Distributor Review of Lenoir City Utilities Board

OIG reviewed the Lenoir City Utilities Board (LCUB), a distributor for TVA power based in Lenoir City, Tennessee. LCUB also operates nonelectric businesses that include gas, water, and sewer utilities. The OIG's review found multiple concerns, including (1) customer classification and metering issues that could impact the proper reporting of electric sales and/or nondiscrimination in providing power to members of the same rate class; (2) noncompliance with certain power contract provisions on executing customer contracts and allocating joint costs between service departments; and (3) weak internal controls related to accuracy of contract demand entered in the billing system and policies over charitable contributions. We also found TVA could enhance oversight of the distributors by developing guidance regarding verification of Standard Industrial Classification (SIC) codes to ensure a company qualifies to receive certain credits.TVA and LCUB agreed with the OIG's recommendations and are taking actions to correct the identified issues. Summary Only