Laserfiche WebLink
****PRELIMINARY AND TENTATIVE FINDINGS**** <br />FLORIDA MUNICIPAL POWER AGENCY <br />EXECUTIVE SUMMARY <br />Our operational audit of the Florida Municipal Power Agency (FMPA) disclosed the following: <br />HEDGING ACTIVITIES <br />Finding No. 1: Fuel hedging practices were not consistent with industry practices utilized by other joint <br />action agencies. <br />Finding No. 2: Investment in natural gas exploration and drilling were not consistent with industry <br />practices utilized by other joint action agencies and were more complex and involved more risk than <br />alternative forms of hedging commonly practiced. <br />Finding No. 3: Certain interest rate swaps were not employed consistent with industry practices utilized by <br />other joint action agencies, which resulted in significant termination fees likely to be incurred. <br />INVESTMENTS <br />Finding No. 4: The FMPA's investment policy needed to be enhanced to clarify requirements regarding <br />allowable investment credit ratings and to establish geographic diversification requirements for investments. <br />PERSONNEL AND PAYROLL ADMINISTRATION <br />Finding No. 5: Compensated absences increased by 75 percent in four years, and the cost of future <br />postretirement benefits for certain employees may result in payouts that negatively impact future rates. <br />Finding No. 6: The Board of Directors (Board) set the compensation package for the General Counsel <br />through a series of actions over several years rather than through the use of a written employment agreement <br />and FMPA was unable to provide documentation for all of the benefits provided by Board action. <br />Finding No. 7: The Chief Executive Officer's employment contract provides for severance pay and <br />postretirement benefits for life if he is terminated for cause. <br />PROCUREMENT OF GOODS AND SERVICES <br />Finding No. 8: FMPA records did not always evidence the public purpose served for purchases of goods <br />and services. <br />Finding No. 9: The FMPA did not always follow its purchasing policies regarding competitive selection. <br />Finding No. 10: The FMPA had not recently used a competitive selection process when selecting financial <br />advisors and bond counsel for bond issues, potentially increasing costs associated with bond issues. <br />Finding No. 11: The FMPA did not always follow its policies regarding credit card issuance and purchases, <br />and did not employ procedures for monitoring credit limits for reasonableness. <br />TRAVEL <br />Finding No. 12: The FMPA did not always follow its travel policies or ensure that travel -related receipts were <br />submitted by contractors. Additionally, the FMPA's travel policies could be enhanced. <br />ALL REQUIREMENTS PROJECT (ARP) CONTRACT PROVISIONS <br />Finding No. 13: The ARP power supply project contracts did not address peak shaving and, although the <br />Executive Committee agreed to curtail peak -shaving activities, the agreement appears primarily voluntary in <br />nature, relies on self -reporting, and contains no consequences for noncompliance. <br />Finding No. 14: Certain ARP power supply project contract provisions relating to withdrawing members are <br />ambiguous, used a fixed discount rate rather than one associated with current capital costs, and did not <br />provide for independent verification by the withdrawing member. <br />3 <br />