Distributor Audit of Sevier County Electric System

The OIG audited Sevier County Electric System's compliance with the power contract between the TVA and Sevier, a power distributor based in Sevierville, Tennessee, for the period July 2008 through June 2010. For fiscal year 2010, Sevier provided power to approximately 54,000 customers that resulted in revenues of approximately $134 million.Our audit found Sevier 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. However, areas for improvement in contract compliance were noted relating to customer classification and customer contract maintenance. Sevier and TVA management agreed with our recommendations and have taken or are taking corrective actions. The target completion date for all corrective actions is June 2012.