Changes in BPA Billing Practices Could Reduce Interest Costs and Improve Cash Flow

RCED-83-64: Published: Feb 28, 1983. Publicly Released: Feb 28, 1983.

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GAO reviewed the electricity billing practices of the Bonneville Power Administration (BPA) to ascertain the actions planned to improve the timeliness of billings.

GAO found that, if BPA were to change its customer billing processes, more than $3.2 million in interest expenses could be avoided annually. These interest expense savings would result from less short-term borrowing by BPA, since monies due would be received more quickly and on a regular monthly basis. BPA has plans to reduce the time taken to bill customers by automating meter readings and bill preparation, which could reduce the bill processing time from 15 to 5 days for each billing period. Although it offers considerable future savings, total automation of the billing system is still several years from completion. However, as a result of GAO discussions with BPA personnel, the automated system will be ready 1 year sooner than anticipated. In addition, GAO found that BPA could have saved $1.4 million in fiscal year 1982 if California utilities paid for their energy purchases monthly rather than quarterly, and it could save $60,000 annually in interest if Federal agency customers were required to pay their bills promptly or were charged interest on late payments. A BPA official stated that most Federal agencies pay 10 to 30 days late. Because of these late payments, BPA incurs interest expenses that should be incurred by other agencies.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Energy should direct BPA to place a higher priority on the billing function and complete the first phase of the automated billing system by February 1984, as planned, and expedite efforts to have the automated billing process fully operational before July 1987. However, if the automated billing system is not expedited, the Secretary of Energy should direct BPA, to the extent practicable, to estimate and bill those customers whose bills cannot be processed on an actual basis within 7 days.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Energy should direct BPA to review existing contracts with the California utilities and, at the first identified opportunity, require the four California utilities to pay monthly or pay an interest charge similar to that now being paid by the Western Area Power Administration.

    Agency Affected: Department of Energy

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Energy should direct BPA to use the Department of the Treasury's Simplified Inter-Governmental Billings and Collections System in order to receive payments promptly, or charge the Wholesale Power Rate Schedule during the next rate-setting process and bill the Federal agencies interest for late payments in the same manner that BPA charges other utilities interest.

    Agency Affected: Department of Energy

 

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