Federal Reports

In August 2008, numerous newspaper articles questioned the fairness of a TVA Maintain and Gain transaction granting water access to The Cove at Blackberry Ridge LLC (Blackberry). The articles raised questions about whether the Blackberry's primary investor, a Congressman, used his position to influence TVA's decision to grant Blackberry's request for water access. Because doubt was cast on the fairness of a TVA process, the OIG conducted an inspection and found no evidence of pressure on TVA from the Congressman to give Blackberry water access on this lakefront project. However, the appearance of possible favoritism resulted in reputational harm to both the Congressman and TVA. As a result of that inspection, TVA and the Board of Directors developed the "Obtaining Things of Value from TVA Protocol" (Protocol) in June 2009 to provide a means to identify the potential of actual or apparent conflicts of interest or the appearance of the exertion of undue influence on the part of a person applying for a TVA benefit.This audit was initiated to determine whether (1) the design provides reasonable assurance of meeting its intended purpose and (2) the Protocol was implemented as required. We determined the Protocol provides false assurance TVA is mitigating the risk of undue influence due to several factors: (1) the design not meeting its intended purpose, (2) the Protocol not being implemented as required, due to inconsistent incorporation into policies and procedures and noncompliance with some Protocol requirements, (3) a lack of consequences for the applicant's noncompliance with self-disclosure, and (4) an absence of instructions on how an employee should disclose knowledge of actual or apparent undue influence limits the likelihood it will be identified and prevented. Ultimately, this poses a risk of reputational harm to TVA and the applicant, person, corporation, or entity seen as receiving the benefit.We recommended TVA (1) perform a risk assessment to determine what types of "things of value" and "covered persons" should be defined in the Protocol; (2) enhance the Protocol by evaluating the benefit of whether to define applicant violation consequences, incorporating reporting guidelines for employees, and revising immediately, and requiring review cadence; (3) require implementation of the Protocol for benefits identified as "things of value," into all TVA related policies and processes; (4) develop a repository for all types of defined "covered person" requests other than those related to Section 26a permit and interest in real property requests; (5) identify who is responsible to brief the TVA Board's Audit, Risk, and Regulation Committee; (6) provide annual training; and (7) disseminate the Protocol annually, at a minimum, to TVA personnel who could be affected by its requirements.

The TVA developed an integrated resource plan (IRP) to guide the organization in meeting future energy demand. Due to the importance of the TVA's IRP as a directional document for TVA's future, the OIG evaluated the adequacy of TVA's development process for the 2015 IRP, including demand-side and supply-side strategies. We determined TVA's process for developing the 2015 IRP was adequate in considering potential future uncertainties and associated responses. Specifically, we determined the IRP project team met stakeholder input objectives by engaging numerous stakeholders and incorporating public opinions into the development of the IRP; considered project risks, including those related to project management; and incorporated practices commonly seen in integrated planning processes, as well as best practices, into the IRP. In our opinion, the IRP team improved on integrated resource planning efforts as the 2015 IRP incorporated lessons learned from the 2011 IRP, where applicable. Additionally, we determined scenario and strategy development and consideration of IRP inputs were consistent with those of other organizations. TVA developed metrics to analyze the portfolios generated in the 2015 IRP that reflected stakeholder input, where applicable, and were consistent with TVA's strategic mission and imperatives. Lastly, we determine considerations included in the Supplemental Environmental Impact Statement were adequate.

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