All Reports

We reviewed TVA's contracts with a contractor that provided boiler pressure parts and burner parts and determined the contracts' compensation clauses were not adequate for determining and evaluating prices to be billed for the parts. We recommended TVA management (1) incorporate specific pricing criteria in the contracts for use in determining and evaluating prices and (2) revise/supplement the cost reimbursable payment terms under one of the contracts to specifically address costs/rates to be paid by TVA.

We assessed the adequacy of controls applicable to the accounting for costs associated with non-nuclear insurable losses. TVA has negotiated and obtained insurance to cover two areas of non-nuclear operations: (1) non-nuclear property and (2) unplanned outages. The unplanned outage insurance covers Fossil's nine baseload units. In summary, we found that the Corporate Insurance Risk & Analysis Group (CIR&A) is in the process of developing policies and procedures to ensure identification of non-nuclear insurable losses and the accounting for associated costs.

This is my first report to TVA’s newly constituted Board since the new Board members were sworn in on March 31, 2006. Legislation signed by President Bush in 2004 expanded the Board from three full-time members to nine part-time members, with a full-time chief executive officer to run TVA on a day-to-day basis. As has been noted by many, this is a historic change to the governance structure of TVA.The impetus for this change was a growing sentiment over the years that TVA’s governance structure had become anachronistic. For 73 years, TVA was managed by three full-time board members.

TVA's previous contract for administration of dental benefits went into effect on January 1, 1999. In April 2005, TVA's Employee Benefits and Procurement sent out a Request for Proposal for quotes from seven companies interested in providing administrative services for dental benefits to TVA's employees.

As a result of our review of the procedures and key control activities used to track and account for tools at Browns Ferry Nuclear Plant (Inspection No. 2005-526I), we performed an inspection to assess the processes and key control activities used to track and account for tools at SQN. TVA Nuclear (TVAN) Business Practice 226 (BP-226), Tool and Equipment Accountability, dated August 27, 2000:Established and implemented a plant accountability system for tools and equipment.Strengthened and standardized existing tool and equipment accountability practices.

We performed a limited scope review to assess the processes and controls over the sale of TVA assets on eBay, including how eBay is chosen for the sales mechanism, reserves are determined, and payments are received and accounted for. Our review of the TVA Investment Recovery (IR) procedures for eBay sales (eBay Sales), dated December 6, 2005, identified several opportunities for improvement.

We reviewed the process and controls for emissions data reporting. Our objective was to ensure that controls are prescribed and functioning to ensure accurate emissions data reporting. The Continuous Emissions Monitoring System (CEMS) is in place at TVA fossil plants and combustion turbine facilities to report data on opacity, SO2, NOx, CO2, and flow.

TVA's helicopter fleet consists of seven helicopters that TVA owns and self-insures. Based on our review of FlightWatch1 data and discussions with the Manager of Helicopter Services, TVA's helicopters are used for a variety of missions, including:Inspecting TVA's 17,000 circuit miles of transmission lines in a seven-state region.Aerial photography, laser mapping, and river and environmental surveys. Construction support. Clean air testing. Right-of-way inspections. Transportation of TVA executives.

We determined Procurement has made Purchasing Card Program changes to address control weaknesses identified in our previous report on the program; however, travel and travel-related expenses are still being charged to the purchasing cards.

Determined the (1) Fiscal Year (FY) 2005 LLRW estimate appeared reasonable when unforeseen incurred LLRW disposal costs were taken into account and (2) the processes, methodology, and assumptions used to develop the FY 2006 disposal estimates were consistent with those used in developing the FY 2005 estimates. In addition, we verified that the LLRW expense and liability accounts were adjusted quarterly in accordance with TVA Nuclear Business Practice 263.