jurisdiction: US

text: b"Memorandum from the Office of the Inspector General\n\n\n\nJanuary 4, 2011\n\nKimberly S. Greene, WT 7B-K\n\nREQUEST FOR FINAL ACTION \xe2\x80\x93 AUDIT 2010-13025 \xe2\x80\x93 DISTRIBUTOR REVIEW OF\nNORTH GEORGIA ELECTRIC MEMBERSHIP CORPORATION\n\n\n\nAttached is the subject final report for your review and action. Your written comments,\nwhich addressed your management decision and actions planned or taken, have been\nincluded in the report. Please notify us when final action is complete.\n\nInformation contained in this report may be subject to public disclosure. Please advise us\nof any sensitive information in this report that you recommend be withheld.\n\nIf you have any questions, or wish to discuss our findings, please contact Richard C.\nUnderwood, Project Manager, at (423) 785-4824 or Melissa M. Neusel, Acting Director,\nDistributor Audits, at (865) 633-7357. We appreciate the courtesy and cooperation\nreceived from your staff during the audit.\n\n\n\nRobert E. Martin\nAssistant Inspector General\n (Audits and Inspections)\nET 3C-K\n\nRCU:HAC\nAttachment\ncc (Attachment):\n Steve Byone, WT 4B-K\n Michael B. Fussell, WT 9B-K\n Peyton T. Hairston, Jr., WT 7B-K\n Tom Kilgore, WT 7B-K\n Richard W. Moore, ET 4C-K\n Robert A. Morris, WT 7C-K\n Emily J. Reynolds, OCP 1L-NST\n Stephen B. Summers, WT 4B-K\n John M. Thomas III, MR 3A-C\n John G. Trawick, WT 3D-K\n Robert B. Wells, WT 9B-K\n OIG File No. 2010-13025\n\x0c\xc2\xa0\n\n\n \xc2\xa0\n\xc2\xa0\n\n\n Audit Report\n\xc2\xa0\nOffice\n \xc2\xa0 of the Inspector General \xc2\xa0\n\n To the Group President,\n Strategy and External \xc2\xa0\n Relations\xc2\xa0\n \xc2\xa0\n\n\xc2\xa0\n\n\xc2\xa0\n\n\xc2\xa0\n\n\nDISTRIBUTOR REVIEW\n\xc2\xa0\n\n\xc2\xa0\n\nOF NORTH GEORGIA\n\xc2\xa0\n\n\nELECTRIC MEMBERSHIP\n\xc2\xa0\n\n\n\nCORPORATION\n\xc2\xa0\n\n\n\n\n\xc2\xa0\n\n\n\n\n\xc2\xa0\n\n\xc2\xa0\n\xc2\xa0\n\xc2\xa0\n\n\xc2\xa0\nAudit Team Audit 2010-13025\nRichard C. Underwood January 4, 2011\nJessica L. Monroe\nStephanie L. Simmons\n\n .\xc2\xa0\n\x0cOffice of the Inspector General Audit Report\n\n\n\n\nACRONYMS AND ABBREVIATIONS\nFY Fiscal Year\nkW Kilowatt\nNGEMC North Georgia Electric Membership Corporation\nOIG Office of the Inspector General\nRUS Rural Utilities Services\nTVA Tennessee Valley Authority\n\n\n\n\nAudit 2010-13025\n\x0cOffice of the Inspector General Audit Report\n\n\n\n\nTABLE OF CONTENTS\nEXECUTIVE SUMMARY ................................................................................ i\n\nBACKGROUND................................................................................................ 1\n\nFINDINGS ......................................................................................................... 2\n PROPER REPORTING OF ELECTRIC SALES AND\n NONDISCRIMINATION IN PROVIDING POWER TO MEMBERS\n OF THE SAME RATE CLASS .......................................................................... 2\n\n USE OF ELECTRIC SYSTEM REVENUES ..................................................... 4\n\n TVA OVERSIGHT OPPORTUNITIES .............................................................. 6\n\nRECOMMENDATIONS .................................................................................. 6\n\n\nAPPENDICES\n\nA. OBJECTIVE, SCOPE, AND METHODOLOGY\n\nB. LETTER DATED DECEMBER 21, 2010, FROM KATHRYN D. WEST TO\n ROBERT E. MARTIN\n\nC. MEMORANDUM DATED DECEMBER 21, 2010, FROM JOHN G. TRAWICK\n TO ROBERT E. MARTIN\n\n\n\n\nAudit 2010-13025\n\x0c Audit 2010-13025 \xe2\x80\x93 North Georgia Electric\n Membership Corporation\n EXECUTIVE SUMMARY\n\nWhy the OIG Did This Review\n As part of the annual audit plan, the OIG (Office of the Inspector General) performed a\n review of North Georgia Electric Membership Corporation (NGEMC), which is a\n distributor for Tennessee Valley Authority (TVA) power based in Dalton, Georgia.\n Annual revenues from electric sales were approximately $232 million in fiscal year 2009.\n The objective of the review was to determine compliance with key provisions of the\n power contract between TVA and NGEMC.\n\nWhat the OIG Found\n Our review of NGEMC found improvements were needed in the area of customer\n classification. We identified 34 customer accounts not classified correctly. We\n estimated the monetary effect of the classification issues and found it would not be\n significant. However, there are qualitative issues that are significant due to their\n systemic nature. Some of the misclassifications identified resulted from (1) an ongoing\n NGEMC policy to classify separately metered well pumps serving residences as\n residential rather than commercial and (2) a discontinued policy to classify any facility\n that had living quarters, including group homes and cabins, owned by individuals and/or\n organizations as residential.\n\n In addition, we found, as of June 30, 2009, NGEMC\xe2\x80\x99s cash ratio was about 2 percent,\n which is less than TVA\xe2\x80\x99s established guidelines for adequate cash reserves of\n 5 to 8 percent. Finally, we identified opportunities to enhance TVA\xe2\x80\x99s oversight of the\n distributors that were also reported in previous distributor audits. TVA is in the process\n of addressing these findings regarding (1) the lack of guidance for distributors on what\n constitutes prudent expenditures and (2) defining the process for granting the Small\n Manufacturer Credit.\n\nWhat the OIG Recommends\n We recommend the Group President, Strategy and External Relations, work with\n NGEMC to (1) remediate classification issues and (2) modify the NGEMC policy\n regarding classification of well pumps serving a residence.\n\nManagement\xe2\x80\x99s Comments\n NGEMC and TVA management agreed with our recommendations and have taken or\n are taking actions to address the recommendations. The target completion date for all\n corrective actions is December 2011. See Appendix B for NGEMC\xe2\x80\x99s complete response\n and Appendix C for TVA\xe2\x80\x99s complete response.\n\nAuditor\xe2\x80\x99s Response\n The OIG concurs with actions taken and planned by NGEMC and TVA to correct the\n identified issues.\n Page i\n\x0cOffice of the Inspector General Audit Report\n\n\nBACKGROUND\nNorth Georgia Electric Membership Corporation (NGEMC) is a distributor for\nTennessee Valley Authority (TVA) power based in Dalton, Georgia, with revenues\nfrom electric sales of approximately $232 million in fiscal year (FY) 2009. TVA\nrelies on distributors to self-report customer usage and subsequently the amount\nowed to TVA (Schedule 1). Customers are generally classified as residential,\ncommercial, manufacturing, and lighting. Within these classes are various rate\nclassifications based on the customer type and usage. Table 1 shows the\ncustomer mix for NGEMC as of June 2009.\n\n NGEMC\xe2\x80\x99s Customer Mix as of June 2009\n Number of Kilowatt\n Customer Classification Revenue\n Customers Hours Sold\n Residential 84,256 $ 137,938,807 1,464,428,857\n General Power \xe2\x80\x93 50 Kilowatt (kW)\n 12,354 15,916,956 138,822,729\n and Under (Commercial)\n General Power \xe2\x80\x93 Over 50 kW\n 1,136 71,865,287 875,984,931\n (Commercial or Manufacturing)\n Street and Athletic 205 200,665 2,621,883\n\n Outdoor Lighting1 543 3,252,437 21,221,828\n\n Unbilled Revenue 2,940,262\n\n Total 98,494 $ 232,114,414 2,503,080,228\n Table 1\n\nThe distributors are required to establish control processes over customer setup,\nrate application, and measurement of usage to ensure accurate and complete\nreporting to TVA. NGEMC, like many other distributors, outsources its billing and\ninvoice processing to a third-party processor. NGEMC utilizes utilityPOWERnet\nfrom Southeastern Data Cooperative, a computerized Customer Information\nSystem, to maintain information for all billing, accounting, and payroll. All other\naccounting and finance responsibilities are handled by NGEMC\xe2\x80\x99s Board of\nDirectors, President and Chief Executive Officer, and executive management\nteam who provide oversight and perform the daily activities.\n\n\n\n\n1\n This customer count excludes those customers who have Outdoor Lighting accounts with NGEMC as\n well as accounts for other services. At June 30, 2009, there were 19,849 of these customers. The\n kilowatt hours sold includes all kilowatt hours for all accounts; revenue also includes all accounts.\nAudit 2010-13025 Page 1\n\x0cOffice of the Inspector General Audit Report\n\n\nFINDINGS\nOur review of NGEMC found issues involving customer classification that could\nimpact (1) the proper reporting of electric sales and/or (2) nondiscrimination in\nproviding power to members of the same rate class. In addition, we found, as of\nJune 30, 2009, NGEMC\xe2\x80\x99s cash ratio was about 2 percent, which is less than\nTVA\xe2\x80\x99s established guidelines for adequate cash reserves of 5 to 8 percent.\nFinally, as we explain herein, we found certain opportunities to enhance TVA\xe2\x80\x99s\noversight of the distributors.\n\nPROPER REPORTING OF ELECTRIC SALES AND\nNONDISCRIMINATION IN PROVIDING POWER TO\nMEMBERS OF THE SAME RATE CLASS\nAs discussed below, we identified a customer classification issue that could\nimpact (1) the proper reporting of electric sales and/or (2) the ability to ensure\nnondiscrimination in providing power to members of the same rate class.2 We\nestimated the monetary effect of the classification issues and found the monetary\neffect would not be significant. However, there is a qualitative issue that is\nsignificant due to misclassifications resulting from an NGEMC policy. Correcting\ncustomer classification and metering issues is important to ensure all customers\nare placed in the correct rate classification and charged the same rate as other\ncustomers with similar circumstances.\nCustomer Classification Issues\nOur review of customer classification at NGEMC identified 302 possible\nmisclassifications. We provided a listing of these 302 accounts to NGEMC for\nfurther review, and they determined that 268 of these accounts were\nappropriately classified and noted 34 misclassified customer accounts. The\n34 customer accounts were classified under the Residential Rate \xe2\x80\x93 Schedule\nRS,3 although they should have been classified under the General Power Rate \xe2\x80\x93\nSchedule GSA.4 The GSA schedule is divided into three parts\xe2\x80\x94Part 1, Part 2,\n2\n Section 5 Resale Rates subsection (a) of the power contract between TVA and the distributor states that\n \xe2\x80\x9cpower purchased hereunder shall be sold and distributed to the ultimate consumer without\n discrimination among consumers of the same class and that no discriminatory rate, rebate, or other\n special concession will be made or given to any consumer, directly or indirectly.\xe2\x80\x9d\n3\n Under the Residential Rate \xe2\x80\x93 Schedule RS, customers are classified based on the following requirement:\n \xe2\x80\x9cThis rate shall apply only to electric service to a single-family dwelling (including its appurtenances if\n served through the same meter), where the major use of electricity is for domestic purposes such as\n lighting, household appliances, and the personal comfort and convenience of those residing herein.\xe2\x80\x9d\n4\n Under the General Power Rate \xe2\x80\x93 Schedule GSA, customers are classified based on the following\n requirements:\n \xef\x82\xb7 GSA Part 1 \xe2\x80\x93 If (a) the higher of (i) the customer\xe2\x80\x99s currently effective contract demand, if any, or (ii) its\n highest billing demand during the latest 12-month period is not more than 50 kW and (b) customer\xe2\x80\x99s\n monthly energy takings for any month during such period do not exceed 15,000 kWh.\n \xef\x82\xb7 GSA Part 2 \xe2\x80\x93 If (a) the higher of (i) the customer\xe2\x80\x99s currently effective contract demand or (ii) its\n highest billing demand during the latest 12-month period is greater than 50 kW but not more than\n 1,000 kW or (b) the customer\xe2\x80\x99s billing demand is less than 50 kW and its energy takings for any\n month during such period exceed 15,000 kWh.\n \xef\x82\xb7 GSA Part 3 \xe2\x80\x93 If the higher of (a) the customer\xe2\x80\x99s currently effective contract demand or (b) its highest\n billing demand during the latest 12-month period is greater than 1,000 kW.\nAudit 2010-13025 Page 2\n\x0cOffice of the Inspector General Audit Report\n\n\nand Part 3\xe2\x80\x94based on electric usage and demand.5 Specifically, we noted:\n\n\xef\x82\xb7 Fifteen customer accounts were for services other than residential use, such\n as shops and garages.\n\xef\x82\xb7 Nine customer accounts classified as residential were separately metered\n well pumps that served the residence according to NGEMC personnel.\n\xef\x82\xb7 One customer account was a group home.\n\xef\x82\xb7 Nine customer accounts were cabins owned by nonprofit organizations.\n\nNGEMC personnel stated they reclassified the 15 customer accounts and one of\nthe nine well pumps from residential to GSA in August 2010. We estimated the\nmonetary effect of all the classification issues and found the monetary effect\nwould not be significant.\n\nWhile these misstatements are not significant from a quantitative standpoint,\nthere are qualitative issues that are significant due to their systemic nature\ncaused by NGEMC policies effective during the audit period. The identified\nmisclassifications were found to be systemic in nature in the following two areas:\n\n\xef\x82\xb7 NGEMC management stated it was their policy to allow accounts for\n separately metered well pumps to be classified as residential if the well pump\n only services a residence. However, according to the Residential Rate \xe2\x80\x93\n Schedule RS, only service \xe2\x80\x9cto a single-family dwelling (including its\n appurtenances if served through the same meter)\xe2\x80\x9d qualifies for the residential\n rate; therefore, separately metered well pumps should be billed under a GSA\n rate.\n\xef\x82\xb7 NGEMC management also stated that in prior years NGEMC consistently\n used the residential classification for any facility with living quarters\xe2\x80\x94this\n would include group homes and cabins owned by individuals and/or\n organizations. NGEMC management stated this is no longer practiced, and\n they recognize these types of accounts should be classified as GSA. NGEMC\n is in the process of reviewing classification of these types of accounts to\n determine if changes are needed; however, as of November 3, 2010, no\n accounts had been reclassified. The Office of the Inspector General (OIG)\n concurs with these planned actions.\n5\n Demand is a measure of the rate at which energy is consumed. The demand an electric company must\n supply varies with the time of day, day of the week, and the time of year. Peak demand seldom occurs\n for more than a few hours or fractions of hours each month or year, but electric companies must maintain\n sufficient generating and transmission capacity to supply the peak demand. Demand charges represent\n the high costs electric companies pay for generating and transmission capacity that sits idle most of the\n time. Demand charges are based on the amount of energy consumed in a specified period of time\n known as a demand interval. Demand intervals are usually 15 or 30 minutes. (Engineering Tech Tips,\n December 2000, Dave Dieziger, Project Leader, United States Department of Agriculture Forest Service,\n Technology & Development Program, http://www.fs.fed.us/eng/pubs/htmlpubs/htm00712373/index.htm.)\n For TVA distributors, the commercial and manufacturer Schedules of Rates and Charges direct that\n metered demand be calculated as \xe2\x80\x9cthe highest average during any 30-consecutive-minute period of the\n month of the load metered in kW.\xe2\x80\x9d\nAudit 2010-13025 Page 3\n\x0cOffice of the Inspector General Audit Report\n\n\nWhile our testing identified 19 instances where the well pump and group home\nand cabin policies resulted in a misclassified customer account, we do not know\nhow many other such instances may exist. In addition, NGEMC has received a\nhydro credit on the Schedule 1 for each well pump, group home, and cabin\nincorrectly classified as residential. We estimated the monetary effect of the\nresulting unearned hydro credits and found the monetary effect would not be\nsignificant.\n\nUSE OF ELECTRIC SYSTEM REVENUES\nUnder Section 6 of the TVA power contract, \xe2\x80\x9cUse of Revenues,\xe2\x80\x9d approved uses of\nrevenues from electric system operations, including any surplus, are (1) operating\nexpenses, (2) debt service, (3) tax equivalent payments, and (4) reasonable\nreserves for renewals, replacements, and contingencies. As discussed below, we\nfound NGEMC did not have enough cash on hand to provide a cash reserve\nwithin TVA\xe2\x80\x99s established guidelines for adequate cash reserves of 5 to 8 percent.6\n\nAs of June 30, 2009, NGEMC reported about $4.5 million in its cash and cash\nequivalent accounts. Table 2 shows NGEMC\xe2\x80\x99s cash ratio was about 2 percent.\nThis amount is lower than TVA\xe2\x80\x99s established guidelines for adequate cash\nreserves of 5 to 8 percent.\n\n NGEMC\xe2\x80\x99s Cash Accounts and Cash Ratio\n Cash and Cash\n Equivalents\n FY 2009 $4,535,303\n Cash Ratio 2.07%\n Table 2\n\nNGEMC funds its capital expenditures through use of the United States\nDepartment of Agriculture, Rural Utilities Services (RUS)7 Electric Program, upon\ncompletion of capital projects. Table 3, as shown on the following page, shows\ninformation about major capital expenditure plans for FY 2010 obtained from\nNGEMC.\n\n\n\n\n6\n TVA reviews the cash ratios of distributors as part of its regulatory rate review function. Cash ratio is\n calculated as follows: Cash + Cash Equivalents\n Total Variable Expenses (Operations and Maintenance + Purchased Power)\n7\n The United States Department of Agriculture, Rural Utilities Services Electric Program, provides\n leadership and capital to upgrade, expand, maintain, and replace America's rural electric infrastructure.\n Under the authority of the Rural Electrification Act of 1936, the Electric Programs make direct loans and\n loan guarantees to electric utilities to serve customers in rural areas.\nAudit 2010-13025 Page 4\n\x0cOffice of the Inspector General Audit Report\n\n\n NGEMC\xe2\x80\x99s FY 2010 Planned Capital Expenditures\n\n Capital Expenditure Plans Project Cost\nNew Underground Service $2,577,916\nNew Overhead Service 1,225,901\nLine Conversion/Changes 4,725,499\nNew Substations 2,722,989\nSubstation and Meter Point Changes 2,040,629\nTransformer and Meters 1,411,410\nSets of Service Wire 2,041\nSectionalizing 168,880\nCapacitors 11,397\nOrdinary Replacements (poles) 5,114,183\nSecurity Lights 358,548\nSupervisory Control and Data Acquisition 77,174\n Total Planned Capital Expenditures $20,436,567\n Table 3\n\nAlthough planned expenditures for FY 2010 were approximately $20 million,\nNGEMC\xe2\x80\x99s actual capital expenditures in FY 2010 totaled approximately\n$12.2 million, and NGEMC obtained about $12 million in loans from RUS.\nBecause of the method NGEMC has selected for funding its capital\nimprovements, these items have limited impact on NGEMC\xe2\x80\x99s ongoing cash\nposition.\n\nAccording to TVA records, over the past five years, NGEMC was approved for\nrate increases in October 2005, 2006, and 2008 and in January 2008. Table 4\nshows the rate increases received by NGEMC and the cash position and cash\nratio at June 30 prior to the effective date of each rate increase.\n\n NGEMC\xe2\x80\x99s Rate Increases, Cash Position, and Cash Ratio\n\n Cash on Hand Cash and Cash Rate Increase8\n Equivalent to an Equivalents as Reported\n Additional\n 8% Cash Ratio and Cash Ratio Percent Effective Date\n Revenue\n\n $11,924,348 $1,610,464 $5,115,957 3.28% 10/1/2005\n (CR = 1.08%)\n\n $14,105,327 $3,462,085 $2,000,000 1.26% 10/1/2006\n (CR = 1.96%)\n\n $14,853,782 $10,055,351 $281,846 0.14% 1/1/2008\n (CR = 5.42%)\n\n $15,427,974 $6,117,539 $958,231 0.48% 10/1/2008\n (CR= 3.17%)\n Table 4\n\n\n8\n These are the rate increases requested by and approved for the distributor. These increases do not\n include any rate increases or decreases made by TVA, including fuel cost adjustments, which were\n passed through by the distributor to the customer.\nAudit 2010-13025 Page 5\n\x0cOffice of the Inspector General Audit Report\n\n\nDiscussions with NGEMC management indicated their operating philosophy was\nto manage debt through borrowing and open loans with RUS. NGEMC\nestablishes a workplan for work anticipated over the next four years and requests\nloan packages based on that workplan. Depending on allocations made to the\nprogram by Congress, the money may or may not be available. When the funds\nare allocated or approved by the government, then the funds become available\nfor NGEMC to draw upon.\n\nTVA OVERSIGHT OPPORTUNITIES\nWe found opportunities to enhance TVA\xe2\x80\x99s oversight of this distributor; however,\nthe issues noted for this distributor were the same as those reported in previous\nOIG distributor reports. Specifically, we noted TVA has not:\n\n\xef\x82\xb7 Provided definitive guidance for distributors on what constitutes prudent\n expenditures.\n\xef\x82\xb7 Adequately defined the process for granting the Small Manufacturer Credit to\n ensure proper documentation, including evidence of approval, is submitted\n and maintained.\n\nIn response to the previous reports, TVA agreed to take corrective actions on\nthese issues. Full discussion of these issues and TVA\xe2\x80\x99s planned actions can be\nfound in prior OIG distributor reports on our Web site, www.oig.tva.gov.\n\nRECOMMENDATIONS\nWe recommend the Group President, Strategy and External Relations, work with\nNGEMC to improve compliance with the contract and/or strengthen internal\ncontrols. Specifically, NGEMC should:\n\n1. Implement procedures to assist in identifying accounts that need to be\n reclassified as commercial when service starts or changes to a nonresidential\n type (i.e., business or separately metered structure).\n\n NGEMC's Response \xe2\x80\x93 NGEMC agreed with the recommendation and stated\n accounts identified during the OIG audit were in the process of being\n reclassified to the recommended rate/class. In addition, management stated\n policies and procedures were in place to address the proper classification of\n accounts when service begins to ensure compliance with proper rate/class.\n NGEMC is exploring steps to allow for review of existing accounts to\n determine proper classification in the event that a former residence is\n repurposed as a nonresidential facility without notification to the co-op.\n NGEMC is making classification changes to accounts identified during the\n OIG audit and plans to have them completed on or before September 2011.\n See Appendix B for NGEMC's complete response.\n\n\nAudit 2010-13025 Page 6\n\x0cOffice of the Inspector General Audit Report\n\n\n TVA Management\xe2\x80\x99s Comments \xe2\x80\x93 TVA agreed electric service should be\n provided in accordance with the availability provisions of the applicable rate\n schedules. The target completion date for this is September 2011. See\n Appendix C for TVA\xe2\x80\x99s complete response.\n\n Auditor's Response \xe2\x80\x93 The OIG concurs with the planned actions.\n\n2. Modify the policy classifying well pumps serving residences as residential\n accounts and classify these accounts as GSA.\n\n NGEMC's Response \xe2\x80\x93 NGEMC agreed with the recommendation and stated\n the policy of classifying well pumps as residential accounts had been\n changed as of completion of the audit. NGEMC stated all new accounts of\n this type are being and will continue to be classified as a GSA account. The\n effective date of this change was December 1, 2010. See Appendix B for\n NGEMC's complete response.\n\n TVA Management\xe2\x80\x99s Comments \xe2\x80\x93 TVA management agreed the distributor's\n customer rate classification policy should be consistent with the rate\n schedules. The policy of classifying well pumps as residential accounts had\n been changed as of completion of this audit. All new accounts of this type are\n being and will continue to be classified as a GSA account. The effective date\n of this change is December 1, 2010. See Appendix C for TVA's complete\n response.\n\n Auditor's Response \xe2\x80\x93 The OIG concurs with the actions taken.\n\n3. Modify the rate classes of the customer accounts from residential to GSA for\n the identified separately metered well pumps.\n\n NGEMC's Response \xe2\x80\x93 NGEMC agreed with the recommendation and stated\n accounts identified during the OIG audit were in the process of being\n reclassified to the proper rate/class. NGEMC further stated review of\n residential class customers to identify and reclassify separately metered well\n pumps will be conducted in the coming months with a targeted completion\n date of December 2011.\n\n TVA Management\xe2\x80\x99s Comments \xe2\x80\x93 TVA management agreed customer rate\n classification should comply with the applicable rate schedule. TVA\n management also stated the distributor was in the process of reclassifying\n accounts to the correct rate and class. The planned completion date is\n December 2011. See Appendix C for TVA's complete response.\n\n Auditor's Response \xe2\x80\x93 The OIG concurs with the planned actions.\n\n\n\n\nAudit 2010-13025 Page 7\n\x0c APPENDIX A\n Page 1 of 2\n\nOBJECTIVE, SCOPE, AND METHODOLOGY\nThis audit was initiated as a part of our annual workplan. The objective was to\ndetermine compliance with key provisions of the power contract between the\nTennessee Valley Authority (TVA) and North Georgia Electric Membership\nCorporation (NGEMC) including:\n\xef\x82\xb7 Proper reporting of electric sales by customer class to facilitate proper\n revenue recognition and billing by TVA.\n\xef\x82\xb7 Nondiscrimination in providing power to members of the same rate class.\n\xef\x82\xb7 Use of revenues, including any surplus, for approved purposes, such as:\n \xef\x80\xad Operating expenses\n \xef\x80\xad Debt service\n \xef\x80\xad Tax equivalent payments\n \xef\x80\xad Reasonable reserves for renewals, replacements, and contingencies\n\nTo achieve our objective, we:\n\n\xef\x82\xb7 Obtained electronic billing data for the audit period. To validate the reliability\n of the billing data, we compared the data to the information reported to TVA\n on the Schedule 1. No significant differences were noted; therefore, the data\n was deemed reliable.\n\xef\x82\xb7 Performed queries on data to identify classification, metering, and contract\n compliance issues. We reviewed results of the queries and selected\n accounts using nonstatistical sampling for further analysis and follow-up to\n determine whether misclassification, metering issues, or noncompliance with\n contract requirements occurred. Since nonstatistical sampling was used,\n projection of the results was not appropriate.\n\xef\x82\xb7 Limited our work on internal controls to those control deficiencies identified as\n contributing to noted instances of noncompliance with the power contract\n and/or the TVA Act.\n\xef\x82\xb7 Determined through inquiry and review of documentation whether NGEMC\n had any nonelectric, system-related business interests supported by electric\n system funds.\n\xef\x82\xb7 Obtained disbursements listings for the audit period. We reviewed and\n analyzed disbursements to identify instances where electric system funds\n may have been used for purposes not allowed under the TVA power contract.\n We used nonstatistical sampling to select questionable disbursements for\n further analysis and follow-up. Since nonstatistical sampling was used,\n projection of the results was not appropriate.\n\xef\x82\xb7 Reviewed cash and cash equivalents in relation to planned capital\n expenditures and other business uses of cash.\n\x0c APPENDIX A\n Page 2 of 2\n\nOBJECTIVE, SCOPE, AND METHODOLOGY (cont.)\nWhen evaluating results of our audit work, we used both qualitative and\nquantitative factors when considering the significance of an item. For the\npurposes of this audit, the quantitative factor considered in determining an item\xe2\x80\x99s\nsignificance is whether the item exceeds 3 percent of the average annual\npurchased power from TVA for the audit period. For this audit, this amount\nequaled $5,408,950. Also for the purposes of this audit, we considered any\nerrors identified as systemic or intentional as significant.\n\nThe scope of the review was for the period July 2007 through June 2009.\nFieldwork was conducted May 2010 through July 2010 and included visiting\nNGMEC\xe2\x80\x99s offices in Dalton, Georgia. This performance audit was conducted in\naccordance with generally accepted government auditing standards. Those\nstandards require that we plan and perform the audit to obtain sufficient,\nappropriate evidence to provide a reasonable basis for our findings and\nconclusions based on our audit objectives. We believe that the evidence\nobtained provides a reasonable basis for our findings and conclusions based on\nour audit objectives.\n\x0cAPPENDIX B\n Page 1 of 2\n\x0cAPPENDIX B\n Page 2 of 2\n\x0c\x0cAPPENDIX C\n Page 2 of 2\n\x0c"


type: contracts

jurisdiction: EU

text:
 26.4.2012
 MT
 Il-Ġurnal Uffiċjali tal-Unjoni Ewropea
 L 114/33
 DEĊIŻJONI Nru 2/2012 TAL-KUMITAT KONĠUNT UE-EFTA DWAR PROĊEDURA KOMUNI TA’ TRANŻITU
 tad-19 ta’ Jannar 2012
 dwar stedina lit-Turkija, biex taderixxi mal-Konvenzjoni tal-20 ta’ Mejju 1987 dwar proċedura komuni ta’ tranżitu
 (2012/222/UE)
 IL-KUMITAT KONĠUNT,
 Wara li kkunsidra l-Konvenzjoni tal-20 ta’ Mejju 1987 dwar proċedura komuni ta’ tranżitu (1) (il-“Konvenzjoni”), u b’mod partikolari l-Artikolu 15(3)(e) tagħha,
 Billi:
 (1)
 Il-promozzjoni tal-kummerċ mat-Turkija tiġi ffaċilitata permezz ta’ proċedura komuni ta’ tranżitu għall-merkanzija ttrasportata bejn it-Turkija u l-Unjoni Ewropea, ir-Repubblika tal-Islanda, ir-Renju tan-Norveġja u l-Konfederazzjoni Svizzera.
 (2)
 Bil-ħsieb li tinkiseb tali proċedura huwa xieraq li t-Turkija tkun mistiedna sabiex taderixxi mal-Konvenzjoni,
 ADOTTA DIN ID-DEĊIŻJONI:
 Artikolu 1
 Skont l-Artikolu 15a tal-Konvenzjoni, it-Turkija hija mistiedna, fil-forma ta’ skambju ta’ ittri bejn il-Kunsill tal-Unjoni Ewropea u t-Turkija mehmuż ma’ din id-Deċiżjoni, biex taderixxi mal-Konvenzjoni mill-1 ta’ Lulju 2012.
 Artikolu 2
 Din id-Deċiżjoni għandha tidħol fis-seħħ fid-data tal-adozzjoni tagħha.
 Magħmul fi Brussell, id-19 ta’ Jannar 2012.
 Għall-Kumitat konġunt
 Il-President
 Mirosław ZIELIŃSKI
 (1) ĠU L 226, 13.8.1987, p. 2.
 ANNESS
 Sinjur,
 Għandi l-unur ninfurmak bid-Deċiżjoni tal-Kumitat Konġunt tal-UE-EFTA dwar proċedura komuni ta’ tranżitu tad-19 ta’ Jannar 2012 (Deċiżjoni Nru 2/2012) li tistieden lit-Turkija li ssir Parti Kontraenti għall-Konvenzjoni tal-20 ta’ Mejju 1987 dwar proċedura komuni ta’ tranżitu. L-Unjoni Ewropea tistieden lit-Turkija biex tassigura li hija tapplika il-Konvenzjoni msemmija hawn fuq b’mod non-diskriminatorju għall-Istati Membri kollha.
 L-adeżjoni tat-Turkija għall-Konvenzjoni tista’ ssir billi jiġi ppreżentat l-Istrument tal-Adeżjoni tagħha mas-Segretarjat Ġenerali tal-Kunsill tal-Unjoni Ewropea flimkien ma’ traduzzjoni tal-Konvenzjoni fil-lingwa uffiċjali tat-Turkija, skont l-Artikolu 15a tal-Konvenzjoni.
 Sinjur, jekk jogħġbok aċċetta l-assigurazzjoni tal-ogħla stima tiegħi.
 Is-Segretarju Ġenerali
 Is-Segretarjat Ġenerali tal-Kunsill tal-Unjoni Ewropea
 It-Turkija
 Waqt li tieħu nota tad-Deċiżjoni tal-Kumitat Konġunt UE-EFTA dwar proċedura komuni ta’ tranżitu tad-19 ta’ Jannar 2012 (Deċiżjoni Nru 2/2012) li tistieden lit-Turkija biex taderixxi mal-Konvenzjoni tal-20 ta’ Mejju 1987 dwar proċedura komuni ta’ tranżitu (il-“Konvenzjoni”),
 B’kont meħud tal-istedina biex taderixxi mal-Konvenzjoni u
 Waqt li tixtieq issir Parti Kontraenti għall-Konvenzjoni,
 B’DAN
 Taderixxi mal-Konvenzjoni;
 Tehmeż ma’ dan l-Istrument traduzzjoni tal-Konvenzjoni fil-lingwa uffiċjali tat-Turkija;
 Tiddikjara li taċċetta r-Rakkomandazzjonijiet u d-Deċiżjonijiet kollha tal-Kumitat Konġunt tal-UE-EFTA dwar proċedura komuni ta’ tranżitu adottati bejn id-19 ta’ Jannar 2012 u d-data li l-Adeżjoni tat-Turkija ssir effettiva skont l-Artikolu 15a tal-Konvenzjoni.
 Magħmula fi ... .