An Audit Report on the Public Utility Commission's Administration of the System Benefit Fund
July 2004
Report Number 04-043
Overall Conclusion
While the majority of funds from the System Benefit Fund (SBF) were distributed correctly, we identified instances where the Public Utility Commission of Texas (Commission) did not administer the SBF in accordance with laws and regulations. Specifically:
- Because the Commission failed to include contract provisions requiring the low-income discount administrator (LIDA) to verify the eligibility of participants who enroll themselves in the Low-Income Discount Program, up to 11 percent of self-enrolled participants may not be eligible. This represents as much as $2.1 million in discounts, out of a total of $239 million in discounts given from September 2002 to February 2004. There are approximately 790,000 participants in the program, and 8 percent of them are self-enrolled. We also noted contract management issues relating to the LIDA contract and other contracts funded with the SBF: the Commission made payments without adequate support and entered into contracts that do not contain provisions to protect the States interests.
- We identified matching and data accuracy weaknesses in the automatic enrollment process that was in use during fiscal year 2003. This process automatically enrolls electric customers who may be participating in other state assistance programs into the Low-Income Discount Program. In March 2004, during our fieldwork, the Commission began using a new LIDA and a significantly changed automatic enrollment process. It needs to ensure that the new process addresses the weaknesses identified in the prior process.
For fiscal year 2004, the Commission projects expenditures for the Low-Income Discount Program to decrease 24 percent from fiscal year 2003 expenditures. The Commission cites several reasons for the decrease, such as changes in Commission rules and a reduction in the Low-Income Discount rate from 17 percent in fiscal year 2003 to 10 percent in fiscal year 2004. These changes are also expected to result in a significant increase in fund balance, which is projected to increase from the August 31, 2003, balance of $10 million to approximately $94 million by August 31, 2005.
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