Reports find TVA owed $7.7M

10:43 am | July 25, 2012

KNOXVILLE (AP) — The Tennessee Valley Authority’s Office of the Inspector General says the utility was overcharged by $4.1 million for pressure-washing services. The utility also was underpaid $3.6 million by Memphis Light, Gas and Water.

The Knoxville News Sentinel reports (http://bit.ly/M2Dgf3) the findings were included in OIG reports released this week. Those reports also found the utility did not follow proper procedures in implementing a new expense management system.

TVA generally agreed with the OIG’s recommendations, although it did not agree with all the findings.

One report found that pressure washing company Pressure’s On Inc. overbilled for services.

Overcharges included nearly $2.5 million in unsupported costs for things like labor, equipment and materials. Another $1.1 million in overcharges stemmed from excessive hours for equipment operating time and hourly rates that were not what was agreed to in the contract.

Pressure’s On Inc. did not immediately return a call to the paper seeking comment.

TVA spokesman Scott Brooks said the utility will seek to recover the amount it was overbilled.

An audit of the electric system of Memphis Light, Gas and Water from January 2009 to December 2010 found that an erroneous adjustment to one customer’s account resulted in a $3.6 million underpayment to TVA.

The OIG made 10 recommendations to Memphis Light, Gas and Water for correcting metering and other issues. The utility agreed to meet those recommendations and to pay TVA the amount owed.

The OIG also examined the implementation of a new expense management system. Part of the project included replacing all TVA-issued purchasing cards with a single corporate credit card. According to the OIG, three systems used to manage TVA’s credit cards failed to route funds properly, causing rejections that had to be corrected by monthly journal entries.

The report concluded that TVA did not perform sufficient analysis before it selected an expense management system.

In a written response, TVA agreed that policies should be more strictly followed, but disagreed that its analysis was not sufficient.

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