Examination of contract compliance for minority electric generating unit owner

Understanding the need

Our client was a large public power organization that is a minority owner in a power plant that supplies a portion of its power to its customers. The client shares a percentage of the costs to operate the facility with the majority owner and requested a compliance review on costs charged under the terms of the joint ownership contract agreement.

Baker Tilly solution

Baker Tilly performed a detailed compliance review of contract billings on behalf of the minority owner in connection with various areas of the contract including overhead cost allocations and other billing parameters. Services included developing methodologies to identify how all overhead costs were allocated to the generating facility, evaluating the cost allocation methodology, reviewing business processes for billing inputs and analyzing detailed billing and input data. After a full review, Baker Tilly provided value added recommendations for improvements in processes that benefited both the majority plant operator and minority plant owners.

Result

The Energy and Utilities team at Baker Tilly provided assurance to the client that billings for its joint ownership contract for the electric generating unit were supported by documentation and prudent utility practices. The minority owner recovered identified costs associated with amounts billed within the agreement. All unit owners benefited going forward from value added recommendation from Baker Tilly regarding improvements in business processes for billing under the ownership contract.