Distributor Audit of BVU Authority

The OIG audited the electric system of BVU Authority (BVU), a distributor of TVA power based in Bristol, Virginia. The objective of the audit was to determine compliance with key provisions of the power contract between TVA and BVU for the period July 2008 through June 2010. For fiscal year 2010, BVU provided power to approximately 16,500 customers resulting in electric sales revenue of approximately $49 million. During the period, BVU also operated a water division, wastewater division, and telecommunications division that included broadband, telephone, cable television, and managerial and consulting services. In addition, BVU provided billing services for the garbage collection division of the city of Bristol, Virginia.Our audit found BVU generally complied with the contract provisions for (1) proper reporting of electric sales, (2) nondiscrimination in providing power, and (3) use of electric revenue for approved purposes. We also found BVU's multiple lines of business were adequately segregated, and the cost allocation methodology was reasonable and consistently applied. However, we found improvements were needed in (1) classifying customers, (2) obtaining manufacturing certifications from customers, (3) entering contract demand in the billing system, and (4) documenting rationale for adjustments.BVU and TVA management agreed with our recommendations and have taken corrective actions.