Summary

The accuracy and integrity of TVA's accounting procedures and financial statements for fiscal year 1976 were questioned, and the reasons why TVA's net income dropped from $163.2 million on March 31, 1976, to $126.1 million by yearend were investigated.

TVA's fuel expense exceeded budget expenses by about $15.9 billion. The unit cost of power generated was higher than budgeted, accounting for about $5.3 million of the overrun. Another $10.6 million of unbudgeted fuel expense resulted from a higher than anticipated coal inventory shortage. Purchased power expenses exceeded budgeted expense by $50.7 million. Maintenance expenses during the fourth quarter exceeded budget estimates by about $20.9 million. This overrun was attributable to difficulties in estimating repair costs and stepped-up maintenance at coal fired steamplants. It was noted that increases in the cost of fuel and purchased power are billed to consumers two months after costs are incurred.