All Reports

We performed four agreed-upon procedures solely to assist management in determining the validity of the Winning Performance payout awards for the year ended September 30, 2008. In summary, we found:The fiscal year 2008 Winning Performance goals were properly approved. However, during our review, we noted the definition sheets describing the formulas for the three TVA incentivized measures were not approved by the Board.

We reviewed the qualifications for contractor and subcontractor employees working on the Watts Bar Nuclear Plant Unit 2 (WBN U2) construction project to assess the hiring process and determine if those hired met minimal qualifications for their designated labor category (grades). We determined:TVA's engineering, procurement, and construction contract did not include minimum requirements for the 20 specified labor categories; moreover, the contractor lacked corporate criteria specifying minimum requirements for filling these positions at WBN U2.

The United States is facing an energy crisis of historic proportions and when coupled with the recent national economic instability, these two factors present utility companies like TVA with unique challenges. The electric utility industry is a very capital-intensive industry requiring TVA to make large scale capital investment decisions. Risk is inherent in the process. How TVA manages those risks is particularly important today.

We audited $7.9 million of costs billed to TVA by a contractor for supplying ammonia and providing engineering and technical services for ammonia facilities to various TVA fossil plants.

This review was the first in a series of reviews that will benchmark TVA's performance in key areas and answer the question, "How is TVA doing in regards to Customer Relations." In conducting this review, we (1) assessed key performance measures and their alignment with the key strategic objectives; (2) evaluated TVA's results relative to targets and available benchmark information; and (3) identified key management challenges that could affect how successful TVA is in achieving these strategic objectives.

Since the Office of the Inspector General's previous review of TVA's risk program in 2003, TVA has enhanced its Enterprise Risk Management (ERM) capabilities in the following areas: risk identification and assessment; management tone; strategic decision-making support; commitment to ERM staffing; and promotion of an ERM culture.

The Office of the Inspector General's review of TVA's compliance with the Federal Information Security Management Act (FISMA) of 2002 determined that TVA had improved (1) tracking of security weaknesses, remediation actions, and incidents and (2) measures to ensure appropriate personnel complete role-based security training.

We reviewed the contractor's processes and key controls for tracking and accounting for costs used in invoicing TVA for its work. Based on the review, we believe the contractor's system increases the risk of improper billing. Specifically, the system used for TVA billings (1) has limited design documentation and prescribed controls; (2) requires significant manual data entry; (3) increases the hours spent to prepare project invoices; and (4) results in numerous adjustments which, according to TVA management, have totaled more than $1 million.

Based on concerns expressed to the Office of the Inspector General, we initiated an inspection of TVA's easement with the Tishomingo County Development Foundation (TCDF). The objective of the review was to determine whether easement payments were made in accordance with the agreement. We found that while TCDF was not in compliance with amended easement payment provisions, the payment provisions were recently amended for the second time to provide the developer, Pickwick Pines Marina (PPM), an opportunity to develop and operate the marina.

We reviewed certain Browns Ferry Unit 1 (BFN U1) operating issues that have occurred since the restart in May 2007. We found the operating issues were primarily caused by improper installation of a fitting during the restart project and another fitting during initial construction, original plant design errors, failure to identify the correct root cause of a previous issue in a timely manner, and failure to identify a missing wood support during walkdowns.