Tennessee Valley Region
Semiannual Report | October 1, 2009 – March 31, 2010

Table of Contents

Message from the Inspector General 4

Special Feature & Noteworthy Undertakings. . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Executive Overview 14

Office of the Inspector General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

Summary of Representative Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Summary of Representative Audits 26

Summary of Representative Investigations 34

Legislation and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

Appendices 42

Appendix 1 – Index of Reporting Requirements Under the Inspector General Act 43

Appendix 2 – Audit and Inspection Reports Issued 44

Appendix 3 – Audit and Inspection Reports Issued With Questioned

 and Unsupported Costs and Recommendations for Better Use of Funds 46

Appendix 4 – Audit and Inspection Reports with Corrective Actions Pending 48

Appendix 5 – Investigative Referrals and Prosecutive Results 49

Appendix 6 – Highlights 50

Appendix 7 – Statement of Richard W. Moore before the Subcommittee on

 Water Resources and Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

Glossary, Abbreviations, and Acronyms 53

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Semiannual Report | October 1, 2009 – March 31, 2010

Message from the Inspector General
Semiannual Report | October 1, 2009 – March 31, 2010

In this semiannual report, we ask the 

question, Culture: Asset or Liability? 

The Kingston incident demonstrated 

that a culture at a TVA fossil fuel plant 

which treats coal ash management like 

“taking out the garbage” can be a severe 

liability. Unfortunately, culture has been 

treated as a “soft” issue by both TVA 

and the Office of the Inspector General. 

While TVA has routinely taken a reading 

of culture through their “Cultural Health 

Index” reviews each year, there has 

been minimal effort until now to correct 

cultural problems. As one scribe noted 

in the aftermath of Kingston, “It takes a 

crisis.” It is now clear that culture is not 

a “soft” issue that only affects employee 

retention or employee “satisfaction” 

ratings. Culture, in a very real way, has 

shown up on TVA’s balance sheet. It can 

literally make or break a company.

TVA has not been alone in overlooking 

the impact of culture on its operations. 

The Office of the Inspector General has 

historically identified “control issues” 

in areas like Information Technology 

management, contracting, environmental 

reporting, and land management. But 

like TVA, we have traditionally viewed 

these issues as process problems to be 

addressed by a better set of controls 

and consistent compliance with those 

controls. It is easy to treat culture as 

a “soft” issue. We now recognize that 

the repeat findings we have chronicled 

over the years have emanated from a 

culture that promotes ad hoc solutions 

and eschews compliance with uniform 

standards. In Kingston, we saw plant 

management opting for “a better way,” 

without coordinating with TVA engineers 

despite clear professional engineering 

reports recommending specific design 

changes. 

TVA must start at the beginning. The 

beginning is to identify the specific 

philosophy (or philosophies) of its 

employees that represent a shared set 

of convictions which either promote the 

mission of TVA or hinder that mission. 

That is the heart of culture. To start 

anywhere else is wasted effort.

The Office of the Inspector General at 

TVA has a role to play here. Through 

our audits, inspections, and investigations, 

we are routinely presented with evidence 

of the philosophy of TVA employees. 

TVA can institute a standard procedure, 

but without employee “buy-in” it is 

unlikely that the standard procedure 

will survive the culture. We can say 

this having seen this mode of operation 

repeated at TVA time after time.

To identify the cultural issues we 

find in the course of our audits and 

investigations, we are applying a new 

culture matrix with every report we 

do. We will go beyond the normal audit 

process to determine whether or not 

there is an underlying attitude present 

which is a hindrance to good performance.

Our Empowerline hotline (1-877-866-

7840 or oigempowerline.com) continues 

to be a source of useful tips about not 

only fraud and employee misconduct, but 

also about cultural attitudes that tipsters 

see displayed in their work areas. We are 

committed to distilling this data into a 

useful form in order for TVA to make 

a better assessment of the state of its 

culture. The goal is to surface what those 

employee values are (as opposed to 

perhaps the values statement on a poster 

in the plant) so that TVA can start to 

better align those values with the course 

set by the TVA Board and TVA leadership. 

As the special feature highlighting 

TVA’s new Organizational Effectiveness 

Initiative demonstrates, TVA leadership 

has launched a robust program to tackle 

the culture issue. This is an initiative that 

receives broad support from the TVA 

Board and Tom Kilgore. 

Our cover for this semiannual report 

is a depiction of a spiral staircase in a 

lighthouse leading up to the beacon. It 

is emblematic of the step-by-step journey 

TVA is on to build a better culture that 

will truly be a company asset. Just 

like a lighthouse guides seafarers to 

a safe harbor, the TVA Board and TVA 

management are sending a clear signal 

of the right direction for TVA. The Office 

of the Inspector General is dedicated to 

supporting this mission.

Message From The Inspector General

The Tennessee Valley Authority continues to live under the cloud of 

the Kingston ash spill of December 2008. The Office of the Inspector 

General is reminded of this shadow every day through our continuing 

review of TVA’s efforts to return the Kingston area to its former state. 

We see TVA making steady progress on the physical cleanup; but 

more importantly, we see signs of an improvement in the TVA culture 

that contributed to this unfortunate environmental event. 

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Richard W. Moore

Inspector General
Semiannual Report | October 1, 2009 – March 31, 2010

Special Feature & Noteworthy Undertakings
Semiannual Report | October 1, 2009 – March 31, 2010

SPECIAL FEATURE:

The Culture Risk Connection

Prior to the OIG issuing its report, 

TVA engaged Stantec, an engineering 

company, to rigorously inspect, 

evaluate, and make recommendations 

on ash storage facilities at all its fossil 

plants. In addition, TVA engaged 

McKinsey & Company, a consulting firm, 

to address the cultural issues brought to 

light as a result of the ash spill.

During our review, TVA retained the 

firm of McKenna Long & Aldridge, 

LLP, a national expert in independent 

investigations, to conduct an 

independent factual investigation of 

the Kingston spill and its implications 

relating to systems, controls, and 

culture. On July 21, 2009, the Board 

approved a resolution to address the 

failures identified in the McKenna 

report. At the same board meeting, 

the Board directed TVA management 

to develop an extensive remediation 

plan in response to the independent 

investigation of the Kingston ash spill, 

various reports by the TVA Inspector 

General, and recommendations by TVA 

management.

As a result of this resolution, TVA 

created the Organizational Effectiveness 

Initiative, OEI, under the responsibility 

of TVA Vice President John Thomas. 

Assisted by McKinsey and Company, 

TVA has started a major organizational 

restructuring effort that is being 

overseen by the OEI team. Thomas 

explained that McKinsey and Company 

is transitioning out of its active role in 

assisting with TVA’s cultural change 

initiative to allow TVA’s OEI Team to 

lead the charge.t

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Every company has a culture. Risk assessment is something 

companies commonly claim to do. But, how many companies 

consider the impact culture itself has on risk assessment?

“Not many,” says Organizational/Industrial Psychologist Dr. Michael McIntyre, 

Ph.D., “at least not on paper,” he adds. “People usually know the difference between 

right and wrong, but they don’t always know how to or feel safe in applying the 

difference, especially when the culture supports turning a blind eye to what 

potentially could be a problem.”

McIntyre affirms there is a link between culture and organizational risk and that 

culture affects how risk is viewed. “For example, historically, companies that have 

operated as a monopoly, where they have little to no competition, can often get 

fixated on profit-margin and view customer service as a lower priority/low-risk 

area.” McIntyre explains. “This can work for a while if the company doesn’t have 

much competition, but as soon as there is a new game in town and customers have 

another viable option, the company, can and likely will, see a significant profit loss. 

Essentially, there needs to be a strategic and comprehensive approach to achieving 

organization-wide goals and assessing risk so that functions of the organization 

that are intrinsically-linked are considered equally in importance to achieving 

overall goals.”

In the case of the Tennessee Valley Authority (TVA), the organization has had an 

Enterprise Risk Management, or ERM, process that has been in place since 1999. 

However, the TVA Office of the Inspector General (OIG) released a report in July 

2009 that concluded prior to the December 22, 2008, historic coal ash spill at 

TVA’s Kingston Fossil Plant and despite internal knowledge of risks associated 

with ash ponds, TVA had not identified ash management as a risk. While over 

the years there was internal discussion about placing the ash ponds under TVA’s 

Dam Safety Program, which would have required more rigorous inspections and 

engineering of the ash ponds, TVA chose not to do this.

The July 2009 report assessed TVA’s root cause analysis and evaluated TVA 

management’s role regarding ash storage and found that managing ash storage 

was a low priority. The report also concluded that TVA could have possibly 

prevented the Kingston spill if it had taken recommended corrective actions. 

TVA was aware of “red flags” that were raised over a long period of time 

signaling the need for safety modifications to TVA ash ponds. 

Another conclusion of the OIG’s report was that the attitudes and conditions 

at TVA’s fossil fuel plants emanated from a legacy culture that impacted the way 

TVA handled coal ash. Ash was relegated to the status of garbage at a landfill 

rather than treating it as a potential hazard to the public and environment. TVA 

management generally agreed with the findings of the report.
Semiannual Report | October 1, 2009 – March 31, 2010

In regard to decision-making which 

falls under the Operating Policies 

and Procedures category, Thomas 

indicated that employees needed clear 

understanding of what their decision 

rights were. In analyzing TVA culture, 

the OEI team found that people didn’t 

really know what their decision rights 

were and that there were decisions 

that went high in the organization 

that could’ve been made at a lower 

level. Conversely, there were issues of 

significance that probably should have 

been elevated to a higher level that 

weren’t.

“If it’s not documented and it’s not 

clear, then decision-making becomes 

individualistic,” Thomas said. “People 

who are more conservative are going 

to go ask and people who are more 

emboldened are just going to go do. 

What we’re trying to build is a wellthought out, conscience structure that 

guides the decision-making process.” 

Thomas indicated creating this 

awareness among employees empowers 

them to ask strategic questions in 

regard to risk such as: “What’s the 

risk inherent in this decision? What’s 

the financial impact of this decision? 

How many dollars are at stake here? 

How many people in the organization 

is this going to impact? What’s the 

reputational risk? What would be 

the perception of this decision on the 

external world?”

According to Thomas, this conscience 

structure will eliminate the 

individualistic decision model by having 

a structured, thought-out process for 

decision-making.

Thomas emphasized that the OEI team 

wants the culture change process to be 

transparent and in that spirit, they’ve 

created an internal Web site detailing 

their progress so that TVA employees 

can readily access the information. 

They’ve even posted questions from 

TVA employees along with the OEI 

team’s answers so all TVA employees 

can view them.

Thomas explained that though the 

cultural change process has started 

with TVA executives and upper 

management, the OEI team along with 

McKinsey and Company wanted to pilot 

their cultural change framework with 

frontline employees. He explained 

the criteria for selecting their test 

group included finding a TVA facility 

that was somewhat complex so 

that a representative sample size of 

employees could be obtained. It was 

equally as important to conduct the 

test at a facility where the management 

team was open to new ideas and would 

be engaged in the process. Paradise 

Fossil Plant in Kentucky fit the bill.

The goal of the pilot was to improve 

performance and accountability at 

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1. Organizational Restructuring

Align the business for optimal 

performance. This undertaking 

has already started with 

top-level executives and 

upper management.

2. Governance and Accountability

Create a clear framework 

around responsibilities and 

accountabilities for every 

employee.

3. Operating Policies and Procedures

Create and implement a consistent 

company-wide architecture to 

enhance clear decision-making.

4. Skill Sets

Develop processes to continually 

develop and identify skill gaps.

5. Rewards and Recognition

Improve performance management 

process to increase effectiveness 

and accountability.

Thomas explained the five-category approach to addressing culture change at TVA. 

PARADISE FOSSIL PLANT
Semiannual Report | October 1, 2009 – March 31, 2010

every level. The pilot was intended 

to help employees and management 

identify ways to improve the most 

significant gaps in the plant’s 

operational and organizational 

performance. Since the planteffectiveness pilot at Paradise Fossil 

Plant began last December, almost 

400 Paradise employees have 

contributed more than 1,300 ideas 

that could eventually save TVA more 

than $60 million annually. The lessons 

learned from the pilot have been and 

will continue to be used to identify 

tools and techniques that can be 

applied across the organization 

and demonstrate examples of 

successful change.

When asked how culture change 

throughout TVA would eventually 

be measured, Thomas responded 

that the cultural health indexes TVA 

normally conducts yearly will be used 

as benchmarks to gauge culture change. 

But, as far as knowing if the culture has

changed, success would be 

apparent in the way TVA 

does business.

“Clarity in conversation 

can be a positive indicator 

of cultural change,” 

Thomas said. “When 

people understand 

and can communicate 

exactly what their roles 

are, what’s expected of 

them and how they are 

held accountable for 

performance, the change 

becomes apparent. At that point, you 

don’t have to have a metric to know 

there’s clear understanding where 

there wasn’t before. Just like you don’t 

need a metric to prove Tiger Woods 

has an image problem, the same is 

true for culture. When the culture is 

generally healthy, people talk about it.

It becomes transparent and evident in 

the way we do business, the way we 

communicate internally and externally.” 

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PARADISE: FACTS & FIGURES

• Paradise has three coal-fired generating units.

• Construction began in 1959 and was 

completed in 1970.

• The winter net dependable denerating 

capacity is 2,273 megawatts.

• The plant consumes some 20,000 tons 

of coal a day.

 Paradise employees, from left, are Scott Layne, Todd Robinson, Kelly Free, 

Aaron Melda and Wayne Scott. Melda is plant manager, and the others are

Power House Maintenance boilermakers. PARADISE FOSSIL PLANT
Semiannual Report | October 1, 2009 – March 31, 2010

NOTEWORTHY UNDERTAKINGS

> Inspector General

Moore Testifies

to Congress on

December 9, 2009

The Tennessee Valley Authority, the 

nation’s largest public power provider, 

has been under intense congressional 

and public scrutiny since the coal ash 

spill of December 22, 2008, in which 

5.4 million cubic yards of ash from 

its Kingston Fossil Plant poured onto 

adjacent land and into the Emory River. 

The spill has been deemed the largest 

environmental disaster in U.S. history. 

In response to the spill, the TVA OIG 

released two reports in 2009--one on 

June 12 critiquing TVA’s response to 

the ash spill and another on July 23 

evaluating TVA’s root cause analysis 

of the spill. These reports are posted 

on the TVA OIG Web site at oig.tva.

gov/2009audits.html.

TVA Inspector General Richard Moore 

has been at the forefront of the 

discourse about these reports, briefing 

Congressional staffers and Congress as 

requested. Inspector General Moore’s 

testimony is posted at oig.tva.gov/

testimony.htm.

 

Excerpt from Inspector General 

Moore’s December 9, 2009 

Congressional Testimony to the 

House Subcommittee on Water 

Resources and Environment of the 

Committee on Transportation and 

Infrastructure

This is not the first time that TVA

has been under the microscope

nor the first time that findings and

recommendations for significant

change have been made. The McKenna

report aptly points out that in 1987, 

in response to TVA’s nuclear safety

issues and sustained regular increases

in TVA’s rates, The Southern States

Energy Alliance Board created an

advisory committee which found some

of the same problems with TVA in the

1980’s as we are finding today. The

McKenna report also notes that my

office has issued reports citing process

problems at TVA that continue to

resurface over the years.

While it is true that none of the

attempts to reform TVA focused on

culture and risks to the extent that 

has been done in the aftermath of the

Kingston spill, it is clear that there are

some recurring themes in TVA history. 

One is that TVA has suffered from

an insular culture that shuns views

outside the “Valley.” This defensive and

protectionist philosophy has produced 

a tunnel vision that eschews input

that might have aided in changing the

very culture that has contributed to

TVA’s current woes. That same culture

resisted system-wide standards and

accountability. All of this is based on

an underlying philosophy that TVA’s

uniqueness as a hybrid government

agency exempted it from adherence

to standards and uniform process. 

My point here this morning is simply

this: the challenge for TVA is a culture

that is highly resistant to reform. The

Kingston spill demonstrated that in

a dramatic way. Changing a culture

takes time. The same culture that

existed on December 22, 2008, still

exists today. Its residual effect is likely

to be felt for years to come.

Despite all of this, I remain optimistic

that the current efforts to effect

meaningful changes at TVA will be

successful for four reasons: (1) the

kinds of reforms being implemented

at TVA are system-wide process

changes that have worked well in

private sector companies and that

have not had the system failures TVA

has experienced; (2) TVA management

has demonstrated a willingness to

solicit input from culture experts

outside the Valley, and they appear

to be taking all of this very seriously;

(3) TVA management has recently

gone through an extremely

robust evaluation of risks that is

unparalleled in TVA history; and

(4) TVA management has made

personnel changes that, to me,

provide credible evidence of a

commitment to do whatever it

takes to get this right.

> TVA Inspector

General Addresses

the Topic of Ethics

to TVA Fuel Supply 

Vendors

TVA Inspector General Richard 

Moore highlighted his desire to build 

relationships with TVA employees as 

well as TVA vendor contract employees 

RICHARD MOORE TESTIFIES TO CONGRESS at the TVA Fuel Supply Vendor Ethics 

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Semiannual Report | October 1, 2009 – March 31, 2010

and Compliance Forum on Friday, 

December 4, 2009. The presentation 

was part of a series of educational 

forums on ethics for contractor 

employees.

Moore presented along with TVA 

Procurement General Manager of Fuel 

Supply Jacky D. Preslar; Executive Vice 

President of Power Supply and Fuels 

Van M. Wardlaw; TVA Assistant General 

Counsel Ralph E. Rodgers; Senior Vice 

President of Corporate Responsibility 

and Diversity Peyton T. Hairston, Jr.; TVA 

Chief Financial Officer Kim Greene; TVA 

Power Supply and Fuels Compliance 

Manager Mark Creech; and TVA Fuel 

Assurance Manager Don Drumm. 

Moore emphasized that TVA and 

TVA OIG have been clear about their 

expectations in regard to personal 

ethics, but indicated he wanted to be 

clear about what to do if someone 

discovers “rogue” employees in 

the organization. “We want you to 

tell us about it,” he said. “I have an 

appreciation for the 

difficulty surrounding 

this situation. In a 

sense we’re asking you 

to trust us.”

Moore explained the 

psychology of fraud by 

using a recent news 

story about famed 

golfer Tiger Woods, 

who was accused of 

being unfaithful to his 

wife, as an example of 

how people are lured 

into questionable 

behaviors. “He’s 

the gold standard in 

the golfing world,” 

Inspector General 

Moore said in reference to Woods. 

“People say, ‘how does this happen?’”

Moore then introduced the concept 

of the “Fraud Triangle” in relation 

to decision-making. “An opportunity 

presents itself,” he explained. 

“Apparently, Tiger had a lot of 

opportunity. There’s opportunity 

to cheat at TVA. A lot of people see 

opportunity, but they don’t have the 

motivation, which is the second piece 

of the triangle.” 

“The third piece of the triangle is a 

critical piece,” Inspector General Moore 

continued, revealing people rationalize 

their bad behavior. “Rationalization is 

the third piece of the fraud triangle.”

Moore used the example of an employee 

rationalizing fraudulent behavior 

by thinking, “I should’ve gotten that 

performance award. I deserve it,” 

adding that rogue decision-making 

“happens in good companies.”

“We’re looking to make examples out 

of people who’ve cheated us,” Moore 

continued. “We’re looking to partner 

with people who don’t believe in fraud. 

As much as I want to make an example 

out of someone who cheats us, we want 

to make an example out of someone 

who cooperates with us.”

“My message is: if we address this, it’s 

better for you, it’s better for me, and it’s 

better for the organization,” Inspector 

General Moore concluded. “Don’t make 

us just own this. You own this too. So, 

call us and we’ll work with you.”

The TVA OIG’s fraud-tip hotline, called 

the Empowerline, is operated away 

from TVA by a third-party contractor 

and allows people to register a 

concern and remain completely 

anonymous if they so choose. Contact 

the Empowerline at 1-877-866-7840 

or https://www.oigempowerline.com. 

The Empowerline is operated 24 hours 

a day, seven days a week.

Kingston Fossil Plant

RICHARD MOORE BRIEFING TVA 

FUEL SUPPLY VENDORS

THE FRAUD TRIANGLE

MOTIVATION

RATIONALIZATION

OPPORTUNITY

A confidential connection for reporting fraud, 

waste or abuse affecting TVA.

www.OIGempowerline.com

1-877-866-7840 EmPowerlineTM is sponsored by the Office of the Inspector General 

and operates independently of TVA. t

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Semiannual Report | October 1, 2009 – March 31, 2010

> Assessing

and Auditing

Catastrophic Risk

Inspector General Richard Moore and 

Deputy Inspector General Ben Wagner 

spoke at the March 2010 General 

Audit Management Conference of the 

Institute of Internal Auditors to about 

70 participants. They shared the TVA 

OIG’s experience with the aftermath of 

the Kingston coal ash spill when more 

than five million cubic yards of wet 

coal ash spilled out of a retaining pond 

into the Emory River and Watts Bar 

Reservoir and onto adjoining land. 

The presentation by Inspector 

General Moore and Deputy Inspector 

General Wagner was titled “Assessing 

and Auditing Catastrophic Risk.” 

It highlighted the challenges in 

enterprise risk management related 

to the identification, assessment, and 

prevention of catastrophic risk; the 

keys to success; and, owning up to and 

addressing the consequences when a 

catastrophic event occurs.

> Ethics Aren’t Easy

Doing what’s right isn’t always easy, 

just ask John McKay, who was the 

opening speaker at the TVA OIG’s ethics 

conference that took place this past 

fall at the University of Tennessee’s 

Conference Center in downtown 

Knoxville.

McKay, a Law Professor at Seattle 

University, was dismissed by the 

Department of Justice under the Bush 

Administration as U.S. Attorney for the 

Western District of Washington in 2006, 

along with seven other U.S. Attorneys. 

The controversy generated an 

onslaught of media attention including 

an article in the Washington Post that 

questioned the motivation for McKay’s 

dismissal. The March 26, 2007, article 

indicates that in 2004 McKay decided 

not to bring voter fraud charges that 

could have undermined a Democratic 

victory in a closely-fought gubernatorial 

race. McKay said he was asked about 

three months before he was fired why 

Republicans in the state of Washington 

might be angry with him. McKay 

indicated that he didn’t bring forth 

voter fraud charges because there was 

no evidence to support such allegations.

Another March 21, 2007, Seattle Times

article read, “In the span of less than a 

month last summer, John McKay went 

from a candidate for a federal judgeship 

with the support of his boss, Attorney 

General Alberto Gonzales, to an out-offavor employee who was about to lose 

his job.”

McKay warned at the OIG ethics 

conference that doing the right thing 

often means becoming unpopular 

and risking being labeled a “trouble 

maker” or someone who’s not a “team 

player.” But, in the end, despite political 

pressure, doing the right thing was the 

only thing McKay believed he could do 

and still feel good about himself.

McKay’s conviction to follow his own 

ethical compass was perhaps rewarded 

in a 2008 Department of Justice Office 

of Inspector General investigative 

report on the removal of nine U.S.

Attorneys, including McKay, in 2006. 

The report ascertained that evidence 

suggested the primary reason for 

McKay’s removal was a disagreement 

with his then boss, Deputy Attorney 

General Paul McNulty.

The report directed attention to 

the fact that Gonzales, who was the 

primary driver in the firings, stated in a 

Congressional testimony that he didn’t 

remember the November 2006 meeting 

where he approved the dismissals.

In 2008, Attorney General Michael 

Mukasey, Gonzales’ successor, 

announced that, at best, the firings 

of the nine attorneys general 

were haphazard, arbitrary, and 

unprofessional.

McKay now draws from his experience 

as an ousted U. S. Attorney in talks 

across the country. He also tells 

audiences that doing what they know 

is right takes courage, and it could 

cost them their jobs one day, just as it 

cost him his; but, being fired for doing 

what’s right is better than remaining 

employed for doing what’s wrong.

The common theme of courage was 

reiterated throughout the day by the 

other guests who joined McKay in a 

panel discussion on ethics moderated 

by Dr. Michael McIntyre, Director of 

the University of Tennessee’s MBA 

program, including:

• Dr. Daniel Klingensmith, Ph.D., an 

Associate Professor of History and 

ethics teacher at Maryville College;

• Dr. Bart Victor, Ph.D, a Cal Turner 

Professor of Moral Leadership at 

Vanderbilt University; and

• Mr. Frederick Talbott, a published 

author, 1994-2009 clinical professor 

of management communications 

at Vanderbilt University, former 

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JOHN MCKAY, LAW PROFESSOR
Semiannual Report | October 1, 2009 – March 31, 2010

investigative journalist who covered 

the Ku Klux Klan, government 

mismanagement and the Iran Contra 

scandal, and member of the South 

Carolina Bar Association.

Talbott was the keynote speaker during 

lunch at the ethics conference. Talbott 

emphasized the theme of courage in 

talking about his father, who was a 

used car salesman. Talbott explained 

his dad refused to sell a customer 

anything he wouldn’t drive himself. 

Even when he felt pressured to fudge 

on the worth of vehicles to make a sale, 

he wouldn’t do it.

Talbott explained his dad’s view of 

ethics lives on through him. Talbott has 

authored a number of books, including 

Churchill on Courage.

“The quality of speakers we had at this 

conference and the depth of the wisdom 

they imparted to us was inspiring,” said 

TVA Inspector General Richard Moore. 

“Life lessons such as the ones presented 

by these ethics pioneers stick with us 

and remind us on a very human and 

authentic level that doing the right 

thing is always the right thing to do.”

> TVA OIG Poster Wins

Addy® Award

The poster advertising the TVA 

Inspector General’s fraud video 

received two awards at Knoxville’s 

45th Annual ADDY Awards dinner that 

took place Saturday, February 20, 2010, 

at the Crowne Plaza Hotel in Knoxville, 

Tennessee.

 The first award for the TVA OIG poster 

was the Silver ADDY Award for color 

photography, and the second award 

was a Bronze Citation of Excellence. 

The poster was used to promote TVA 

Inspector General Richard Moore’s 

message throughout TVA on what 

employees can do if they suspect 

fraud is occurring in a TVA program 

or operation. It was submitted to 

the ADDY competition by TradeMark 

Advertising. 

“The more TVA employees understand 

they can help us fight fraud against 

TVA by reporting suspicious actions, 

the more effective we will be,” said 

Inspector General Moore. “I am 

thankful that our effort in conveying 

this message is getting noticed, and 

that the quality of the work in 

advertising the message is so high.”

The American Advertising Federation, 

a not-for-profit industry association 

conducts the ADDY Awards through 

its 200-member advertising clubs and 

15 districts. With more than 60,000 

entries annually, the ADDY Awards 

are billed as the world’s largest 

and, arguably, toughest advertising 

competition. 

To watch the video go to: 

oig.tva.gov/int-highres.html

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Frederick Talbott, Author

Inspector General Moore with Award winning poster
Semiannual Report | October 1, 2009 – March 31, 2010

Executive Overview
Semiannual Report | October 1, 2009 – March 31, 2010

During the period of October 1, 2009, 

to March 31, 2010, our inspection, 

audit, and investigation teams acted to 

promote greater economy, effectiveness, 

and efficiency at TVA while detecting 

and preventing fraud, waste, and 

abuse. In total, we identified more 

than $10 million in recoveries, 

fines/penalties, potential savings, 

questioned costs, or funds which 

could be put to better use, as outlined 

in the chart above.

> Inspections

The Inspections team completed 

three significant reviews during this 

period that focus on TVA’s operational 

performance, the legitimacy of the 

highest college degrees listed on 

resumes submitted for employment, 

and TVA’s criteria for the adjustment of 

tributary water levels in TVA-managed 

bodies of water.

The most significant of these reports 

is the review of TVA’s operational 

performance. It is the third in our 

series of reviews that benchmark TVA’s 

performance in key areas. As noted 

in our prior reports on the ash spill at 

Kingston, over TVA’s 75-year history 

some cultural traits have developed 

which serve to undermine TVA’s 

mission and safety record. Cultural 

issues have also been identified as 

contributing to findings in other OIG 

reviews. 

In this report on TVA’s operational 

performance, in addition to the legacy 

cultural issue, we found TVA performed 

exceptionally well in terms of system 

reliability, delivering electric service 

with 99.999 percent reliability. TVA 

also performed better than the 

industry at large in all its key reliability 

performance metrics. However, in 

terms of system efficiency, we found 

that higher than average forced outage 

rates, especially for its fossil units, 

have negatively impacted TVA’s system 

efficiency performance. We also found 

that, based on the number of recordable 

injuries per 200,000 hours worked, 

TVA ranked in the first quartile of 

those utilities against which TVA was 

measured.

> Financial and

Operational Audits

During this semiannual period, 

Financial & Operational Audits 

completed 11 projects, including 

three audits, one attestation 

engagement, and seven other 

projects. The audits and attestation 

engagement included work in 

the following areas: (1) TVA’s 

Hearing Conservation Program; 

(2) risks related to TVA’s Pension 

system; and (3) agreed-upon 

procedures for TVA’s Winning 

Performance measures. We also 

provided oversight of TVA’s external 

auditors conducting the audit of 

TVA’s financial statements.

The review of TVA’s Hearing 

Conservation Program has not only 

significant safety and economic 

findings, but also again shows the 

impact of culture on achieving 

organization-wide goals. In TVA’s 

Hearing Conservation Program 

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With more than 12,000 employees, changing the organizational 

culture is a sizeable feat for TVA; however, high-level structural 

changes and the establishment of a program called the 

Organizational Effectiveness Initiative, OEI, are indicative of a 

serious commitment to transformation. These changes were 

launched to address the organizational cultural issues identified 

by the OIG in its reports on the ash spill at Kingston and at other 

TVA locations. The feature article beginning on page 6 highlights 

the significance of culture and details some of the steps TVA has 

undertaken to address the issue. 

STATISTICAL HIGHLIGHTS

October 1, 2009 ~ March 31, 2010

Audit Reports Issued 26

Questioned Costs $979,959

Disallowed Costs $2,255,467

Funds Recovered $2,998,971

Funds to be Put to Better Use $9,702,600

Funds Realized by TVA $480,450

Investigations Opened 168

Investigations Closed 198

Fines/Recoveries/Restitution $47,679

Criminal Actions 9

Administrative Actions (No. of Subjects) 7

Inspections Completed 3
Semiannual Report | October 1, 2009 – March 31, 2010

we found, among other things, the 

existence of an employee culture which 

encourages some TVA employees to file 

nonwork related hearing loss claims.

We also found that TVA’s Hearing 

Conservation Program, as written, 

complies with the significant provisions 

of Occupational Safety and Health 

Administration’s (OSHA) “Occupational 

Noise Exposure” regulations, but that 

certain TVA sites did not follow or 

ensure all program requirements were 

being met consistently.

> Distributor AuditS

During this semiannual period, the 

OIG completed four reviews of TVA 

distributors. We found distributors 

were not complying with all contract 

requirements and, as a result, TVA 

management is planning to change the 

requirements for customer contracts as 

part of the rate change process with the 

distributors. We noted the distributors 

had more than enough cash on hand to 

fund planned capital expenditures and 

provide a cash reserve. Additionally, 

we identified several areas where 

internal controls could be strengthened 

to improve completeness, accuracy, 

and validity of the billing data. Finally, 

we also found several opportunities 

for TVA to enhance oversight of the 

distributors and an opportunity for 

TVA to correct a billing error.

> IT Audits

During this semiannual period, 

we completed six audits in the IT 

environment pertaining to: (1) the 

OIG’s annual review of the Federal 

Information Security Management Act 

(FISMA), and (2) the effectiveness of 

TVA’s backup and recovery process. We 

also completed 13 audits in support of 

TVA’s FY 2009 efforts to comply with 

the Sarbanes-Oxley Act of 2002 (SOX).

In our annual review of TVA’s 

information security program, we found 

TVA had generally improved in the area 

of establishing its inventory of systems 

requiring certification and accreditation 

and general security awareness 

training for network users. However, 

we identified several areas during this 

year’s audit in which (1) performance 

had declined, or (2) TVA had not 

completed actions from the prior 

year’s audits. We reviewed five TVA 

business units as to their controls over 

backup and recovery of applications, 

data, network device configurations, 

and control system configurations. We 

found TVA had significant weaknesses 

in the controls over backup and 

recovery of network device and control 

system configurations. 

> ContracT Audits

During this semiannual period, Contract 

Audits completed (1) five preaward 

audits of cost proposals submitted by 

prospective contractors that identified 

$9.7 million of potential savings 

opportunities for TVA to negotiate, and 

(2) four compliance audits of contracts 

with expenditures totaling $184 million 

and identified potential overbillings 

of $806,000. We also reviewed TVA’s 

decision to construct a gas plant in 

northeast Tennessee.

> Investigations

During this semiannual reporting 

period, Investigations continued to 

work closely with Audits on contractrelated issues and with Inspections 

on ongoing issues from the Kingston 

ash spill. Additionally, Investigations 

continued to focus on major fraud 

cases, and we participated on task 

forces with other federal, state, and 

local agencies. We conducted numerous 

administrative inquiries resulting 

in program improvements for TVA 

and disciplinary actions against TVA 

employees. The findings of these cases 

and involvements can be found in the 

Investigations section, starting on page 

34 of this report.

Also during this semiannual period, the 

OIG’s Data Mining program conducted 

a more detailed review of previous 

findings in regard to TVA credit card 

transactions. Two separate reviews 

were conducted to identify potential 

fraudulent or unauthorized charges. 

One review included over $322,000 in 

transactions made from March 2006 to 

April 2009 at a major electronic retailer. 

Although all of the transactions were 

approved by management, many 

appeared to violate TVA’s policy on 

hospitality. TVA management agreed 

with the majority of our findings 

and implemented recommendations 

to strengthen controls and increase 

monitoring in this area.

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Semiannual Report | October 1, 2009 – March 31, 2010

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Mission

Promote excellence in TVA’s operations through the 

conduct of investigations, audits, inspections, and 

advisory services designed to promote economy, 

efficiency, and effectiveness and prevent and detect 

fraud, waste, and abuse

Vision

To be a highly effective organization that promotes 

positive change by identifying opportunities for 

improvements in the performance and efficiency of 

TVA’s programs and operations

Core Values

• Independence

• Integrity

• Innovation

• Initiative 

• Quality

• Results

• Leadership

• Teamwork

• Communication

• Respect for Individual

 PERFORMANCE

• Perform timely reviews that address 

stakeholder concerns and areas of highest risk

• Focus efforts on areas of highest impact and risk

• Ensure processes are efficient and effective

• Stay abreast of emerging issues and industry trends

• Stay abreast of stakeholder concerns

• Produce work that is timely, relevant, and of 

high quality

> Goals & Objectives

 WORKFORCE

 • Cultivate and retain a highly skilled, productive, 

and fully engaged workforce

• Hire and retain a well qualified workforce

• Maintain competitive pay and award programs that 

allow for rewarding team and individual contributors

 • Develop leadership, team and technical skills of each 

employee

 • Ensure accountability in individual performance

 • Promote effective communications 

 within OIG

 STAKEHOLDER

• Improve stakeholder awareness of OIG

• Ensure stakeholders are kept informed

• Ensure stakeholders have an opportunity to 

provide input in the annual audit planning 

process and each individual review, as 

appropriate

OIG strategic plan
Semiannual Report | October 1, 2009 – March 31, 2010

Office of the Inspector General
Semiannual Report | October 1, 2009 – March 31, 2010

The OIG’s most important 

resources are its people. Our 

team is made up of experienced 

auditors, investigators, and 

administrative staff. The OIG is 

an independent office within TVA 

and is headquartered opposite 

TVA in TVA’s East Tower, 

overlooking downtown Knoxville. 

Inspector General Richard Moore 

believes that in order to effectively 

provide oversight to TVA, we must 

be strategic in our placement of OIG 

employees. As such, Inspector General 

Moore has worked to ensure that 

our office has a presence at or near 

all major TVA offices throughout the 

Tennessee Valley.

The OIG has a satellite office in the 

Edney Building in Chattanooga, 

Tennessee, where the Inspections unit 

and several investigators are located. 

There are also staffed field offices at the 

Watts Bar Nuclear Plant in Tennessee; 

and also in Nashville, Tennessee; 

Huntsville, Alabama; and Mayfield, 

Kentucky. 

As of March 31, 2010, the OIG had 

a total staff of 105. The Audit and 

Inspections units are composed of 

66 individuals, the Investigations 

unit includes 29 individuals, and the 

Administrative unit is comprised of 

10 individuals. 

The number of personnel located 

at each staffed office is as follows: 

Knoxville-78, Watts Bar Nuclear 

Plant-2, Chattanooga-18, Nashville-2, 

Huntsville-4, and Mayfield, Kentucky-1.

> ADMINISTRATION

The administrative section works 

closely with the IG, Deputy IG, and 

Assistant IGs to address the day-to-day 

operations of the OIG and to develop 

policies and procedures designed to 

drive and enhance productivity in 

achieving office goals. Responsibilities 

include operations for personnel 

administration, budget and financial 

management, purchasing and contract 

services, facilities, conferences, and 

government relations.

> AUDITS AND 

INSPECTIONS

The Audits and Inspections group 

performs a wide variety of engagements 

designed to promote positive 

change and provide assurance to 

TVA stakeholders. Based upon the 

results of these engagements, the 

Audits and Inspections group makes 

recommendations to enhance the 

effectiveness and efficiency of TVA’s 

programs and operations. 

The group uses an impact- and riskbased approach to developing an 

annual work plan. The group’s plan 

considers TVA’s strategic plans, 

major management challenges, their 

enterprise risk management process, 

and other input from TVA management. 

The planning model also evaluates 

each potential engagement from the 

standpoint of materiality (i.e., costs 

or value of assets), potential impact, 

sensitivity (including public and/or 

congressional interest), and likelihood 

it will result in recommendations for 

cost savings or process improvements. 

The result of the OIG audit and 

inspections planning process is a focus 

on those issues of highest impact and 

risk of fraud, waste, or abuse. This 

focus extends to the field of Information 

Technology and risk assessment 

related to a potential malicious or other 

intrusion of TVA’s IT infrastructure.

The Audits group, based in Knoxville, 

conducts and/or supervises 

comprehensive financial and 

performance audits of TVA programs 

and operations.

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OIG Staff
Semiannual Report | October 1, 2009 – March 31, 2010

It consists of four departments— 

Financial/Operational Audits, Contract 

Audits, Distributor Audits, and 

Information Technology Audits.

• Financial/Operational Audits has 

lead responsibility for: (1) oversight 

of TVA’s financial statement audit 

and related services performed by 

TVA’s external auditor; (2) reviews 

of TVA’s internal controls related 

to financial reporting, operational 

efficiency, and compliance with laws 

and regulations; and (3) operational 

reviews to assess the results and 

economy and efficiency of TVA 

programs.

• Contract Audits has lead 

responsibility for contract compliance 

and preaward audits. In addition, 

this group performs reviews of TVA’s 

contracting processes and provides 

claims assistance as well as litigation 

support.

• Distributor Audits has lead 

responsibility for contract compliance 

reviews of TVA’s distributors. This 

group assesses compliance with the 

terms of the power contracts between 

TVA and its distributors. 

• IT Audits has lead responsibility for 

audits relating to the security of TVA’s 

IT infrastructure, application controls, 

and general controls associated 

with TVA systems. This group also 

performs operational reviews of the 

effectiveness of IT-related functions. 

The Inspections group, based in 

Chattanooga, serves a unique function. 

We refer to our Inspections group as 

the “Light Calvary.” This group was 

created when Inspector General Moore 

recognized the need for an auditing 

team that could provide a quick, yet 

thorough review of TVA functions. 

The methodology utilized by this 

group allows them to complete these 

reviews quicker than traditional audits, 

by limiting the scopes of the reviews. 

However, the team can and does 

provide standard audit reviews 

when needed and seeks to ensure 

that program objectives and 

operational functions are achieved 

effectively and efficiently. 

In accordance with the Quality Standards for Inspections, the objectives of 

the Inspections group include providing a source of factual and analytical 

information, monitoring compliance, 

measuring performance, assessing the 

efficiency and effectiveness of operations, and/or conducting inquiries into 

allegations of fraud, waste, abuse, and 

mismanagement.

Audit and inspection findings vary 

depending on the objectives of the 

project. Issues can be generalized 

into specific categories depending on 

the type of engagement performed. 

The graphic below shows some 

representative examples of issues 

commonly reported.

> INVESTIGATIONS

The Investigations group is vigilant in 

its search for activity related to fraud, 

waste, and abuse in TVA programs 

and operations. This highly skilled 

team performs investigative activity in 

accordance with the Quality Standards 

for Investigations. The investigators 

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TYPES OF AUDIT AND INSPECTION ISSUES

Information 

Technology Audits

• Unauthorized Access

• Inadequate Controls

• Lack of Data Integrity

• Fraud

Financial Audits

• Internal Control Deficiencies

• Material Misstatements

• Legal Noncompliance

• Fraud

Operational Audits

• Operational Inefficiency

• Not Achieving Intended Results

• Inferior Performance

• Legal/Regulatory 

Noncompliance

• Fraud

Distributor Audits

• Contract Noncompliance

• Misstatement of Power 

Sales to TVA

• Fraud

Contract Audits

• Inflated Proposals

• Contract Overpayments

• Inferior Performance

• Fraud

Inspections

• Internal Control Deficiencies

• Operational Inefficiency

• Policy Noncompliance

• Fraud
Semiannual Report | October 1, 2009 – March 31, 2010

maintain liaison with federal and state 

prosecutors and file a report with the 

Department of Justice whenever the 

OIG has reason to believe there has 

been a violation of federal criminal 

law. Our investigators partner with 

other investigative agencies and 

organizations on special projects and 

assignments, including interagency law 

enforcement task forces on terrorism, 

the environment, and health care. Our 

investigative workload includes the 

following major categories:

Contract Fraud – Defrauding TVA 

through its procurement of goods 

and services.

Theft of Government Property and 

Services – Theft of TVA property and 

“schemes to defraud...designed to 

deprive individuals, the people, or the 

government of intangible rights, such as 

the right to have public officials perform 

their duties honestly.”

Environmental Crime – Any act which 

violates an environmental protection 

statute.

Health Care Fraud – The intentional 

misrepresentation of health care 

services, expenses, billings, needs, or 

coverage that results in unauthorized 

payments or other benefits.

Illegal hacking into TVA Computer 

Systems – Accessing a computer 

without authorization or exceeding 

authorized access.

Workers’ Compensation Fraud – 

Includes employee fraud, medical fraud, 

premium fraud, and employer fraud, 

most often a false claim of disability to 

receive benefits.

Employee Misconduct – Generally 

includes misuse of TVA furnished 

equipment, travel voucher fraud, and 

a multitude of miscellaneous matters.

> OIG RESPONSIBILITIES

• Promote economy and efficiency while preventing and detecting fraud, waste, 

and abuse.

• Conduct and supervise audits, inspections, and investigations relating to TVA 

programs and operations.

• Keep the TVA Board and Congress fully and currently informed concerning 

fraud and other serious problems, abuses, and deficiencies relating to TVA 

programs and operations.

• Recommend corrective actions concerning problems, abuses, and deficiencies, 

and report on the progress made in implementing such actions.

• Assure work performed by nonfederal auditors complies with Government 

Auditing Standards.

• Issue semiannual reports to TVA Board and the Congress.

> OIG AUTHORITY

• Conduct any audit, inspection, or 

investigation the IG deems necessary 

or desirable.

• Access all TVA records or other 

material.

• Issue subpoenas and administer oaths.

• Receive complaints and grant 

confidentiality.

• Have direct and prompt access to the 

TVA Board.

• Hire employees and contract for 

services as necessary.t

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OFFICE RESPONSIBILITIES AND AUTHORITY

Created by the TVA Board of Directors in 1985, the TVA OIG became statutory under the Inspector 

General Act Amendments of 1988 (IG Act). The authority to appoint the TVA Inspector General 

was transferred to the President in November 2000 by Public Law No. 106-422.
Semiannual Report | October 1, 2009 – March 31, 2010

Summary of Representative Inspections
Semiannual Report | October 1, 2009 – March 31, 2010

Summary of 

Representative

Inspections

During this period, Inspections 

completed three reviews. 

Specifically, Inspections 

reviewed TVA’s operational 

performance, the legitimacy 

of the highest college degrees 

listed on the resumes submitted 

for employment, and TVA’s 

criteria for the adjustment of 

tributary water levels in TVAmanaged bodies of water.

> Review of TVA’s

Operational

Performance Results

This review was the third in a series 

of reviews that benchmark TVA’s 

performance in key areas and answers 

the question, “How is TVA doing in 

regard to operational performance?” 

In conducting this review, we: 

(1) assessed key performance 

measures and their alignment with 

key strategic objectives; (2) evaluated 

TVA’s performance relative to key 

performance indicators by using target 

metrics and available benchmark 

information; and (3) identified 

key management challenges 

confronting TVA.

Our report found TVA’s performance 

is positive with respect to system 

reliability and safety; however, both 

system efficiency and management 

culture could be improved. As noted 

in our recent report on conditions 

surrounding the ash slide at Kingston, 

attitudes and conditions at TVA’s fossil 

plant that emanate from a legacy 

culture impacted the way TVA handled 

coal ash. Cultural issues have also been 

identified as contributing to findings in 

other OIG reviews. Over TVA’s 75-year 

history, cultural traits have developed 

that if not identified and addressed 

can undermine the best policies 

and procedures. The importance of 

recognizing cultural limitations cannot 

be overemphasized.

For TVA’s continued success, we 

believe the culture must be accurately 

assessed, compliance with new policies 

and procedures must be faithfully 

measured with appropriate metrics, 

and employees must be educated to 

think differently about TVA business, 

operational, and safety practices. As a 

result of reports from both McKenna 

Long & Aldridge and the OIG, TVA has 

recently begun implementing actions 

to assess the culture and drive change 

management. 

This benchmarking report on TVA’s 

operational performance assesses the 

performance of TVA’s power system in 

the ensuing three key areas and can be 

summarized as follows:

• Reliability: One of TVA’s primary 

responsibilities is to serve as a 

reliable and cost competitive source 

of electric power to its customers. 

TVA has performed exceptionally 

well in terms of system reliability, 

delivering electric service with 

99.999 percent reliability. TVA also 

performed better than the industry 

at large in all its key reliability 

performance metrics. In addition, 

TVA has maintained an adequate 

capacity reserve margin, which has 

contributed to this strong reliability 

performance. 

• Efficiency: Additional focus is 

warranted in the area of system 

efficiency, which is a measure of the 

effectiveness of TVA’s expenditures 

on the operations and maintenance 

of its generation fleet. Specifically, 

higher than average loss of electrical 

generation due to unplanned 

equipment or transmission failures 

or problems, especially for its fossil 

units, have negatively impacted 

TVA’s system efficiency performance. 

In addition, while TVA’s delivered 

cost of power ranked in the second 

quartile of a selected peer group, 

its average nonfuel operations and 

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inspections TEAM
Semiannual Report | October 1, 2009 – March 31, 2010

maintenance costs ranked only in the 

third quartile. High operations and 

maintenance costs coupled with low 

plant availability combined to depress 

TVA’s efficiency metrics. Two things 

clearly impacting TVA’s efficiency 

performance included: (1) an aging 

fossil generation fleet and (2) reduced 

availability of hydroelectric power.

• Safety: The recent death of a 

contractor employee involved in the 

Kingston Fossil Plant ash spill cleanup 

effort emphasizes that safety must be 

the first priority in everything TVA 

does. Notwithstanding the above 

event, TVA ranked in the first quartile 

on safety, based on the number of 

recordable injuries per 200,000 hours 

worked, according to data provided 

by the Occupational Safety and Health 

Administration and comparable data 

provided by the 2007 Edison Electric 

Institute Benchmark Data. 

Finally, TVA faces many significant 

management challenges in attaining 

and maintaining operational excellence. 

Our report discusses the areas of: 

(1) an aging generation fleet and 

transmission system; (2) an aging 

work force; (3) generation mix; and 

(4) management culture.

> Review of

Educational Degrees

for Contractors

Assigned to the WBN 

U2 Project

An article published July 30, 2008, 

by the Spokesman-Review (i.e., 

the Spokesman-Review is the daily 

newspaper in Spokane, Washington) 

listed almost 10,000 people identified 

by the Department of Justice who 

had purchased phony and counterfeit 

high school and college degrees. One 

of the people included in the list, an 

employee of a company which operates 

two nuclear plants in Minnesota, was 

found to have counterfeit degrees 

in engineering and accounting. We 

conducted our review of this potential 

issue to validate the highest degrees 

listed on employee resumes. 

Specifically, we conducted a review of 

Bechtel and subcontractor employees 

assigned to the WBN U2 Project. Our 

objective was to validate, for selected 

personnel, the highest educational 

degree listed on the resumes submitted 

for employment. Our review found no 

instances where an employee was hired 

based on a fraudulent degree. However, 

neither Bechtel nor the OIG was 

successful in verifying one employee’s 

degree. In addition, three employees 

in our sample had only a copy of their 

degree on file as their verification. We 

recommended the Vice President, WBN 

U2, in conjunction with the Bechtel 

Project Director, ensure that employees’ 

educational degrees are verified if the 

degree is required for the position for 

which they are hired. Furthermore, 

a copy of a diploma supplied by an 

employee should not be considered 

adequate verification.

TVA management agreed with our 

findings and recommendations. 

According to Bechtel, they have 

verified the degree for the individual 

employee whose file was missing this 

documentation. Bechtel provided 

the verification directly to an on-site 

OIG representative. For the three 

employees with only a copy of their 

degree on file, the copies and/or the 

employee files should have included an 

annotation by the Human Resources 

(HR) representative performing the 

verification that an original educational 

degree was provided by the employee 

at the time of hire. Bechtel does not 

accept copies of educational degrees 

from an employee as adequate 

verification.

> Review of TVA’s

Reservoir Operations

Program

TVA is responsible for managing a range 

of programs in the Tennessee River 

Valley for the use, conservation, and 

development of the water resources 

related to the Tennessee River. In 

carrying out this mission, TVA operates 

a system of dams and reservoirs with 

associated facilities--its water control 

system. As directed by the TVA Act, 

TVA uses this system to manage the 

water resources of the Tennessee 

River for the purposes of navigation, 

flood control, power production and, 

consistent with those purposes, for a 

wide range of other public benefits. 

Based upon questions posed to OIG 

personnel regarding TVA’s criteria for 

the adjustment of tributary water 

levels, we initiated a review of TVA’s 

Reservoir Operations. 

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Chickamauga Reservoir is on the Tennessee River just north of Chattanooga. 

The reservoir stretches 59 miles upriver from Chickamauga Dam to Watts Bar Dam.
Semiannual Report | October 1, 2009 – March 31, 2010

Our objectives were to determine: 

(1) whether criteria exist to balance 

the competing objectives of managing 

water in TVA reservoirs; (2) how those 

objectives compare to those of the 

U.S. Army Corps of Engineers; and 

(3) whether TVA was following its 

criteria. This report encompasses 

TVA-managed lakes, tributaries, and 

overall Reservoir Operations.

Our review of TVA’s Reservoir 

Operations revealed TVA has 

Board-approved guidelines that were 

developed with public input in 2004. 

We noted in discussion with two offices 

of the U.S. Army Corps of Engineers 

that they balance similar objectives 

and manage their reservoirs in a 

similar manner to TVA. We performed 

testing based upon the approved 

TVA guidelines and found no issues. 

Specifically, we found that there were no 

issues related to the following summer 

criteria: (1) Recreational Releases 

(water releases to enhance recreational 

opportunities); (2) Chickamauga 

Flow (the required flow through 

Chickamauga Dam); and (3) Tributary 

Balancing (ensuring that no individual 

tributary is disproportionately affected 

when meeting river system minimum 

flow goals). 

Lastly, we found there were no issues 

related to the following nonsummer 

criteria: (1) Minimum Flow 

Commitments, which is measured in 

pulse commitment violations (a pulse 

represents a release of an agreed-upon 

amount of water, and a violation is an 

instance where TVA does not provide 

the pulse on time); and (2) Flood 

Storage Availability (flood storage is 

defined as the volume, or capacity, 

in a reservoir that is reserved for the 

storage of flood water, and anytime a 

tributary’s headwater elevation exceeds 

the flood guide, it is in violation).

Since we had no recommendations, 

this report was issued for informational 

purposes only.

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Chickamauga: FACTS & FIGURES

• Construction of Chickamauga Dam began in 1936 

and was completed in 1940.

• The dam is 129 feet high and stretches 5,800 feet 

across the Tennessee River.

• Chickamauga Reservoir has 784 miles of shoreline 

and about 36,240 acres of water surface. It has a 

flood-storage capacity of 345,300 acre-feet.

• In order to maintain the water depth required for 

navigation, the minimum winter elevation for 

Chickamauga Reservoir is 675 feet. The typical summer 

operating range is between 681.5 and 682.5 feet.

• Chickamauga and other reservoirs on the 

Tennessee and its tributaries have prevented 

nearly $5 billion in flood damage in the city of 

Chattanooga alone.

• The 60x360 foot lock at Chickamauga lifts and 

lowers river craft about 50 feet between Nickajack 

and Chickamauga reservoirs.

• The hydroelectric power plant at Chickamauga 

consists of four generating units.

Hiwassee Reservoir is located on the

Hiwassee River in western North Carolina, 

stretching 22 miles northwest to

southeast. It is immediately upstream 

from Apalachia Reservoir.

hiwassee: FACTS & FIGURES

• Construction of Hiwassee Dam began in 1936 and was 

completed in 1940.

• The dam is 307 feet high and stretches 1,376 feet across the 

Hiwassee River.

• In the year with normal rainfall, the was level in Hiwassee 

Reservoir varies about 43 feet from summer to winter to 

provide seasonal flood storage.

• The reservoir has a flood-storage capacity of 205,600 acre-feet.

• The hydroelectric power plant at Hiwassee Dam consists of two 

generating units.
Semiannual Report | October 1, 2009 – March 31, 2010

Summary of Representative Audits
Semiannual Report | October 1, 2009 – March 31, 2010

Summary of 

Representative

Audits

During this reporting period, 

we completed 26 audits which 

identified more than $10 million 

in questioned costs and funds 

which could be put to better use. 

We also identified numerous 

opportunities for TVA to improve 

program operations. Our audits 

included: (1) financial and 

operational audits; (2) preaward 

and postaward contract audits; 

(3) reviews of TVA distributors; 

and (4) IT reviews.

Financial and Operational Audits 

reviewed TVA’s Hearing Conservation 

Program and TVA’s Pension system. 

It also applied agreed-upon procedures 

this period to TVA’s Winning 

Performance measures in addition to 

monitoring TVA’s financial statements 

audit performed by external auditors. 

In total, the group completed 

11 reviews of various financial 

and operational activities by TVA. 

Contract Audits succeeded in 

identifying more than $9.7 million 

of potential savings opportunities 

for TVA to negotiate. Those savings 

opportunities were primarily related 

to overstated cost recovery rates and 

misclassified labor categories. Contract 

Audits also completed four compliance 

audits of contracts with expenditures 

totaling $184 million and identified 

potential overbillings of $806,000. 

Additionally, Contract Audits reviewed 

TVA’s decision to construct a gas plant 

in Northeast Tennessee. 

Distributor Audits completed four 

audits of TVA power distributors to 

assess compliance with key power 

contract provisions. Through these 

reviews, this group identified contract 

compliance issues, distributor internal 

control issues as well as opportunities 

for TVA to improve oversight of the 

distributors.

Information technology is used in every 

facet of TVA’s operations. The IT Audits 

group assessed the effectiveness of 

TVA’s backup and recovery process. 

This group also performed its annual 

review of TVA’s information security 

program. This work was in addition 

to tests of general computer and 

application controls and a design 

review that was completed in support 

of TVA’s compliance with SOX. In 

total, the IT Audits group completed 

six audits in the IT environment and 

13 audits in support of TVA’s FY 2009 

efforts to comply with SOX.

A more detailed description for 

the engagements completed this 

semiannual period by the four 

departments follows.

Financial and

Operational Audits 

> TVA’s Hearing

Conservation

Program

Hearing loss claims at TVA have 

increased from 65 claims in 1997 

totaling $1.1 million to 689 claims 

in 2008 totaling $6.5 million. Thus, 

there are significant safety and 

economic reasons to periodically 

review this program.

TVA’s Hearing Conservation Program 

(Program) was established to “prevent 

employee hearing loss from exposure 

to high noise levels,” by “reduc[ing] 

noise levels where feasible and... 

provid[ing] the means for protection 

from noise in areas where the levels 

remain high.” In general, the Program 

has four major components: (1) the 

development and implementation of a 

noise monitoring (sound level survey) 

program; (2) the provision for adequate 

hearing protection devices and its 

proper use; (3) the development and 

implementation of an audiometric 

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Semiannual Report | October 1, 2009 – March 31, 2010

testing program; and (4) regular 

training and education. 

All employees and former employees 

who sustain injuries, including hearing 

loss, while on duty are entitled to the 

benefits of the Federal Employees’ 

Compensation Act (FECA). FECA 

provides for the Office of Workers’ 

Compensation Programs of the U.S.

Department of Labor to make all claim 

decisions and payment of benefits. 

Approximately $33.6 million were 

paid to TVA claimants (representing 

3,734 claims) for hearing losses 

during the five-year period ending 

September 30, 2008. During this 

same five-year period, there were 

1,316 new hearing loss claims filed. 

As part of our FY 2009 audit plan, 

we reviewed the TVA’s Hearing 

Conservation Program (Program) 

to determine whether: (1) it complies 

with OSHA‘s regulations, and (2) TVA 

organizations are in compliance with 

Program guidelines. We also reviewed 

a prior OIG report to determine 

whether or not its recommendations 

have been implemented.

In summary, we found:

• TVA’s Hearing Conservation 

Program, as written, complies with 

the significant provisions of 29 CFR 

Part 1910.95, “Occupational Noise 

Exposure,” issued by OSHA.

• Certain TVA sites did not: (1) perform 

and/or use sound level surveys in 

accordance with the Program; 

(2) adhere to Program hearing 

protection requirements and/or 

discipline employees when hearing 

protection was not worn 

in designated areas; (3) ensure 

Program individuals’ annual 

audiogram and training requirements 

were met; and (4) record loggable 

Standard Threshold Shifts (STS) on 

the OSHA 300 log, i.e., a work-related 

hearing loss above a threshold 

specified in the Hearing Conservation 

Program. 

We also determined: (1) TVA’s current 

organizational structure does not 

allow for enforcement of the Program 

by Corporate Health and Safety; and 

(2) confirmed the existence of an 

employee culture which promotes the 

filing of hearing loss claims by some 

TVA employees who believe they are 

entitled to a hearing loss award at the 

end of their TVA career, without regard 

to whether the employee believes such 

loss was work-related, nonwork-related, 

or due to the natural aging process. The 

OIG reported this culture in a separate 

report issued in March 2009.

> Review of TVA’s

Pension Risk

Established in 1939, Tennessee Valley 

Authority Retirement System (TVARS) 

is a defined benefit plan (Plan) covering 

most full-time and part-time annual 

employees. TVARS is a separate legal 

entity from TVA and is administered 

by an independent, seven-member 

Board of Directors. TVA is to contribute 

to TVARS the amounts necessary on 

an actuarial basis to provide TVARS 

with assets sufficient to meet TVAfinanced benefit obligations to be paid 

to members. A member’s retirement 

benefit consists of a pension benefit 

provided by TVA’s contributions and 

earnings on Plan assets.

As part of our annual audit plan, our 

office reviewed the risks associated 

with the TVA’s pension plan and how 

those risks are mitigated. Our audit 

covered areas, such as: (1) controls 

designed to mitigate pension risk; 

(2) the TVARS financial statement 

audit performed by their external 

auditor as it relates to the existence 

and valuation of assets; (3) the work 

of TVARS’ actuary in determining 

TVA’s pension liability; (4) funding and 

benefits decisions and other factors 

impacting the financial status of TVARS; 

and (5) concerns raised during the 

audit by TVARS members. 

Our review determined TVARS’: 

(1) controls were suitably designed and 

operating with sufficient effectiveness 

to provide reasonable assurance 

that the control objectives specified 

were achieved; (2) external auditors 

performed the work according to their 

audit program, and we found nothing 

to question their work or conclusions; 

and (3) method used to calculate 

the pension liability and funding 

contribution was acceptable.

We also determined that a 

combination of factors resulted in 

TVARS experiencing a significant 

shortfall between assets and projected 

obligations and being funded at a lower 

level relative to obligations than most 

other comparison utilities. Four factors 

contributed to this shortfall: (1) not 

making contributions to TVARS in six 

years; (2) adding significant benefits to 

the plan; (3) making TVARS rules that 

had the effect of enticing employees 

to retire; and (4) the market crash of 

2008 and early 2009. These events 

constituted a near “perfect storm” 

that created a financially unhealthy 

system with a funding shortfall of 

approximately $3 billion and annual 

retirement benefit payments of about 

$575 million as of December 31, 2008. 

During our review, TVA and TVARS 

were in negotiations regarding the 

fiscal year 2010 contribution to TVARS 

and potential benefit reductions. 

Our office was contacted by several 

TVARS members expressing concerns 

on the impact the reductions might 

have. Most of these concerns were 

related to perception issues, such as: 

(1) the fairness of proposing cuts to 

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TVARS’ benefits without cuts to the 

Supplemental Executive Retirement 

Plan (SERP) or the Federal Employees 

Retirement System (FERS); (2) 

past benefit decisions encouraging 

employees to retire early, which 

increased the benefit payments by 

TVARS, and then hiring some of those 

retirees back under contract; and (3) 

lack of independent legal counsel to 

assist in determining whether certain 

benefits are vested.

> Agreed-Upon

Procedures Applied

to 2009 Winning

Performance

Payouts

TVA’s Winning Performance (WP) 

Incentive Plan is a performance 

management program designed to 

promote teamwork, focus on continued 

high performance, and motivate and 

reward employees for achieving 

strategic objectives and critical success 

factors. The WP program is based 

on the principle that operational 

improvements, reduced costs, and 

improved revenues can be obtained 

by applying management focus and 

offering monetary incentives. We 

performed agreed-upon procedures, 

which were requested solely to assist 

management in determining the validity 

of the Winning Performance payout 

awards for the FY ended September 30, 

2009.

In summary, we found: 

• The FY 2009 WP goals were properly 

approved. The TVA Board approved 

the elimination of any payout based 

on the TVA level scorecard metrics, 

which accounted for 30 percent of the 

potential payout, during the February 

12, 2009, Board meeting. During this 

same meeting, the Board requested 

the Chief Executive Officer (CEO) to 

revisit the remaining incentivized 

metrics that the CEO approved 

on January 23, 2009. The CEO 

subsequently approved the revised 

FY 2009 Payout Business Rules, 

Payout Report, and Strategic 

Business Unit and Business Unit 

(BU) scorecards on March 6, 2009. 

We noted these revised scorecards 

included the removal of 43 metrics 

from the January 2009 approved 

scorecards and the addition of 

14 metrics not previously approved 

for the respective scorecard.

• Actual year-to-date inputs for all the 

metrics agreed with the respective 

supporting documentation with one 

exception which did not affect the 

respective WP payout.

• The payout percentages were 

mathematically accurate. Subsequent 

changes to actual data were 

submitted through November 5, 

2009. We recalculated the payout 

percentages based on the revised data 

without exception. We noted one of 

the actual year-to-date inputs that 

appeared on several scorecards was 

not rounded using the same rounding 

convention as the respective goal. 

However, this discrepancy did not 

affect the WP payout. We also noted 

the changes to one goal which were 

approved subsequent to fiscal yearend on October 29, 2009, resulted in 

a payout percentage increase for the 

BU of 6.25 percent and for the TVA 

BU Average of 0.21 percent.

> FY 2009 Financial

Statement Audit

Complied with 

Standards

TVA contracted with the independent 

public accounting firm of Ernst & 

Young to audit TVA’s balance sheet as 

of September 30, 2009, and the related 

statements of income, changes in proprietary capital, and cash flows for the 

year then ended. In addition, the contract called for the review of TVA’s FY 

2009 interim financial information filed 

on Form 10-Q with the Securities and 

Exchange Commission (SEC). The contract required the work be performed 

in accordance with generally accepted 

government auditing standards. Our 

monitoring of this work disclosed no 

instances where Ernst & Young did not 

comply, in all material respects, with 

generally accepted government auditing 

standards.

Contract Audits

> TVA’s Decision to

Construct a Gas

Plant in Northeast

Tennessee

We reviewed TVA’s decision to 

construct a gas plant in northeast 

Tennessee to determine if TVA’s analysis 

supporting its decision was reasonable.

TVA’s decision was initiated by a 

court-ordered accelerated schedule to 

install emission control equipment at 

John Sevier Fossil Plant which would 

require TVA to shut down units at the 

plant for about 20 months during the 

construction. Although TVA evaluated 

various alternatives, TVA’s need to 

preserve the reliability of the power 

system was the most significant factor 

influencing its decision. In summary, 

we determined TVA’s analyses appeared 

reasonable to make the decision to 

construct the gas plant in northeast 

Tennessee.

> Preaward Contract

Reviews

To support TVA management in 

negotiating procurement actions, we 

completed five preaward audits of cost 

proposals submitted by companies 

proposing to provide: (1) retiree staff 

augmentation services and 

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(2) engineering and design services 

for TVA power production and 

transmission operations. Our audits 

identified $9.7 million of potential 

savings opportunities for TVA to 

negotiate. The savings opportunities 

were primarily related to reducing 

proposed indirect cost recovery rates 

to better reflect the company’s actual 

cost experiences. 

> Contract

Compliance Reviews

During this semiannual period, we 

completed four compliance audits of 

contracts with expenditures totaling 

$184 million and identified potential 

overbillings of $806,000. Highlights 

of our completed compliance audits 

follow.

• We audited $25 million of costs 

billed to TVA by a contractor for the 

administration of TVA’s dental benefit 

plan. In summary, we found TVA 

had been overbilled $25,591 

including: (1) $17,713 in duplicate 

claim payments; (2) $832 for claims 

which exceeded plan limits; and 

(3) $7,046 for ineligible orthodontic 

payments. In addition, due to the 

high amount ($132,000) of additional 

coinsurance that was billable to 

members during our audit period, 

we determined the “Alternative 

Benefits” provision in TVA’s dental 

benefit plan might be unclear as it 

relates to the member’s responsibility 

when alternate procedures are used. 

We recommended TVA management: 

(1) recover $25,591 in overbilled 

costs from the contractor and 

(2) revise the dental benefit plan 

to more clearly define the member’s 

responsibility as it relates to 

alternative procedures. 

The contractor and TVA management 

agreed TVA had been overbilled 

$25,591. In addition, TVA management 

agreed to consider revising the dental 

benefit plan to clearly define the 

member’s responsibility as it relates to 

alternative procedures. 

• We audited $147.7 million of costs 

billed by a contractor for providing 

security services from January 2005 

through July 2009 and found TVA had 

overpaid or been overbilled $286,881 

as follows:

 (1) $206,531 had been overpaid by 

TVA due to an erroneous payment 

for costs related to another 

contract.

 (2) $72,645 had been overbilled for 

miscellaneous unsupported and 

ineligible costs.

 (3) $7,705 had been overbilled due 

to inaccurate provisional billing 

adjustments for 2007 and 2008.

The contractor subsequently refunded 

$247,438 to TVA and TVA management 

plans to recover the remaining $39,443.

• We audited $10.16 million of costs 

billed by a contractor for providing 

engineering and technical support 

services in regard to the Detailed, 

Scoping, Estimating, and Planning

study related to the potential 

completion of Unit 2 at Watts Bar 

Nuclear Plant. In summary, we 

found TVA had been overbilled 

$184,487 including: (1) $175,094 of 

home office labor costs that should 

have been recovered through the 

contractor’s overhead rate and 

(2) $9,393 of miscellaneous 

unsupported or ineligible billings. 

We also found TVA had paid the 

contractor an additional $33,000 

in fees due to conflicting contract 

language regarding the application 

of fee to travel costs. 

We recommended TVA management: 

(1) take action to recover $184,487 in 

overbilled costs from the contractor and 

(2) determine the appropriateness of 

including travel costs in the contractor’s 

fee base. TVA management is reviewing 

our findings to determine the amounts 

to be recovered from the contractor.

• We audited the prices billed to TVA 

by a contractor for certain equipment 

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Semiannual Report | October 1, 2009 – March 31, 2010

related to dry cask storage systems 

for spent nuclear fuel at Sequoyah 

and Browns Ferry Nuclear (BFN) 

Plants, and found TVA had been 

overbilled $276,000 because the 

contractor overstated the price of 

a vertical crawler that had been 

delivered to BFN. The overstatement 

resulted because the contractor did 

not follow the contract’s pricing 

criteria which required the price of 

the BFN crawler to be set at cost plus 

10 percent. We recommended TVA 

management recover the $276,000 

overbilling from the contractor. 

TVA management is reviewing our 

findings to determine the amounts to 

be recovered from the contractor.

Distributor Audits

TVA has 155 distributors—municipal 

utility companies and cooperatives—

that resell TVA power to consumers. 

Sales of power through these 

distributors account for about 

85 percent of TVA’s total revenue. 

The Distributor Audits group performs 

audits of distributors to assess 

compliance with the key 

power contract provisions including: 

(1) the proper reporting of power 

sales by customer class to facilitate 

proper revenue recognition and 

billing by TVA; (2) nondiscrimination 

in providing electricity to members 

of the same rate class; and (3) the 

use of power revenues. During this 

semiannual period, the OIG completed 

four reviews of TVA distributors. 

Following are issues noted in one 

or more of these reviews.

> Classification and

Metering

We noted instances where: 

(1) customers were not classified 

properly; (2) similar customers were 

not classified the same; (3) customers 

were not metered for demand; and 

(4) customers were not metered, 

which resulted in estimates being used 

for billing purposes. The impact of 

these issues, where we had adequate 

information to estimate, was not 

material; however, there were some 

instances where we did not have 

enough information to estimate the 

impact. We also noted that the billing 

system software used by a large group 

of TVA distributors was not properly 

moving one class of customers to the 

next rate classification because of a 

coding error. Generally, the distributors 

are taking action to correct these issues.

> Contract

Compliance

We found distributors were not 

complying with certain contract 

requirements. Specifically, we noted: 

(1) cost allocations for joint use of 

property and services agreed to with 

TVA were not being applied, other 

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distributor audits TEAM

dry cask storage system
Semiannual Report | October 1, 2009 – March 31, 2010

allocation methods not approved by 

TVA were used, and/or allocations 

were applied improperly; (2) contracts 

were not in place with all customers 

required by the power contract; 

(3) comingling of electric department 

funds with those of other city 

departments was occurring; and 

(4) proper documentation was not 

being retained to allow verification 

of compliance with the TVA small 

manufacturing company credit.

As a result of contract compliance 

issues noted in these and previous 

audits, TVA management is planning to 

change the requirements for customer 

contracts as part of the rate change 

process with the distributors. In 

addition, TVA management stated they 

allowed distributors to keep electric 

and nonelectric funds in the same bank 

account as long as the collections and 

payables were accounted for separately 

in the general ledger. The distributors 

generally agreed to take actions to 

address the other issues noted above.

> Use of Electric

Revenues

We noted the distributors had more 

than enough cash on hand to fund 

planned capital expenditures and 

provide a cash reserve. While TVA has 

established guidelines to determine if a 

distributor has adequate cash reserves 

(cash ratio of 5 to 8 percent), TVA has 

not established guidelines to determine 

if a distributor’s cash reserves are 

excessive. All four distributors 

reviewed had cash ratios exceeding 

the minimum guidelines of 5 to 8 

percent. TVA agreed to establish these 

guidelines.

We also found a distributor paid for a 

feasibility study for a nonelectric line 

of business using electric system funds 

prior to obtaining TVA approval. After 

obtaining TVA approval to loan funds to 

the nonelectric department, funds were 

transferred, but no document with loan 

terms (interest rate, payment terms, 

payback period, electric department 

recourse, etc.) was executed. TVA and 

the distributor agreed to take action to 

put agreements in place.

> Distributor Internal

Control Issues

At each of the distributors audited, we 

identified areas where internal controls 

could be strengthened to improve 

completeness, accuracy and validity of 

the billing data. The following issues 

were noted at one or more of the 

distributors: (1) inaccurate or missing 

contract demand in billing systems; 

(2) distributors not using, and/or no 

management review of, exception 

reports showing changes to customer 

data in the billing system, zero usage 

for monthly readings, and/or negative 

usage for monthly readings; (3) lack 

of documented policies and errors 

in billing for well pumps; (4) lack 

of policies over expenditures; 

and (5) inaccurate data in meter 

management systems. The 

distributors generally agreed to 

take actions to address these issues.

> TVA Billing Error

TVA incorrectly billed a distributor 

for the Competitive Index Rate (CIR) 

credit. According to the wholesale 

contract with the distributor, the retail 

rates used in calculating the CIR credit 

were to be changed in line with the 

rate changes of the competing system. 

However, the distributor’s retail 

contract with the end-use customer 

provided fixed retail rates for a fiveyear period regardless of rate changes 

made by the competing system. The 

competing system’s rates changed 

in May 2006; however, TVA did not 

adjust the CIR credit because: (1) the 

inconsistencies between the wholesale 

and retail contracts may have resulted 

from poor communications between 

TVA and the distributor about program 

requirements; and (2) TVA customer 

service personnel had signed the retail 

contract between the distributor and 

the customer. 

While the signatures reflected approval 

to only one section of the contract and 

not of the contract in its entirety, TVA 

took the position that the signatures 

could compromise its legal position 

in the event of litigation. If the rates 

had been adjusted in accordance with 

the wholesale contract provisions, 

TVA would have reduced the amount 

credited to the distributor by 

approximately $174,000 during the 

audit period. The position TVA took 

on this issue in 2006 would likely 

compromise its ability to pursue 

recovery of the $174,000 at this time. 

According to distributor personnel, the 

customer left the distributor in 2008. 

TVA management did not pursue 

recovery of the $174,000 because 

they believed litigation would not be 

successful. Instead TVA stated the 

focus was on putting procedures and 

processes in place to assure pricing 

programs are implemented as intended 

in the future. In addition, TVA reviewed 

other customer contracts for the CIR at 

other distributors and took action to 

make necessary adjustments.

> Opportunities

for TVA Oversight

Improvements

We found opportunities for TVA to 

enhance oversight of the distributors. 

Specifically, we noted TVA: (1) did 

not include cash used to prepay 

TVA power in the calculation of the 

cash ratio for rate review purposes; 

(2) had not provided definitive 

guidance for distributors on what 

constituted prudent expenditures; 

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(3) had not adequately defined how 

often meters should be tested by the 

distributors; (4) had not performed 

a joint-cost study in a timely manner; 

and (5) had not defined at what point 

a demand meter is required for certain 

commercial rate class customers. 

TVA agreed to take action on all 

identified issues.

IT Audits

> Areas of

Improvement

Noted in Federal

Information Security 

Management Act

FISMA was meant to bolster computer 

and network security within the federal 

government. As a part of FISMA, the 

OIG performs an annual review of 

TVA’s information security program. 

In comparison to the FY 2008 FISMA 

report, we found TVA had generally 

improved in the area of establishing its 

inventory of systems requiring certification and accreditation and general 

security awareness training for network 

users. However, we identified several 

areas during this year’s audit in which: 

(1) performance had declined, or (2) 

TVA had not completed actions from 

the prior year’s audits. Specifically, 

we noted improvements were needed 

in the following areas: (1) the oversight 

and evaluation of contractor systems; 

(2) the plan of action and milestones 

process; (3) the certification and 

accreditation process; (4) incident 

reporting; and (5) security awareness 

training. TVA management generally 

agreed with our findings and has 

taken or is in the process of taking 

corrective action to remediate issues 

noted in this audit.

> Backup and Recovery 

Controls Need

Improvement

We reviewed the controls over backup 

and recovery of applications, data, 

network device configurations, and 

control system configurations for five 

business units. We found TVA had 

significant weaknesses in the controls 

over backup and recovery of: (1) 

network device and (2) control system 

configurations. We also found the 

controls for the backup and recovery 

of data were effective; except in the 

areas of: (1) monitoring of partially 

completed backups; (2) initial backup 

and restore testing for new servers; and 

(3) remote media management. Finally, 

we noted areas for improvement related 

to storage and destruction of backup 

media in one business unit and backup 

of Remote Terminal Units in another 

business unit. TVA management 

generally agreed with our findings and 

has taken or is in the process of taking 

corrective action to remediate issues 

noted in these audits.

> FY 2009 IT SOX 404 

Testing Identified

Opportunities for

Improvement

During the first half of the semiannual 

period, we completed: (1) year-end 

remediation and nonoccurrence 

testing for 18 IT general controls and 

31 application controls, which were 

initiated at the end of the previous FY, 

and (2) a design review of IT general 

controls in place to address financial 

reporting risks. We noted opportunities 

to improve SOX documentation, 

operating effectiveness of controls, 

and areas where control gaps existed. 

Additionally, we found documented 

risks have not been updated since the 

inception of the TVA SOX compliance 

program. We recommended TVA 

management perform a top-down 

risk analysis to better align the risks, 

control objectives, and control activities 

with financial reporting risks. TVA 

management generally agreed with 

our findings and has taken or is in the 

process of taking corrective action to 

remediate issues noted in these audits.

IT audits TEAM

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Summary of Representative Investigations
Semiannual Report | October 1, 2009 – March 31, 2010

Summary of 

Representative

Investigations

During this semiannual 

period, we completed 198 

investigations of criminal 

and administrative matters 

covering a wide range of topics 

including conflict of interest, 

workers’ compensation fraud, 

theft of government property, 

and safety reporting issues to 

name a few. Specifically, the 

criminal investigations resulted 

in four indictments with two 

involving workers’ compensation 

fraud, one involving conflict of 

interest, and another involving 

destruction of government 

property. In addition, three 

convictions and two pretrial 

diversions were obtained 

during this period. One of the 

convictions entailed a conflict 

of interest by a TVA Economic 

Development manager, another 

involved theft of TVA property, 

and a third case involved the 

destruction of TVA property 

(not included in narrative 

below). One of the pretrial 

diversions concerned forged 

and falsified invoices by a TVA 

manager and one included theft 

of TVA property. Twenty-one 

investigations led to changes 

in management procedures 

or actions to reinforce existing 

policies. As a result of our 

investigations, disciplinary 

action was taken against 

seven individuals. 

We also continued our data mining 

efforts to identify potential areas for 

investigation. Two data mining projects 

focused on TVA credit card transactions. 

One involved purchases of electronics 

and the other entailed purchases 

associated with entertainment, golfing, 

and athletic venues. These reviews 

resulted in changes to TVA’s policies 

and increased program monitoring 

by TVA demonstrating that the work 

of Investigations not only results in 

criminal sanctions, but often results 

in a better TVA.

> Former TVA Economic

Development

Project Manager

Pleads Guilty to

Conflict of Interest

A former TVA Economic Development 

project manager pled guilty in 

United States District Court for the 

Eastern District of Tennessee on 

January 19, 2010, to two counts of 

violating 18 United States Code, Sec.

208(a), a federal criminal conflict of 

interest statute. While employed by 

TVA as a technical services project 

manager, the former Economic 

Development manager’s duties 

included overseeing environmentallyfriendly development projects and 

approving invoices submitted by 

contractors who performed work on 

the TVA project he supervised. The 

former manager admitted that in 

the course of performing his official 

duties, he personally approved two 

invoices to TVA from the Center for 

Economic Development and Resource 

Stewardship (CEDARS). Prior to 

the approval of these invoices, he 

personally loaned $2,500 to CEDARS 

as “start up” money and loaned 

CEDARS $5,000 on behalf of Enginuity 

Development Group, LLC, a limited 

liability company of which he was a 

member. The former manager admitted 

he knew he had a financial interest in 

CEDARS and had violated the federal 

conflict of interest statute by approving 

the invoices. 

Sentencing for this case is scheduled 

for June 2010 at which time, the former 

TVA manager could receive up to five 

years imprisonment and a $250,000 

fine for each of two counts alleging 

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investigations TEAM
Semiannual Report | October 1, 2009 – March 31, 2010

violation of the conflict of interest 

statute. The former manager 

resigned from TVA in April 2008 

after a management alert was issued 

by our office.

> Former TVA Nuclear

Assurance Program 

Manager Enters

Pretrial Diversion

Program 

In the last semiannual report, we 

reported that a former TVA program 

manager at Watts Bar Nuclear Plant was 

indicted on August 3, 2009, in Circuit 

Court in Rhea County, Tennessee, on 

one criminal count alleging forgery 

and passing forged instruments. The 

former manager created and submitted 

a false invoice to TVA, claiming property 

damage during a move of his personal 

household goods related to his TVA 

employment. On January 8, 2010, 

the former TVA manager entered into 

a pretrial diversion program for a 

one-year period. In addition, the OIG 

issued a report to TVA management, 

recommending TVA consider including 

an employment restriction in TVA’s 

personnel security records to ensure 

that the results of this investigation 

are considered if the former manager 

seeks future employment with TVA.

> Flawed Procedure

Leads to TVA 

Employee Being

Rehired after

Pleading Guilty 

to Theft

A TVA maintenance foreman at 

Colbert Fossil Plant (COF) used a TVA 

purchase request to buy a 50-gallon hot 

water heater for the plant, which the 

employee later took and installed in 

his home. The OIG investigated the 

matter in conjunction with the TVA 

Police and the investigation culminated 

in the foreman confessing to stealing 

the water heater, resigning his 

position at TVA, and pleading guilty 

in state court to a theft charge. The 

OIG later learned that the plant HR 

department failed to timely note his 

ineligibility for rehire, and that he 

had regained employment at the COF 

through a contractor. The OIG advised 

plant HR personnel of the matter, 

and the rehire status was quickly 

rescinded. The OIG followed up with 

a Report of Administrative Inquiry, 

recommending changes in process to 

ensure that employment eligibility is 

properly and timely addressed. The 

recommendations were accepted and 

set for implementation fleet-wide.

> Chemist at Tennessee

Company Sentenced

for Environmental

Violation

A chemist at a Tennessee chemical 

company was indicted in federal court 

and pled guilty on a Clean Water Act 

violation as previously reported. 

The chemist falsely represented that 

wastewater at the company’s plant in 

Etowah, Tennessee, had been analyzed 

for aluminum when it had not. The 

company’s water is discharged into the 

Hiwassee River, which is a part of TVA 

watershed area. On October 19, 2009, 

the chemist was sentenced to one year 

probation, 100 hours of community 

service as a special condition of 

probation, and received a $5,000 fine. 

The United States Attorney declined 

prosecution against the corporation 

because they met Department of 

Justice guidelines for self disclosure. 

This investigation was conducted 

jointly by TVA OIG and the EPA 

Criminal Investigation Division in 

conjunction with the Eastern District 

Environmental Crimes Task Force.

> Copper Thefts at

TVA’s Hartsville

Facility Lead to

Federal Charges

TVA OIG and TVAP jointly conducted an 

investigation into copper thefts at TVA’s 

Hartsville facility by two local residents 

resulting in losses totaling $35,786. 

The investigation revealed that on 11 

occasions the two men took TVA copper 

to a recycling business in LaFayette, 

Tennessee. Both men were arrested 

and indicted in federal court. One of the 

individuals entered into an 18-month 

pretrial diversion agreement. The other 

was convicted in federal court and 

sentenced to five months at a halfway 

house, five months’ home confinement, 

and three years’ probation. They were 

assessed joint restitution totaling 

$35,876. During an interview of one 

of the subjects, suspicious activity was 

observed by the OIG Agents. District 

drug task force officers were notified 

and further inquiry resulted in the 

arrest and indictment of 10 individuals, 

including the person being interviewed, 

on drug related charges.

> Contractor at

Kingston Fossil

Plant Operating

Without a Valid

Business License

The OIG investigated allegations that 

an Alabama contractor did not have 

a valid Alabama business license 

while performing work at TVA. We 

determined the contractor had a valid 

Alabama business license; however, 

the contractor was performing work at 

TVA’s Kingston Fossil Plant and did not 

have a valid Tennessee business license. 

We recommended management remove 

the contractor from the site until a valid 

license could be obtained. Management 

agreed and also implemented other 

recommended actions to verify future 

contractors’ licenses.

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Semiannual Report | October 1, 2009 – March 31, 2010

> TVA Documents Not

Properly Stamped by 

TVA Engineer

Documents reviewed during the 

review of the the Kingston ash 

containment pond failure revealed 

that a TVA engineer had used his 

professional licensing stamp on 

some of the documents, but had 

failed to affix his signature to the 

stamp. In addition, other documents 

were missing his stamp and signature 

entirely. We recommended TVA 

review its practice on the use of 

stamping engineering documents, 

and TVA management agreed with 

our recommendations.

> Practices of TVA 

Management in

Employee Injury 

Cases Questioned

The OIG investigated two highly 

complex cases concerning: 

(1) questionable injury reporting; 

(2) employee compensation; 

(3) workers’ compensation; and 

(4) interrelated OSHA regulations. 

Both cases involved seriously injured 

workers, who required substantial 

medical attention following on-thejob accidents, including being placed 

on reduced, or “light,” duty. Both 

investigations concluded that, while no 

violation of criminal law was evident, 

there was a disconnect between 

(1) TVA policies and procedures, and 

(2) federal regulations regarding light 

duty and lost time resulting from the 

accidents. Additionally, there was an 

issue of knowledge and practice of the 

requirements by TVA Power Service 

Shop management and supervisors. 

The OIG sent a Report of Administrative 

Inquiry to TVA management, who 

responded positively by noting the 

changes that had taken place between 

the date of injury and the date of the 

report, and by implementing required 

training for affected supervisory 

personnel.

> Investigation of

Falsification of

Documentation

During SOX Audit

OIG Investigations received an 

allegation originating with IT 

Engineering and IT Audits that 

information reported to OIG IT Audits 

personnel may have been falsified. 

The information bore directly on a 

Sarbanes-Oxley related audit. The 

investigation confirmed that an 

employee had changed the date of 

a restore log in two locations from 

October 12, 2009, to July 6, 2009. 

Criminal prosecution was declined, and 

the OIG issued a report recommending 

TVA Management revise existing 

policies and procedures to ensure that 

Sarbanes-Oxley data is maintained 

for a reasonable time period to allow 

for adequate testing, and that security 

measures are implemented to ensure 

that future falsifications cannot occur. 

Management agreed with the issues 

presented, and the responsible party’s 

employment was terminated.

> Investigation

of Workers’ 

Compensation Fraud

The OIG continued to conduct 

investigations of workers’ 

compensation fraud. Two 

investigations in this area led to 

indictments during this semiannual 

period. In one of these investigations, 

a former TVA employee receiving 

workers’ compensation benefits was 

indicted in Tennessee state court on 

two counts of theft. The former TVA 

employee violated OWCP regulations by 

having his daughter collect and cash his 

compensation-benefits checks while he 

was incarcerated on an unrelated felony.

In another workers’ compensation 

investigation, a now former Widows 

Creek Fossil Plant employee was 

indicted in federal court in the Northern 

District of Alabama on two counts of 

making false statements. The former 

plant worker claimed he was injured 

on the job but later confessed he had 

been previously treated by his personal 

physician for the same symptoms. TVA 

terminated his employment as a result 

of our investigation.

> OIG Data Mining

Program Results

The OIG continued to use data mining to 

identify instances of waste, fraud, and 

abuse of TVA resources. We completed 

two projects related to TVA credit card 

transactions. These are outlined below 

along with management action taken as 

a result of our recommendations.

• Charges at Best Buy

A review of transactions from March 

2006 to April 2009 identified a high 

volume of credit card purchases 

from Best Buy, a major electronics 

retailer. Specifically, we identified 

371 transactions totaling more than 

$322,000 in purchases including 

televisions, digital recorders, GPS 

units, Apple ipods®, MyBook hard 

drives, and other small electronics. 

More than $126,000 of these items 

were purchased for employee 

recognition. Because of potential 

abuse and negative publicity for TVA, 

we recommended TVA establish 

an inventory tracking process for 

these items and similar electronic 

purchases.

 Management responded to our report 

and stated TVA has strengthened 

controls to reduce the number of 

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Semiannual Report | October 1, 2009 – March 31, 2010

cards outstanding by 25 percent. 

In addition, merchant codes for 

electronic equipment will be blocked, 

preventing these types of purchases 

in the future. TVA also agreed to 

establish a tracking process and is 

working to incorporate these items 

with TVA’s new IT Asset Management 

Program. TVA immediately identified 

and tagged select items and stablished 

a process to track new purchases. 

• Golfing, Entertainment, and Athletic 

Venues in Credit Card Data

Earlier reviews of credit card 

transactions identified numerous items 

associated with entertainment, golfing, 

and athletic venues. As a follow up, we 

performed a more detailed review of 

previous findings in order to determine 

the causes and approvals of the 

expenditures and to make corrective 

recommendations. We reviewed 

transactions from January 1, 2007, 

to July 31, 2009, where TVA hosted 

stakeholders, business prospects, 

contractors, politicians, and employees 

with entertainment, including the 

following: 

 (1) Golf outings and related 

expenditures totaling 

$84,410; and 

 (2) Numerous athletic venues 

including:

• A music concert at Ford Field 

 in Detroit Michigan;

• 24 tickets to a major league 

 baseball game;

• A professional football game; 

• Season tickets to SEC football 

 games; and

• Hunting events. 

Although all of the reviewed 

transactions were approved, many 

appeared to violate TVA’s policy on 

hospitality. In light of the fact such 

expenditures have been discussed 

by the news media and can create a 

negative image of TVA to the public, 

we recommended TVA officials review 

the practices governing the use of 

credit cards and the types of allowable 

transactions.

TVA management agreed with the 

majority of our findings and was 

already aware of these issues as a 

result of the Freedom of Information 

Act (FOIA) requests on this subject. 

TVA’s Compliance & Advisory Services 

(CAS) performed a detailed analysis 

of 74 percent of the transactions in 

the OIG inquiry and identified more 

than $37,000 in transactions that were 

disallowed by TVA policies, practices, 

and procedures. CAS is in the process 

of completing a comprehensive 

review of the Hospitality and the Gold 

Card programs. Their preliminary 

review indicated that enhancements, 

clarifications and further guidance are 

needed to better enforce compliance. 

Though TVA expected to issue a 

final report in November 2009, the 

review was expanded to include the 

period ending February 2010. TVA 

additionally incorporated the review 

as part of an ongoing initiative of 

continuous monitoring. 

• Three Investigations of 

Hospitality Expenditures

From this data mining effort, three 

separate investigations were opened. 

The investigations concluded that a 

substantial number of the questioned 

charges resulting from the data mining 

review fell within accepted hospitality 

expenditure guidelines. Other charges, 

while technically falling within TVA 

guidelines for expenditures, created 

real or apparent risks in that some 

recipients could run afoul of state ethics 

laws regarding the receipt of gifts in 

their official capacities. In all cases, 

TVA-sponsored attendees should be 

documented. The OIG sent a report 

to management outlining the findings 

and suggestions to which management 

responded positively.

> Repeated use of

partially completed

Daily Monitoring

Logs at Kingston

Fossil Plant

Investigated

Following the ash spill at Kingston 

Fossil Plant, a review of documents 

revealed that daily monitoring logs 

from the dredge cell seep repair area 

appeared to be copies of previous logs 

with only the time, date, and weather 

data at the top of the logs being 

changed, giving the appearance that 

the logs may have been falsified. Some 

logs contained minor changes such as 

additional check marks, answers with 

strikethroughs, or brief comments or 

single words added. Others were exact 

copies of previously used logs with 

no additional information added. The 

Tennessee Department of Environment 

and Conservation expressed extreme 

concern over the issue. 

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Semiannual Report | October 1, 2009 – March 31, 2010

Our investigation determined that 

most of the documents had been 

prepared by one TVA employee, but this 

employee explained he made copies 

of the logs to use as a guide during 

the inspections to avoid having to 

redo a new form each day. He stated 

that conditions on Swan Pond Road 

frequently did not change from day 

to day. However, if any changes were 

noticed, he added additional comments, 

as applicable, to accurately reflect the 

changes. He further stated that the prewritten answers, as copied, remained 

accurate unless otherwise noted. The 

employee denied ever completing a 

Daily Inspection Log without actually 

completing an inspection. After the 

inspection was completed, he placed 

the logs in a binder at the plant, but 

the employee’s supervisor was not 

aware of the use of either the forms 

or the binder; consequently, the logs 

were never reviewed by anyone. The 

investigation revealed a lack of clarity 

in the division of responsibility for the 

dredge cell seep repair area between 

the Heavy Equipment Division and the 

By-Products Group, as well as the role 

of a TVA contractor.

The OIG issued a report to management 

which included four recommendations, 

all of which were addressed in 

management’s response to the report. 

The recommendations included: 

(1) use of a new checklist and entry 

for each inspection; (2) review of 

inspections by a supervising official; 

(3) steps to assure issues noted 

during inspections are addressed as 

appropriate and documentation of 

TVA’s response to those issues is 

retained in an easily retrievable system 

of records; and (4) procedures to assure 

inspections are conducted routinely and 

not only when a certain crew is on duty, 

as appears to have been the case with 

the dredge cell seep repair area at the 

Kingston Fossil Plant. 

> Inadequate Controls

over Limestone

Deliveries Identified

at Paradise

The OIG received a report that a TVA 

contract supplier was overbilling for 

limestone delivered at the Paradise 

Fossil Plant. Limestone is used in the 

plant’s scrubbers and is delivered by 

the supplier at a rate of approximately 

25 tons per truckload. The OIG 

investigated the matter by observing 

and recording the number of truckloads 

of limestone delivered by the supplier 

to the plant over a 17-day period. 

The number of deliveries was then 

compared to the invoices submitted 

to the plant by the supplier. Over the 

17 day period, it appeared that TVA 

was overbilled for four truckloads of 

limestone. However, the tare weight 

on the invoices was not reliable. 

Interviews of plant employees showed 

that TVA primarily relied on the 

unverified delivery weights provided by 

the supplier.

Due to poor controls at Paradise, the 

OIG was unable to conclude with 

certainty whether or not the plant 

had been shorted limestone by the 

supplier. A report was submitted to 

TVA management which included 

recommendations to improve controls 

relating to truck traffic and load weight 

verification. In response to the report, 

TVA assigned a security guard to check 

receipts as trucks enter the plant 

grounds and is investigating installing 

a card reader to automate the process. 

We are following up with management 

on the issue regarding the weights.

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PARADISE FOSSIL PLANT
Semiannual Report | October 1, 2009 – March 31, 2010

Legislation and Regulations
Semiannual Report | October 1, 2009 – March 31, 2010

Legislation and Regulations

In fulfilling its responsibilities under the IG Act of 1978, as amended, the OIG follows and reviews existing and proposed 

legislation and regulations that relate to the mandate, operations and programs of TVA. Although TVA’s Office of the 

General Counsel reviews proposed or enacted legislation that could affect TVA activities, the OIG independently follows 

and reviews proposed legislation that affects the OIG and/or relates to economy and efficiency or waste, fraud, and abuse 

of TVA programs or operations.

Major pieces of legislation being followed by the TVA OIG during the past six months include:

> S. 1745 – Non-Federal

Employee Whistleblower

Protection Act of 2009

This legislation expands the whistleblower 

provisions under Section 1553 of the 

American Recovery and Reinvestment Act of 

2009 (P.L. 111-5) which cover whistleblowing 

reprisal allegations by state, local, and 

contractor employees whose employers 

receive covered stimulus funds. S. 1745 

would amend the Federal Property and 

Administrative Services Act of 1949, 41 U.S.C.

§ 265, to expand protections to employees 

of private contractors or grantees who 

receive funds or property from the Federal 

Government.

The Bill, with certain exceptions, would 

require IGs to investigate reprisal complaints 

and submit a “report of the findings of the 

investigation” to the complainant, his/her 

employer, and the head of the agency.

> H.R. 4983, Transparency in

Government Act

This legislation would amend Section 5(a)

(3) of the Federal Funding Accountability and 

Transparency Act to provide that: each agency 

inspector general: (1) reviews a statistically 

representative sample of agency Federal 

awards every 6 months for the first three 

years following enactment of this section, and 

annually thereafter, to determine whether 

agencies have appropriate measures in place 

to review Federal Funding Accountability and 

Transparency data submissions for accuracy 

and completeness; (2) reports to the Director 

of the Office of Management and Budget 

and the head of the agency the findings of 

the review, including recommendations for 

corrective action; and (3) makes publicly 

available, including through the Web site 

created by this Act, the findings of the review.” 

The legislation would also require the 

disclosure by any Executive agency of its 

sponsorship for any advertisement or 

communication in the communication 

itself. In addition, the legislation amends the 

Freedom of Information Act (FOIA) so that all 

information included in the agency’s response 

to a FOIA request shall be made available 

to the public electronically, free of charge 

through each agency’s Web site.

> S. 2995 – Clean Air

Amendments Act of 2010

This legislation amends the Clean Air Act to 

establish a national uniform air pollutant 

regulatory program for the electric generating 

sector in the 48 contiguous states and the 

District of Columbia. The intent of the bill is 

to benefit people’s health and environment 

by reducing the adverse effects of energy 

production and use. The bill calls for the 

promulgation of emission standards that aim 

to reduce emissions from coal-fired power 

plants of mercury by 90 percent by 2015, of 

sulfur dioxide by 80 percent by 2018, and of 

nitrogen oxides by more than 50 percent by 

2015.

> H.R. 4858, The Public

Information Act of 2010

This legislation would require executive 

branch agencies, including government 

corporations and other establishments in 

the executive branch, to make their public 

records available on the internet at no charge 

to the public. Section 7(d) of the bill would 

require IGs to conduct periodic reviews of 

their agencies’ compliance with the internet 

publication requirements at least once every 

four years and to post the results of the 

reviews on the internet.

> H.R. 5026 Grid Reliability 

and Infrastructure

Defense Act

This legislation has as its purpose 

strengthening the defenses of the nation’s 

critical electric infrastructure against cyberthreats. The bill would grant the Federal 

Energy Regulatory Commission (FERC) 

emergency powers when the nation’s 

president identifies an imminent grid security 

threat. In addition, the bill directs FERC in 

consultation with the appropriate Federal 

agencies, and after notice and opportunity 

to comment, to implement actions to protect 

the reliability of the nation’s electric bulk 

power system for any identified grid security 

vulnerability which has not been addressed 

by the North American Electric Reliability 

Corporation. The legislation also directs the 

nation’s president to designate not more than 

100 domestic critical defense facilities most 

vulnerable to a disruption of electricity. If 

FERC determines there is an unaddressed 

electric infrastructure vulnerability serving 

that facility, than FERC is to order measures 

to protect the facility against the identified 

vulnerability.

> S. 976 – A Bill Amending

Subchapter I of

Chapter 35 of Title 44

This legislation would exempt from the 

Paperwork Reduction Act, 44 U.S.C. § 3501 

et seq., the collection of information during 

any investigation, audit, inspection, 

evaluation, or other review by federal 

Inspector General Offices.

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Semiannual Report | October 1, 2009 – March 31, 2010

Appendices
Semiannual Report | October 1, 2009 – March 31, 2010

Appendix 1

Index On Reporting Requirements Under The IG Act

REPORTING REQUIREMENT PAGE

Section 4(a)(2) Review of Legislation and Regulations 40-41

Section 5(a)(1) Significant Problems, Abuses, and Deficiencies 22-39

Section 5(a)(2) Recommendations With Respect to Significant Problems, Abuses, 

and Deficiencies

22-39

Section 5(a)(3) Recommendations Described in Previous Semiannual Reports in 

Which Corrective Action Has Not Been Completed

Appendix 4

Section 5(a)(4) Matters Referred to Prosecutive Authorities and the Prosecutions 

and Convictions That Have Resulted

Appendix 5

Section 5(a)(5) and 6(b)(2) Summary of Instances Where Information Was Refused None

Section 5(a)(6) Listing of Audit and Inspection Reports, Showing Dollar Value of 

Questioned Costs, Unsupported Costs, and Recommendations as to 

Funds to be Put to Better Use

Appendix 2

Section 5(a)(7) Summary of Particularly Significant Reports 22-39

Section 5(a)(8) Status of Management Decisions for Audit and Inspection Reports 

Containing Questioned Costs

Appendix 3

Section 5(a)(9) Status of Management Decisions for Audit and Inspection Reports 

Containing Recommendations That Funds Be Put to Better Use

Appendix 3

Section 5(a)(10) Summary of Audit and Inspection Reports Issued Prior to the Beginning of 

the Reporting Period for Which No Management Decision Has Been Made

None

Section 5(a)(11) Significant Revised Management Decisions None

Section 5(a)(12) Significant Management Decisions With Which the Inspector General Disagreed None

Section 5(a)(13) Information under Federal Financial Management Improvement Act of 1996 None

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Semiannual Report | October 1, 2009 – March 31, 2010

Appendix 2

OIG AUDIT REPORTS ISSUED DURING THE THE SIX-MONTH

PERIOD ENDED MARCH 31, 2010

Report 

Number and 

Date Title

Questioned 

Costs

Unsupported 

Costs

Funds to be Put 

to Better Use

CONTRACT AUDITS

2009-12306 

11/17/2009

Blue Cross Blue Shield of Tennessee Contract for Administration 

Services for Dental Benefits

$25,591 $17,713 $0

2009-12689 

11/24/2009

Review of TVA's Decision to Construct a Gas Plant in Northeast 

Tennessee

$0 $0 $0

2009-12871 

12/04/2009

Preaward Review – Retiree Staff Augmentation Services $0 $0 $854,000

2009-12908 

12/17/2009

Preaward Review – Proposal to Provide Engineering Design and 

Support Services

$0 $0 $6,500,000

2008-12050 

01/20/2010

Pinkerton Government Services, Inc, Review of Costs Billed Under 

Contract Nos. 17952 and 17935

$286,881 $6,665 $0

2009-12907 

01/26/2010

Preaward Review – Proposal to Provide Engineering Design and Support 

Services

$0 $0 $2,200,000

2008-11973 

02/04/2010

Bechtel Power Corporation Costs Billed Under Contract No. 58949 

for WBN Unit 2 DSEP

$217,487 $0 $0

2009-12909 

02/04/2010

Worley Parsons Proposal for Engineering Design and Support and 

Services

$0 $0 $0

2009-12905 

02/18/2010

Preaward Review – Proposal to Provide Engineering Design and 

Support Services

$0 $0 $148,600

2007-028C 

03/17/2010

Holtec International, Inc. $276,000 $0 $0

DISTRIBUTOR AUDITS

2008-12037 

10/15/2009

Distributor Review of Bolivar Energy Authority $0 $0 $0

2008-12042 

01/19/2010

Distributor Review of Tullahoma Utilities Board $0 $0 $0

2008-12041 

01/20/2010

Distributor Review of Princeton Electric Plant Board $0 $0 $0

2008-12038 

02/19/2010

Distributor Review of Murphy Electric Power Board $174,000 $0 $0

FINANCIAL AND OPERATIONAL AUDITS

2009-12893 

11/09/2009

Agreed-Upon Procedures for TVA Fiscal Year 2009 Performance Measures $0 $0 $0

2009-12326 

02/12/2010

Review of the Tennessee Valley Authority Retirement System $0 $0 $0

2009-12296 

02/18/2010

Review of Green Power Marketing $0 $0 $0

2009-12292 

02/25/2010

TVA's Hearing Conservation Program $0 $0 $0 t

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Semiannual Report | October 1, 2009 – March 31, 2010

INFORMATION TECHNOLOGY AUDITS

2009-12338-04 

11/30/2009 Enterprise Backup and Recovery – Nuclear Power Group $0 $0 $0

2009-12747 

12/08/2009

Sarbanes-Oxley Remediation Testing – IT General Controls and Applica- tion Control Narratives $0 $0 $0

2009-12338-06 

12/09/2009 Enterprise Backup and Recovery – Nuclear Security and Access Control $0 $0 $0

2009-12338-08 

01/19/2010 Enterprise Backup and Recovery –Power Systems Operations $0 $0 $0

2009-12697 

01/25/2010 Federal Information Security Management Act Evaluation $0 $0 $0

2009-12338-05 

01/26/2010 Enterprise Backup and Recovery–Information Services $0 $0 $0

2009-12338-07 

01/26/2010 Enterprise Backup and Recovery –Fossil Power Group $0 $0 $0

2009-12994 

03/02/2010 Sarbanes-Oxley IT Control Design Review $0 $0 $0

TOTAL 

AUDITS (26) $979,9591 $24,378 $9,702,600

OIG INSPECTION REPORTS ISSUED DURING THE 

SIX-MONTH PERIOD ENDED ENDED MARCH 31, 2010

Report Number 

and Date Title

Questioned 

Costs

Unsupported 

Costs

Funds to be Put 

to Better Use

2007-11400 

11/23/2009

Review of TVA's Operational Performance Results $0 $0 $0

2008-11995 

12/03/2009

Review of Educational Degrees for Contractors Assigned to the 

Watts Bar Nuclear Plant Unit 2 Construction Completion Project

$0 $0 $0

2009-12652 

01/07/2010 Review of TVA’s Reservoir Operations Program $0 $0 $0

TOTAL 

INSPECTIONS (3) 0 0 0

Note: A summary of or link to the full report may be found on the OIG’s website at http://www.tvaoig.gov.

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1

Includes $33,000 of unrecoverable costs.
Semiannual Report | October 1, 2009 – March 31, 2010

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Appendix 3

TABLE I: TOTAL QUESTIONED AND UNSUPPORTED COSTS 

AUDITS

Audit Reports

Number of 

Reports

Questioned

Costs

Unsupported

Costs

A. For which no management decision has been made 

by the commencement of the period 4 $3,909,940 $656,058

B. Which were issued during the reporting period 5 $979,959 $24,378

Subtotal (A+B) 91 $4,889,899 $680,436

C. For which a management decision was made during the 

reporting period 92 $4,714,805 $680,436

 1. Dollar value of disallowed costs 8 $2,255,467 $680,436

 2. Dollar value of costs not disallowed 3 $2,459,338 $0

D. For which no management decision has been made 

by the end of the reporting period 1 $175,094 $0

E. For which no management decision was made within 

six months of issuance 0 $0 $0

TABLE I: TOTAL QUESTIONED AND UNSUPPORTED COSTS

INSPECTIONS

Audit Reports

Number of 

Reports

Questioned

Costs

Unsupported

Costs

A. For which no management decision has been made 

by the commencement of the period 0 $0 $0

B. Which were issued during the reporting period 0 0 0

Subtotal (A+B) 0 0 0

C. For which a management decision was made during the 

reporting period 0 0 0

 1. Dollar value of disallowed costs 0 0 0

 2. Dollar value of costs not disallowed 0 0 0

D. For which no management decision has been made 

by the end of the reporting period 0 0 0

E. For which no management decision was made within 

six months of issuance 0 0 0

1 The subtotal of reports (A+B) differs from the sum of C and D when the same report(s) contain recommendations for which a management decision was made 

and other recommendations for which a management decision was not made by the end of the semiannual period.

2 The total number of reports for which a management decision was made during the reporting period differs from the sum of C(1) and C(2) when the same 

report(s) contain both recommendations agreed to by management and other not agreed to by management.
Semiannual Report | October 1, 2009 – March 31, 2010

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TABLE II: FUNDS TO BE PUT TO BETTER USE 

AUDITS

Audit Reports Number of Reports Funds to be Put to Better Use

A. For which no management decision has been made 

by the commencement of the period 5 $39,888,000

B. Which were issued during the reporting period 4 $9,702,600

Subtotal (A+B) 9 $49,590,600

C. For which a management decision was made during the 

reporting period 83 $49,442,000

 1. Dollar value of recommendations agreed to by management 3 $8,852,500

 2. Dollar value of recommendations not agreed to by management 6 $40,589,500

D. For which no management decision has been made 

by the end of the reporting period 1 $148,600

E. For which no management decision was made within 

six months of issuance 0 $0

TABLE II: FUNDS TO BE PUT TO BETTER USE 

INSPECTIONS

Audit Reports Number of Reports Funds to be Put to Better Use

A. For which no management decision has been made by the 

commencement of the period 0 $0

B. Which were issued during the reporting period 0 0

Subtotal (A+B) 0 0

C. For which a management decision was made during the 

reporting period 0 0

 1. Dollar value of recommendations agreed to by management 0 0

 2. Dollar value of recommendations not agreed to by 

management 0 0

D. For which no management decision has been made by the 

end of the reporting period 0 0

E. For which no management decision was made within six 

months of issuance 0 0

3The total number of reports for which a management decision was made during the reporting period differs from the sum of C(1) and C(2) when the same 

report(s) contain both recommendations agreed to by management and others not agreed to by management.
Semiannual Report | October 1, 2009 – March 31, 2010

Appendix 4

AUDIT AND INSPECTION REPORTS WITH CORRECTIVE ACTIONS PENDING

As of the end of the semiannual period, final corrective actions associated with seven audits and three inspections were not completed 

within one year of the final report date. Presented below for each audit and inspection are the report number and date and a brief 

description of the open recommendation(s) and the date management expects to complete final action, if available.

Audit Report 

Number and Date Report Title and Recommendation(s) for which Corrective Action has Not Been Completed

2007-11348-01 

03/26/2008 IT Security Organizational Effectiveness

TVA management agreed with our recommendations and has completed actions on three of the six recommendations. TVA 

is in the process of implementing program and organizational improvements. Action plans are scheduled for completion 

by June 30, 2010.

2007-11216 

06/02/2008 Actions to Protect Social Security Numbers and Eliminate Unnecessary Use

TVA management has completed final action for one recommendation. According to Information Services, it is on track to 

meet the action deadline of June 2010 for the remaining two recommendations.

2008-11754 

06/13/2008 Computer Operations–Manage Facilities – SOX 404 Testing

Management has completed actions to address three of the five recommendations. Corrective action for the remaining two 

recommendations is on track for completion in September 2010.

2007-11388 

08/21/2008 Sequoyah Nuclear Plant – Cyber Security Assessment

TVA management from Nuclear Power Group and Information Services provided corrective action plans to address the 

recommendations and indicated all corrective actions would be completed by October 2010. Management has completed 

final actions on six of the fifteen recommendations.

2008-11945 

11/20/2008 TVA Telework Initiatives

The Vice President, Human Resources, issued a TVA-wide policy on December 28, 2009. Other recommendations related to 

conducting an assessment and working with TVA organizations to specifically identify the positions that are a good fit for 

teleworking are ongoing.

2008-11964 

09/25/2008 Federal Information Security Management Act Evaluation

Management agreed with our findings and has completed actions for one of the four recommendations. Remediation is 

targeted for completion by August 31, 2010.

2008-11965 

02/04/2009 Contractor Workforce Management – Access and General Control Review

Because of commitments to implementing MAXIMO for the Nuclear organization, TVA plans to test and evaluate the func- tionality of the upgraded software by March 2010. Pending positive test results, the implementation of the software will 

follow within the next few weeks. TVA expects that the upgrade, testing, evaluation, and implementation should be complete by April 2010.

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Inspection Report 

Number and Date Report Title and Recommendation(s) for which Corrective Action has Not Been Completed

2005-518I 

08/31/2005 Physical and Environmental Controls for the Chattanooga Data Center

Information Services has developed a Unified Communications Strategy and Project Plan to replace the telephone system 

by the end of 2010.

2005-522I 

06/13/2006 TVA’s Role as a Regulator

Initial planned completion of the recommendations was scheduled for December 31, 2006. On March 26, 2010, 

Compliance Advisory Services indicated that the new target date for final action would be September 30, 2010.

2007-11443 

09/30/2008 Contractor Background Checks Applicable to the Watts Bar Nuclear Plant Unit 2 Construction Project

Nuclear Power Group and Human Resources are currently working to determine what changes are necessary to the background checks for the Watts Bar Nuclear Plant Unit 2 project related to contractor employees and if any changes are re- quired to TVA Business Practice 29.

Appendix 5

INVESTIGATIVE REFERRALS AND PROSECUTIVE RESULTS1

Referrals

Subjects Referred to U.S. Attorneys 18

Subjects Referred to State/Local Authorities 2

Results

Subject Indicted 4

Subjects Convicted 3

Pretrial Diversions 2

Referrals Declined 19

1

These numbers include task force activities and joint investigations with other agencies.

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Appendix 6

HIGHLIGHTS - STATISTICS

 MAR 31,

 2010 

 SEPT 30,

 2009

 MAR 31,

 2009

 SEPT 30,

 2008

 MAR 31,

 2008

AUDITS

AUDIT STATISTICS

Carried Forward 44 70 28 47 35

Started 46 46 59 53 52

Canceled (4) (6) (3) (2) (2)

Completed (26) (66) (14) (70) (38)

In Progress at End of Reporting Period 60 44 70 28 47

AUDIT RESULTS 

Questioned Costs $980 $6,744 $1,226 $3,609 $774

Disallowed by TVA 2,255 2,799 829 1,802 370

Recovered by TVA 2,999 909 644 676 3,339

Funds to Be Put to Better Use $9,703 $50,570 $0 $28,653 $100,990

Agreed to by TVA $8,853 4,723 0 28,120 53,987

Realized by TVA 480 4,395 0 26,460 53,987

OTHER AUDIT-RELATED PROJECTS

Completed 10 16 8 7 6

Cost Savings Identified/Realized (Thousands) $0 $0 $0 $0 $0

INSPECTIONS

Completed 3 21 4 16 8

Cost Savings Identified/Realized (Thousands) $0 $0 $0 $0 $0

INVESTIGATIONS1

INVESTIGATION CASELOAD

Opened 168 194 171 161 155

Closed 198 223 91 135 121

In Progress at End of Reporting Period 251 280 200 174

INVESTIGATION RESULTS (Thousands)

Recoveries $41.8 $20.6 $10,725.3 $632.6 $25,262

Savings 0 472.1 0 0 4,137

Fines/Penalties 5.9 .4 352.7 1.6 206

MANAGEMENT ACTIONS

Disciplinary Actions Taken (# of Subjects) 7 6 3 15 9

Counseling/Management Techniques Employed 

(# of Cases) 25 10 1 6 16

PROSECUTIVE ACTIVITIES (# of Subjects)

Referred to U.S. Attorneys 18 45 18 7 19

Referred to State/Local Authorities3 2 6 -- -- --

Indicted 4 3 4 14 4

Convicted 3 3 3 3 3

Pretrial Diversion 2 0 0 1 0

1These numbers include task force activities and joint investigations with other 

agencies.

2Adjusted from the previous period.

3 Category added in semiannual period ended September 30, 2009.

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Appendix 7 

Statement of Richard W. Moore

Inspector General, Tennessee Valley Authority

before the

Subcommittee on Water Resources and Environment

of the

Committee on Transportation and Infrastructure

United States House of Representatives

December 9, 2009

Madam Chairwoman Johnson, Ranking Member Boozman, and members of the Subcommittee, I appreciate the opportunity to testify before 

you on the eve of the one year anniversary of the Kingston ash spill. My written testimony covers the specifics of our assessment of the 

degree to which TVA has responded to the findings and recommendations in the recent OIG reports concerning the coal ash spill, clean-up 

operations, and TVA’s overall environmental management. My statement this morning, however, will be a broader, higher level analysis of the 

current status of TVA.

As you know, my office issued two reports. The first report issued in June of this year evaluated TVA’s (1) initial emergency response, 

(2) response to the media, and (3) reparations to the victims and restoration of the community. The second report was issued on 

July 23, 2009, and focused on (1) providing an independent peer review of the root cause analysis utilizing the services of Marshall Miller 

& Associates, and (2) reviewing TVA’s ash management practices. These reports resulted in nine very broad recommendations designed 

to (1) improve specific business processes, (2) develop a more robust risk management program, and (3) take actions that would change 

TVA’s culture to be more focused on developing sound business practices and driving compliance throughout the TVA organization.

Over the past year, we have seen TVA devote an extraordinary amount of time, money, and focus to addressing not only the 

recommendations of the OIG, but also the recommendations of the McKenna law firm which in many respects paralleled our findings 

and recommendations. TVA has extracted all of the detailed findings and recommendations, and they have cross-referenced the findings 

to develop a Gap Analysis and a tracking matrix. TVA has detailed the specific actions that need to be taken to address all findings and 

recommendations. They have contracted with a consultant to develop the necessary policies and procedures, and they are benchmarking 

other companies, including identifying best practices related to dry ash storage. TVA has hired another consultant, McKensey and Company, 

to analyze TVA’s culture and to assist TVA in effectively changing the culture that contributed to the Kingston ash spill. Beyond these 

procedural changes are changes that are perhaps more difficult to measure but are just as significant. Changes in personnel, changes in the 

tempo of how quickly things are done, and changes in attitudes are evident to us as we track the work of TVA management. 

This all leads me to believe that TVA is marching in the right direction. As you know, we have been perhaps TVA’s harshest critic in terms 

of how they handled coal ash storage and how they handled the crisis after the fact. In many ways, the Kingston ash spill was TVA’s darkest 

hour. Our impression now, however, is that TVA management is not just reacting to criticism to emerge from a crisis, but they are committed 

to transforming TVA into what we all hope it can be. 

I would like to offer, however, some historical perspective on TVA in crisis. This is not the first time that TVA has been under the microscope 

nor the first time that findings and recommendation for significant change have been made. The McKenna report aptly points out that in 

1987, in response to TVA’s nuclear safety issues and sustained regular increases in TVA’s rates, The Southern States Energy Alliance Board 

created an advisory committee which found some of the same problems with TVA in the 1980’s as we are finding today. The McKenna report 

also notes that my office has issued reports citing process problems at TVA that continue to resurface over the years. 

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While it is true that none of the attempts to reform TVA focused on culture and risks to the extent that has been done in the aftermath of 

the Kingston spill, it is clear that there are some recurring themes in TVA history. One is that TVA has suffered from an insular culture that 

shuns views outside the “Valley.” This defensive and protectionist philosophy has produced a tunnel vision that eschews input that might 

have aided in changing the very culture that has contributed to TVA’s current woes. That same culture resisted system-wide standards and 

accountability. All of this is based on an underlying philosophy that TVA’s uniqueness as a hybrid government agency exempted it from 

adherence to standards and uniform process. 

My point here this morning is simply this: the challenge for TVA is a culture that is highly resistant to reform. The Kingston spill 

demonstrated that in a dramatic way. Changing a culture takes time. The same culture that existed on December 22, 2008, still exists today. 

Its residual effect is likely to be felt for years to come.

Despite all of this, I remain optimistic that the current efforts to effect meaningful changes at TVA will be successful for four reasons: 

(1) the kinds of reforms being implemented at TVA are system-wide process changes that have worked well in private sector companies 

and that have not had the system failures TVA has experienced; (2) TVA management has demonstrated a willingness to solicit input from 

culture experts outside the Valley, and they appear to be taking all of this very seriously; (3) TVA management has recently gone through an 

extremely robust evaluation of risks that is unparalleled in TVA history; and (4) TVA management has made personnel changes that, to me, 

provide credible evidence of a commitment to do whatever it takes to get this right.

Ultimately, the Office of Inspector General will measure the progress that TVA makes, and we will report the facts as we find them. We 

appreciate this Subcommittee’s efforts to protect the citizens of the Tennessee Valley by focusing on these important issues. My office will 

work with this Subcommittee to track TVA’s progress and to issue reports that may be helpful to you. 

I look forward to answering any questions that you may have.

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Disallowed Cost – A questioned cost 

that management, in a management 

decision, has sustained or agreed 

should not be charged to the agency.

Final Action – The completion of all 

management actions, as described in a 

management decision, with respect to 

audit findings and recommendations. 

When management concludes no action 

is necessary, final action occurs when a 

management decision is made.

Funds Put To Better Use – Funds, 

which the OIG has disclosed in an 

audit report, that could be used 

more efficiently by reducing outlays, 

deobligating program or operational 

funds, avoiding unnecessary 

expenditures, or taking other 

efficiency measures.

Management Decision – The 

evaluation by management of the 

audit findings and recommendations 

and the issuance of a final decision by 

management concerning its response 

to such findings and recommendations.

Questioned Cost – A cost the IG 

questions because (1) of an alleged 

violation of a law, regulation, contract, 

cooperative agreement, or other 

document governing the expenditure 

of funds; (2) such cost is not supported 

by adequate documentation; or (3) the 

expenditure of funds for the intended 

purposes was unnecessary 

or unreasonable.

Unsupported Costs – A cost that 

is questioned because of the lack of 

adequate documentation at the time 

of the audit.

The following are acronyms and abbreviations widely used in this report:

BFN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Browns Ferry Nuclear Plant

CAS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Compliance & Advisory Services

CEDARS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Center for Economic Development and 

Resource Stewardship

CEO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Chief Executive Officer

CIR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Competitive Index Rate

COF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Colbert Fossil Plant

EPA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Environmental Protection Agency

Ernst & Young. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Ernst & Young LLP

FECA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Federal Employees’ Compensation Act

FERC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Federal Energy Regulatory Commission

FERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Federal Employees Retirement System

FISMA. . . . . . . . . . . . . . . . . . . . . . . .Federal Information Security Management Act

FOIA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Freedom of Information Act

FY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Fiscal Year

HR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Human Resources

IG Act. . . . . . . . . . . . . . . . . . . . . . . . . . Inspector General Act Amendments of 1988

IT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Information Technology

OEI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Organizational Effectiveness Initiative

OIG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Office of the Inspector General

OSHA. . . . . . . . . . . . . . . . . . . . . . . Occupational Safety and Health Administration

OWCP. . . . . . . . . . . . . . . . . . . . . . . . . . Office of Workers’ Compensation Programs

Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hearing Conservation Program

SERP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Supplemental Executive Retirement Plan

SOX. . . . . . . . . . . . . . . . . . . . . . . . . . Section 404 of the Sarbanes-Oxley Act of 2002

STS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Standard Threshold Shifts

TVA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tennessee Valley Authority

TVARS. . . . . . . . . . . . . . . . . . . . . . .Tennessee Valley Authority Retirement System

TVAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .TVA Police

WBN U2 Project. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Watts Bar Nuclear Plant Unit 2 

Construction Completion Project

WCF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Widows Creek Fossil Plant

WP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Winning Performance

GLOSSARY ABBREVIATIONS AND ACRONYMS

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> Power Generation

• A federal government corporation, created on 

May 18, 1933, serving a seven-state region

• Nation’s largest public power system

• Composed of:

- 29 hydroelectric plants

- 1 pumped-storage plant

- 3 nuclear sites

- 11 coal-fired power plants

- 11combustion turbine plants

- 2 diesel generator sites

- 1 wind energy site

- 1 digester gas site

- 1 biomass co-firing site

- 15 solar energy sites

• 33,716 megawatts (summer net capability)

• 145 billion kW hours generated (FY 2009) 

• $11.1 billion in annual revenue (FY 2009) from sale of electricity

• 12,219 employees (FY 2009)

> Transmission

• 99.999 percent reliability for ten consecutive years

• 80,000 square-mile service area

• 15,954 miles of transmission line

> Customers

• 155 power distributors (municipalities and cooperatives)

• 56 directly served customers

• 11 utility power exchange arrangements

• 9 million people served

> Stewardship

• Nation’s fifth-largest river system

• 800 miles of commercially navigable water 

transporting more than 50 million tons of cargo

• 49 dams and reservoirs

• 293,000 acres of public land

• 11,000 miles of reservoir shoreline

• Over 100 public recreation facilities

WHAT IS TVA?

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A confidential connection for reporting fraud, 

waste or abuse affecting TVA.

www.OIGempowerline.com

1-877-866-7840 EmPowerlineTM is sponsored by the Office of the Inspector General 

and operates independently of TVA. 

The OIG is an independent organization charged with conducting 

audits, inspections, and investigations relating to TVA programs 

and operations, while keeping the TVA Board and Congress fully 

and currently informed about problems and deficiencies relating 

to the administration of such programs and operations.

The OIG focuses on (1) making TVA’s programs and operations 

more effective and efficient; (2) preventing, identifying, and 

eliminating waste, fraud, and abuse and violations of laws, rules, 

or regulations; and (3) promoting integrity in financial reporting.

If you would like to report to the OIG any concerns about fraud, 

waste, or abuse involving TVA programs or violations of TVA’s 

Code of Conduct, you should contact the OIG Empowerline 

system. The Empowerline is administered by a third-party 

contractor and can be reached 24 hours a day, seven days a 

week, either by a toll-free phone call (1-877-866-7840) or over 

the Web at oigempowerline.com. You may report your concerns 

anonymously or you may request confidentiality. 

Report Concerns to the OIG Empowerline. 

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Tennessee Valley Authority

Office Of The Inspector General

400 West Summit Hill Drive

Knoxville, Tennessee 37902

oig.tva.gov