CITIZEN POWER ALLIANCE

The investigation will focus on how the British company accounts and allocates expenses between its different businesses in the US, according to the New York Public Service Commission (PSC), which regulates utilities in the state. The regulator's decision follows the discovery of $26m (£16.6m) of expenses that it described as questionable during the PSC's examination of National Grid's controversial plan to raise electricity prices by a total of $369m next year.

National Grid insists that the increase, and a $106m rise sought in nearby Massachusetts, are needed to invest and improve the infrastructure and distribution network in the north-east of the country. But with Congressional elections in less than two months and a stumbling economic recovery, National Grid's expenses have sparked anger among the public and politicians.

New York regulators could potentially force National Grid to pay money to its more than 3m residential and business customers in the north of the state if it is found to have misallocated expenses. National Grid has already withdrawn $4m of expenses and says it will fully co-operate with the investigation.

Having first expanded into the US in 2000, National Grid is facing particular scrutiny at the moment. Alongside its examination of the planned rate rise, regulators in New York's state capital of Albany are also conducting a review of the company's operations – something it undertakes for each utility it regulates every five years.

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