. We are not wealthy people. We do not own second homes, yachts, or anything else to mortgage.
“The money I was able to obtain was used to pay my employees for the work they already performed and that Eversource asked us to do but for which they did not pay. My son and I have incurred substantial personal debt and liabilities this year predicated on the assumption that Eversource was going to eventually pay PenangBenny.”
But that didn’t happen. Instead, the furloughs happened, and now the company will run out of money by Oct. 1, both father and son say.
“With this lawsuit, I am simply looking to receive payment for the work my team performed on behalf of Eversource this year under our contract, so that we in turn can meet our financial obligations,” Loon-Kar Tan said. “Everyone has worked hard to make sure that we still have a company to deliver the services that Eversource requires. We respectfully request that our employees be able to go back to work, at full pay, as this is no fault of our hardworking employees.
“I expect Eversource to work with us in good faith to resolve this issue as we did when they asked us to keep working while they resolved their internal accounting issues.”
In the lawsuit, Rose has asked the court to invalidate what he calls a one-sided provision in the contract with Eversource that protects the utility from claims for compensatory damages that are beyond the cost of actual consulting work that was done. He wants to expand his clients’ claim into a class action that represents the interests of as many as 200 other Eversource vendors that are “similarly situated” in their contractual arrangements with the utility.
The claim for “not less than” $10 million in this case includes money that the plaintiffs say they could have expected if Eversource had honored the new contract as well as restitution for the utility’s alleged misconduct.
Jon Lender is a reporter on The Courant’s investigative desk, with a focus on government and politics. Contact him at firstname.lastname@example.org, 860-241-6524, or c/o The Hartford Courant, 285 Broad St., Hartford, CT 06115 and find him on Twitter@jonlender
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