TVA Office of the Inspector General Report regarding the Scottsboro Electric Power Board--Discriminatory Acts of Utilities and TVA's Responsibility

The following release was forwarded to area media agencies.

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TVA Office of the Inspector General Report Concerning the Scottsboro Electric Power Board (OIG):

The OIG performed a review of the City of Scottsboro Electric Power Board (Scottsboro) which is a distributor for TVA power based in Scottsboro, Alabama. Scottsboro also operates a telecommunications department that offers cable, internet, and telephone services. Also, Scottsboro is one of four distributors to which TVA granted retail rate setting authority. In 2002, TVA Board of Directors approved and made available to distributors six wholesale power contract flexibility options. One of these available options terminated TVA's contract authority and obligations regarding retail rates. Four distributors (Scottsboro, Knoxville Utilities Board, Memphis Light, Gas and Water, and Meriwether Lewis Electric Cooperative) were granted this authority. As a result, these distributors have the authority to determine the retail rates charged to its customers with no or limited oversight by TVA. The TVA Board, however, did not relinquish the responsibility to ensure the power purchased is sold and distributed to the ultimate consumer without discrimination among consumers of the same class, and no discriminatory rate, rebate, or other special concession will be made or given to any consumer. According to agreements with three distributors, the options were provided (1) because the electric utility industry was undergoing changes and restructuring, and (2) to prepare for the prospect of legislation further altering the industry and the relationship between TVA and its distributors. The decision previously made by the TVA Board of Directors to allow the four distributors to regulate their own retail rates significantly increases the reputational risk to TVA surrounding their role as a regulator. The Office of the Inspector General (OIG) will address this issue separately after additional reviews are undertaken.

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Our review of Scottsboro found issues involving customer classification and metering that could impact (1) the proper reporting of electric sales and/or (2) nondiscrimination in providing power to members of the same rate class. We also identified two other potential power discrimination issues related to Scottsboro (1) providing a specialized industrial rate to only one customer and (2) not passing wholesale fuel cost adjustments and wholesale rate increases/decreases to all customers. We were unable to estimate the monetary effect of all the classification and metering issues because in some instances information was not available; however, for the one instance where information was available, we estimated Scottsboro owed TVA approximately $88,000 in wholesale demand charges. (end report) http://oig.tva.gov/reports/audit-inpsections.html
(Note at the end of the official OIG report concerning the Scottsboro Electrical Power Board the PDF entry. This entry contains the Executive Summary of the Inspector General. It reflects the fact that all customers of the Scottsboro Electric Power Board were required to pay in excess of $1.1 million dollars for internet, and phone services for a select few customers. Not all customers of the Scottsboro Electric Power Board have telecommunications services available. Why should customers pay for a service they do not receive? The PDF report also includes the City of Scottsboro Electric Power Board reply.)
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Other words the Scottsboro Electric Power Board overcharged their customers. There is also a question concerning the equal payment of rates of the Power Boards residential customers.

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SCOTTSBORO UTILITIES DISCRIMINATORY PRACTICES:

The Scottsboro Electric Power Board discriminates against poor, retired and disabled customers due to their billing practices. The Power Board refuses to move the bill due date of financially disadvantaged customers who are on fixed income, customers which receive Social Security retirement, disability, military retirement checks or VA disability checks on the 1st or the 3rd of each month. The Electric Power Board's practices cause the previously mentioned classes of people to suffer finacial loss due to penalties assessed to the poor, disabled or retired because they may not be able to pay their bill on the date due.

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WATER SEWER AND GAS BOARD:

Unfair treatment of the poor and disadvantaged has extended to the Scottsboro Water Sewer and Gas Board (WSG). When complaints were filed with the local WSG Board concerning broken pipes and filthy water, instead of helping to resolve problems, the WSG ceased service to the problem area forcing the economically disadvantaged and minority residents of the area to suffer higher water rates from an unlicensed, private water distribution provider/landlord. The WSG does not treat all users of product or services fairly.

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NO PUBLIC UTILITY COMMISSION OVERSIGHT CONTRIBUTES TO PROBLEM IN TVA AREA:

The resulting discriminatory practice of the of Scottsboro Water authority as a result of its managers decision making is enabled by no State Public Utility Commission oversight in the TVA operating area. Thus, because of a lack of oversight, it has become possible  the poor and disabled may suffer at the hands of unwavering Utility Boards who are concerned with their financial bottom lines and not the health and welfare of citizens.

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QUESTION TO TVA--WITH NO STATE PUBLIC UTILITIES COMMISSION OVERSIGHT TO ASSIST IN PREVENTION OF LOCAL PUBLIC UTILITIES DISCRIMINATION. WHAT ROLE WILL THE TVA PLAY IN PREVENTION AND INTERDICTION INTO ALLEGATIONS AND EXAMPLES OF SOCIAL, DISADVANTAGED, DISABLED AND MINORITY CLASS DISCRIMINATION IN VIOLATION OF FEDERAL LAW?

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