Many utilities have joint ownership of a generation facility where the majority owner operates and bills the minority owners for their share of the operation and maintenance costs. These costs are allocated to the owners based on terms specified in an ownership and operations (O&O) agreement. In addition to the direct costs billed to the owners, the majority owner will also charge an administration fee for management services.
Do you know if the amount you are billed is correct? If not, you may want to perform an audit of the costs billed to you and the other minority owners. An audit will help give you comfort that the costs being passed on to you are only for the shared unit and are only for your percentage of ownership. An audit will typically test the majority owner’s internal controls around cost accumulation and billing; provide sample-based testing of specific costs; review administrative and general costs being allocated; and examine other aspects of the O&O agreement.
Connect with our industry specialized team to review billings under joint ownership agreements in order to improve or enhance processes.
For more information on this topic, or to learn how Baker Tilly energy and utility specialists can help, contact our team.