Federal Reports

The objective of this review was to determine whether TVA was meeting all requirements and planned actions for the removal of equipment containing polychlorinated biphenyls (PCBs). We found there were currently no requirements for the removal of PCB equipment, and previous planned actions for PCB equipment removal were not always completed. We believe continued use of PCB-containing equipment poses significant risk to TVA, as (1) TVA maintains one of the largest inventories of PCB equipment in the electric utility industry; (2) the condition of some PCB equipment at TVA increases the risk of an incident; and (3) TVA does not have an accurate inventory of its PCB-contaminated equipment.We recommended the Chief Operating Officer (1) expedite removal of PCB equipment by (a) providing dedicated funding and (b) developing a standard methodology for assessing risk of PCB contaminated equipment to prioritize its removal; and (2) provide dedicated funding to expedite efforts to determine PCB-contaminated equipment inventory to prioritize and allocate funding, accordingly, for the removal of this equipment. Until the PCB-contaminated equipment inventory is completed, TVA should treat all fires involving electrical equipment as if it contained PCBs until determined otherwise.

Continuous Monitoring

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.