Bureau of Audits

Adjustment Clause Audits

Gas, steam-heat and certain municipal electric utilities require an annual adjustment clause audit as mandated by the legislature. The audits verify the energy costs incurred by a utility, determining if the utility overbilled or underbilled customers for yearly energy charges. The PUC then decides if customer rates will be appropriately reduced or increased. The bureau performs audits of certain water utilities that are authorized to charge ratepayers a Distribution System Improvement Charge (DSIC). The DSIC enables water utilities to accelerate compliance with the Safe Drinking Water Act. Audits are conducted to ensure that only Commission-authorized expenses are included in the DSIC rates. Certain electric utilities impacted by the Electric Competition Act are authorized to recover a portion of their stranded costs through Competitive and Intangible Transition Charges. The utilities are required to file annual reconciliation statements associated with the application of these charges. The bureau will perform audits designed to determine the accuracy and the propriety of the reconciliation statements.

Financial Audits

These audits cover a wide variety of financial issues. They also include original cost audits (OC), original cost studies (OCS), and continuing property records audits (CPR). The audits determine the propriety of the property, plant and equipment records together with an evaluation of the usefulness of that equipment. The CPR audits are scheduled on a five-year cycle whereas the OC audits are dependent upon certain conditions being met and the utility submitting an OC study. Compliance audits examine a broad range of utility operations and determine adherence to prescribed laws and regulations.

Management Audits and Management Efficiency Investigations

Management audits are performed to determine the extent to which a utility has contained costs; developed reasonable long-range and short-range plans for its continued operation and maintenance; provided proper service to customers; and provided proper management and organizational structure. Management efficiency investigations examine management effectiveness and the operating efficiency of the utilities and also assess the utilities' progress in implementing recommendations from prior management audits. The audits are mandated for approximately 32 large and medium-size fixed utilities. These utilities must be audited every five to eight years. There are a few hundred utilities, with plant-in-service of less than $10 million, subject to audit procedures on an as-needed basis. Bureau staff generally performs such audits as a result of a specific problem or complaint.