Gary Dye to Eugene environmentalists: Keep fighting NW Natural

It can’t happen here. Or can it? NW Natural whistleblower Gary Dye.

[00:00:05] Gary L. Dye: Nobody knows this, this corrupt story that happened 10 years ago and 15 years ago, nobody knows. I mean, my friends and associates that I happen to blurt out this story to, they’re going, ‘Huh? What? I didn’t know that. This is Oregon. This is sweet, liberal, wonderful, beautiful Oregon. We don’t have corruption like that in our state.’

[00:00:30] But it does happen here. It has happened here, you know, and that crap ruined me. They ruined my life, these creeps. Unbelievable! And it’s still going on today.

[00:00:44] John Q: A whistleblower shares his story with Eugene environmentalists, who have launched a campaign against NW Natural.

[00:00:53] Gary L. Dye: I’m just this engineer that wanted to do his job: making sure that the people’s bill was accurate, that their metering was accurate, that they were paying for what they were supposed to pay for when they burned the gas in their house. That’s all I wanted to do.

[00:01:08] And I had incredible talent. I got awards nationally for the things that I did, innovative stuff not done anywhere in the world.

[00:01:16] John Q: Too important to fail, he says NW Natural has become bloated and corrupt.

[00:01:22] Gary L. Dye: My first career was in oil refining, for major oil companies and boy, the difference between NW Natural as a utility, and Shell Oil Company as a corporation, there’s an incredible difference. Even a big oil company, they’ve still got competition and they can’t afford to have deadweight and people that aren’t doing anything and wasted positions . You couldn’t do that in private industry. You either had to pull your weight or you’re going to get fired.

[00:01:53] That didn’t happen at NW Natural. And I could see why: NW Natural is the utility that the state cannot afford to go bankrupt. It goes bankrupt, and what happens in the winter with all these houses, you understand the political upheaval that would happen if people didn’t have gas to heat their homes in the middle of winter.

[00:02:13] So the state guarantees their survival. No matter what happens in NW Natural, the state will guarantee a rate such that company moves on. That really makes it so you can have all kinds of corruption up and down your organization, and be really inefficient and do a lot of things that government wants the company to do that aren’t really in the ratepayers’ interest.

[00:02:37] And so that’s why our rates are so high. It’s because we got all this featherbedding and wasteful things going on that, frankly, it’s just a big waste.

[00:02:47] John Q: He told about his history with NW Natural, starting with the day he was hired.

[00:02:52] Gary L. Dye: I came to the company in the year 2000. My predecessor had left the company a few months earlier to basically work for a related metering type of company. And so I came in and I didn’t have anybody to talk to or learn from or anything like that.

[00:03:07] I started from scratch and I dug in there and I noticed that there was this program that was supposed to keep track of all of the little meters on the sides of houses, a statistical kind of a program. And they’re supposed to run this thing every year and try to figure out with the statistics which meters, which meter families had to be pulled from the houses.

[00:03:31] And so I got into that and I said, ‘Hey, wait a second. The last time they ran this was for data of 1997, three years ago. And the last report was 1998 and they didn’t run a report for 1999 or 2000.’

[00:03:47] And, I called up the guy and said, ‘Hey, what’s going on here?’ I think it was actually even two years. ‘Why didn’t you produce these reports that you’re supposed to file with the state every year, what happened?’

[00:03:57] He says, ‘Well, we changed our billing system and they dropped the method in the computer that used to crank out all these statistics and produce the report.’

[00:04:08] ‘ Oh really? Oh, okay.’ So I had no way to produce this report and I had to get on the ball and actually that’s why I produced it in Excel. But the other thing I discovered is that he called for 10,000 or 15,000 meters to be removed because they were running too fast. They were billing more than they were supposed to, legally. And therefore that’s when you got to pull them from the field.

[00:04:31] And I said, ‘Well, what about these meters? They haven’t been pulled, but what’s going on there.’

[00:04:36] He says, ‘Yeah, well, you know, it, wasn’t part of my job to actually pull these meters from the field. That was the Operations people.’

[00:04:44] And they just didn’t want to do it, right? They wanted to save money. They want to save money on their budget so that they would look good and maybe get a raise or promotion or being thought of as a good manager.

[00:04:55] And so then as I got in the job, I saw more and more and more things that were completely unethical and cheating on what they agreed with the OPUC to do, to keep measurement accurate, and have accurate bills.

[00:05:10] And, I was like, I was 40-something there. And I really wanted this job and I’m thinking to myself:  What am I going to do here? I see corruption everywhere I look in this company. What do I do? Do I report it? They’ll probably get rid of me or something.

[00:05:27] So what I did is I worked in the background. I worked in the background to fix this, this, this, and this. Go into people’s office and kind of have a veiled threat: ‘You realize what the OPUC is going to do if they catch us. Do you realize that? You got to take care of this, man? Come on, let’s go.’

[00:05:42] And over the space of a few years, I finally got things mostly corrected and even improved, above and beyond, doing these innovative things I talked about.

[00:05:52] John Q: His reports to the state were not quite as direct as they might have been, to avoid disclosing years of overbilling.

[00:05:59] Gary L. Dye: And then I started producing those reports and sending them to the state of Oregon. And the thing is, they still hadn’t pulled these meters and they also didn’t pull a bunch of meters to allow the statistics to be generated properly. So we were behind on that. And so what do I say on that?

[00:06:16] So I use the trickiest language possible to kind of say what this problem was, but not really such that I hope it goes through. And then we continue correcting the problem and make the problem go away in another year or two or whatever. But if they happen to catch on, I can point to this report and say, ‘Yeah, I mentioned it, see that, see this abuse or it’s right here. That’s what that meant.’

[00:06:42] One guy in the OPUC, he was about ready to retire, he finally caught on and he started asking these questions. And that’s when it blew up.

[00:06:52] John Q: He offered a brief sketch of the Public Utility Commission, in the years leading up to his encounter with them.

[00:06:58] Gary L. Dye: Around year 2003, a guy on the OPUC, his name was Ron Eachus and he was saying things out loud about, ‘Hey, you know what? I don’t think NW Natural should be getting a 10% rate of return. That’s too high.’ You get 6% return on a government bond. And, since NW Natural, since they are guaranteed to make this profit, they shouldn’t be getting 10%. That 10% is for a more risky type of company; more risk, more return. That’s the way that works.

[00:07:33] And I said, He’s got a good point there. Even though it was something against our company and affecting our profits and maybe going to come back and affect my bonus and my salary. But he had a good point.

[00:07:46] Well, people at NW Natural, they didn’t like hearing that. Because what happens if the OPUC suddenly says, you’re only going to get 6% from now on, there would have been a plummet in NW Natural stock price and all of the executive bonuses and stock options would have been destroyed. They couldn’t have that. So what did they do?

[00:08:06] Ron Eachus was fired. And what happens when that happens? The other members of the OPUC, they see that. They know exactly what’s going on. So there’s a shot across the bow and it says, ‘Hey, you OPUC members, you try pulling a stunt like this, and you’re going to lose your job too’. And they want that job. That’s a nice paying job. Benefits, secure, everything. So that’s what happened. And OPUC from at least that point on had been puppets of NW Natural.

[00:08:41] And there was this game between the OPUC and NW Natural. NW Natural said, ‘Hey, we want you to approve our rate case, we want you to bump it up.’ And also, ‘Hey, we want you to implement this Weather Adjusted Rate Mechanism called WARM.’

[00:08:57] Now that was the total ripoff right there. And so the OPUC says, ‘Okay, we’ll do that for you, if you do this for us, basically have a a program where people get taxed 3% on their bill and that goes to pay people that can’t afford to pay the gas bill.’

[00:09:15] it’s basically a welfare program run by NW Natural. The WARM program is a complete kind of a ripoff. They took into account the 30-year average of temperatures in Oregon, and would adjust your bill based on how much higher or lower it is compared to the 30-year average.

[00:09:33] The thing is NW Natural believed in global warming. They believe that incrementally, year after year after year, the temperature would go higher and higher and higher. And so when you compare today’s temperature with this 30-year average, it’s going to be higher than that. And that caused an extra boost in their rate and in their earnings. It was a kind of like a total ripoff.

[00:09:58] And they wanted every customer to be a member of the WARM rate program. So people didn’t know that they were switched to this. Now you could call up and say, ‘Hey, I don’t want to be on WARM. I want to go back to the old method,’ which is what I did, of course, but people didn’t know anything about this and they don’t care and so everybody got switched to this new rate program. And that made NW Natural quite a bit of money. It really boosted their earnings and boosted their stock price. And it was totally corrupt.

[00:10:27] John Q: Gary described his work on the BTU spreadsheet.

[00:10:31] Gary L. Dye: I must have fixed 10 or a dozen things and did innovative things to really, really improve measurement. I was so proud of myself on these things that I did, and I’m the first person in that country to do some of these things, and it was really paying off.

[00:10:48] But NW Natural has these gas storage wells out there west of Portland. And basically this well— so what you can do is you can pump gas into that well, and it’ll stay there and then you can withdraw it. And there are huge wells, and it’s very unique in this country of having wells like that close to a major metropolitan area. It was a gold mine for them. And so they put a lot of their resources on exploiting and expanding the Mist gas fields.

[00:11:18] And that was separate from their utility function. So that’s how they got much bigger profits and their stock prices go way, way up. It was a great, great thing. A thing of luck really. Management said, ‘Hey, we’ve got to do something to be able to suck more gas out of those wells in the winter time, so we can utilize that capacity and they were even selling capacity of those wells on the open market to PGE and other companies.

[00:11:46] They decided they’re going to put another big pipeline from Portland down to Salem to pump this mist gas down south. And also they were going to do these things with all the regulators in East Portland so they can push that gas to East Portland.

[00:12:00] Now, the problem with that is that they had no way of accurately measuring the BTU value of mist gas, which was substantially less than regular natural gas BTU value. And so a lot of people, they were getting a lower-value BTU. So when you burn this stuff in your furnace, it puts out 7% less heat than regular gas. So basically you were being ripped off by 7%, and so they were trying to expand that.

[00:12:29] And I was the guy that was in charge of measurement. I was the guy in charge of what they called the BTU spreadsheet, which tried to place the heating value on the gas of all the customers so that inequity would go away. But it was absolutely impossible, it was a joke.

[00:12:46] And I tried to tell people almost since the day I started, this thing is a joke. It doesn’t pass the laugh—It can’t, there’s no way you can do that. And one of these days the OPUC is going to spot that and we’re going to get in big trouble.

[00:13:00] John Q: Gary said his life changed during a cold spell in 2009.

[00:13:05] Gary L. Dye: 2009, we had a big cold spell. And so they were able to withdraw a lot of this mist gas and it reached the two paper mills in Oregon City, Blue Heron and West Linn Paper, and their bills were not reflecting this low-value BTU gas. They were paying for regular gas.

[00:13:25] They were paying 7% too much. And so what happened is they called up the segment manager and saying, ‘Hey, is there something wrong with our meters? Because we’re burning up 5%, 10% more gas than we used to. I can’t figure that out. What happened?’

[00:13:40] So the segment manager— and he’s a sales guy, he wasn’t a technical guy, right?— so he comes to me and he points this out and I go, ‘This is what I’ve been talking about. Our BTU spreadsheet does not handle this particular case. They’re getting low-BTU-value gas, but they’re being charged high-BTU-value gas. So they’re actually having to pull in 7% more gas through their meter to provide the same heating that they had. That’s what’s going on.’

[00:14:12] ‘So what do we do about that?’

[00:14:13] And I said, ‘We cannot correct that. We know that what the problem is, we could take off 7% from their bill,’ but we were forbidden to do that because you can’t show preference to anybody. So if we did it to them, we’d have to do it to everybody in that BTU zone, like 50,000 customers.

[00:14:34] But the thing is you don’t know which of these customers in that zone had a low-value or high- value. It was impossible to do.

[00:14:42] John Q: Although Blue Heron cited world market conditions, Gary believes the extra costs from NW Natural also contributed to the closure.

[00:14:50] Gary L. Dye: Later on that year, Blue Heron Paper Mill, they went bankrupt. They had declared bankruptcy a year or two earlier, and got reorganized, so they were really operating on the line there, but finally they had to throw in the towel.

[00:15:06] They went bankrupt and they shut down and 170 people lost their jobs. And they couldn’t go anywhere else either, the paper industry was in decline. They couldn’t get a job at the paper mill across the river. No way, they were done.

[00:15:19] And why? Because paper mills are by far the largest users of natural gas in the state. They have to dry all that paper. That takes a huge amount of gas. They’ve got these huge turbine meters to supply that gas. And tens of millions of dollars per year is how much gas these paper mills would buy, tens of millions of dollars.

[00:15:42] Do the math on that: if they’re paying 7% too much, what does that mean? It puts them over the edge. That is the straw that broke the camel’s back.

[00:15:51] John Q: Gary said the Blue Heron closure caused him to do some soul searching.

[00:15:55] Gary L. Dye: That hit me pretty darn hard, you know? That wasn’t right. These people lost their jobs. Good jobs, family wage jobs, gone forever.

[00:16:06] And I’m saying, I’ve been doing this all wrong. I shouldn’t have been working in the background. It was helping, but it wasn’t solving the problem with this corruption. Finally I said, Enough is enough. I reported 24 ethical violations I had seen over the years to the corporate ethics team.

[00:16:18] And I started putting out emails, warning upper management—even vice-presidents—of the problem with this BTU monitoring system, how it’s fundamentally flawed and it’s going to be worse. Now we’re going to be infesting all these people in Salem with this lower-level gas, and we have no way of accounting for it. And also all the people in East Portland. This problem is going to blow up in our faces. We’ve got to do something about this.

[00:16:46] I lost all my credibility. In that company, it just went around: ‘Gary Dye. He’s not a company player, man. He’s not one of us. He’s an agitator.’ And boy, I could see my career just being destroyed. This made me feel so bad because I’d gotten married for the first time and I had two kids, four and five years old.

[00:17:08] There’s nothing close to this job in Portland. You know, NW Natural is a natural monopoly. I get fired from this company, I can’t go across town and get a job at that other gas company, you know. And my job was so specific— it wasn’t transferable to any other kind of job.

[00:17:26] And I was like 50 years old. You don’t hire 50-year-old engineers that don’t know anything about your business, right? You don’t train a 50-year-old guy, you know. They want to hire the guy out of college or the guy with five years’ experience and pay them a low amount of money.

[00:17:43] I was toast. I couldn’t get a job if I didn’t have this one, if they fired me. So that kind of stress, that kind of stress, on a whistleblower: Are you going to sacrifice yourself? Are you going to sacrifice your family and your kids for this issue?

[00:17:56] So I said, ‘This ain’t working, and I’ve got to spill the beans.’

[00:18:01] I first did it internally, like you’re supposed to. And one of the vice-presidents of Legal: ‘Thank you, Gary, we’ll take this and we’ll get back to you.’

[00:18:11] And a few people ask me questions here and there and everywhere about all these different issues. And so finally it came out: ‘Gary. I just want to tell you that in our investigations, we found no business practices were violated and there were no ethical violations either. Thank you for what you’ve done, please go on with your job, bye bye bye.’

[00:18:34] And I said, ‘Well, wait a second. I don’t understand how this, this, and this is not an ethical violation.’ And he said, ‘Well, Gary, it’s against state law to disclose information about other companies, so I’m not able to disclose that to you.’

[00:18:53] John Q: Gary decided to bring those 20+ ethics violations—which he’d already reported to the NW Natural corporate ethics team—and report them again, this time to the Oregon Public Utility Commission.

[00:19:05] Gary L. Dye: They thought they could get away with it like they’ve always gotten away with it. They felt they could make threats at an employee, like they’ve always done.

[00:19:12] I realized, NW Natural Gas is not going to do anything about this. And eventually they’re going to fire me. So what the hell. I went down to the OPUC and reported it to them.

[00:19:22] So I go down to the OPUC to meet with them and spill the beans. I’d already sent them a few things earlier. But I told them about all these problems, specifically about this BTU problem and Blue Heron Paper Mill and how that bothered my conscience and how I spilled the beans on all these ethical violations and how NW Natural isn’t going to do anything about it. And they sat there and they shook their heads and asked a few questions and blah, blah, blah.

[00:19:53] I remember one person, and she’s still there, she said, ‘Gary, you think you need some protection from us?’

[00:20:00] And I said, ‘I don’t think so. I don’t think they can fire me now.’

[00:20:05] NW Natural, a little bit later, escorted me off the campus and they said, ‘Gary, did you report this to the OPUC?’

[00:20:13] And I said, ‘Yes, I did.’

[00:20:15] John Q: After the usual paperwork, his professional career was terminated. Gary Dye.

[00:20:20] Gary L. Dye: And I was fired. I got an attorney and I filed for wrongful termination and we had some negotiations and what they did was, they gave me $145,000 as long as I signed a nondisclosure agreement. They paid me off to keep quiet.

[00:20:39] When I filed for wrongful termination, they packaged all of this stuff into those negotiations. And so, since I settled with NW Natural, BOLI  (Oregon Bureau of Labor and Industries) decided that they didn’t need to do anything. They didn’t need to follow up on my complaint because I settled with NW Natural. So everything stopped. Nobody pursued anything with that corruption and the bad meters and bad everything else.

[00:21:12] They didn’t really care. There was no oversight.

[00:21:15] John Q: Ironically, NW Natural also handed him his final technical achievement. Gary Dye.

[00:21:21] Gary L. Dye: And here’s the most exasperating thing about it. It’s a long and involved and intricate issue for 12 years. The whole time, I was advocating and pressing and making veiled threats to upper management—trying to get them to change this BTU method—‘Bad measurement, we’re cheating people.’ They said, ‘No, we’re not going to do that. We’re going to do other things.’ They fire me, and then a few months later, they did it—they actually implemented the BTU-measurement system that I had been advocating for all those years.

[00:21:48] That has become my greatest engineering achievement. I’m so very proud of that.

[00:21:54] I lost my job and career because of that. It caused the end of my marriage, and most recently my ex-wife got the court to take my kids away from me.

[00:22:05] That’s what happens to whistleblowers in the state of Oregon.

[00:22:08] John Q: After oversight agencies closed the case, Gary Dye now hopes Eugene environmentalists will follow up to help expose the latest corruption at NW Natural.