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

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

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: John W. Sprague Team: General Accounting Office: Resources, Community, and Economic Development Division Phone: (202) 512-7783