Audit 320988

Title: Storm Damage Accounting Policies: The accompanying schedule of expenditures of federal awards includes the activity of the Electric Power Board of the Metropolitan Government of Nashville and Davidson County (the “Board” or “NES”). The schedule includes only those federal programs required to be included in accordance with the Office of Management and Budget’s guidance wherein certain types of expenditures are not allowable or are limited to reimbursement. This schedule has been prepared in conformity with accounting principles generally accepted in the United States of America. NES maintains its accounts in accordance with the Uniform System of Accounts prescribed by the Federal Energy Regulatory Commission using the economic measurement focus and the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). The information does not present the financial position, changes in net position, or cash flows of the Board. Expenditures eligible for grants were for costs related to operations, maintenance, and repair or replacement of fixed assets of the distribution system damaged by the declared events. Amounts related to fixed assets in the electric plant are stated at original cost. Such cost includes applicable overhead such as general and administrative costs, depreciation of vehicles used in the construction process, and payroll and related costs such as pensions, taxes and other fringe benefits related to plant construction. There are no subrecipients of grants. The Board does not elect to use the 10% de minimis cost rate as described in Section 200.414 of Uniform Guidance. De Minimis Rate Used: N Rate Explanation: The Board does not elect to use the 10% de minimis cost rate as described in Section 200.414 of Uniform Guidance. The Board experienced damage and loss to the distribution system as a result of straight-line winds and flooding in the Middle Tennessee area, including parts of metropolitan Nashville and Davidson County in May 2020. The severe weather events resulted in the declaration of a federal disaster by FEMA. During May and June of 2020, the Board repaired the damages recognizing $3.9 million of net operating expense and $4.6 million of capital expenditures in its financial statements for that period. NES submitted an application for a portion of these costs to FEMA in 2020 (via TEMA contract number FEMA 4550-DR-TN) to obtain a grant. Major portions of the application are pending final approval with FEMA. The Board experienced damage and loss to the distribution system as a result of tornadoes and flooding in the Middle Tennessee area, including parts of metropolitan Nashville and Davidson County, and in parts of several surrounding counties, in March 2021 and April 2021. The severe weather events resulted in the declaration of a federal disaster by FEMA. During March of 2021, the Board repaired the damages recognizing $1.4 million of net operating expense and $0.8 million of capital expenditures in its financial statements for that period. NES submitted an application for a portion of these costs to FEMA in 2021 (via The Tennessee Emergency Management Agency contract number FEMA 4601-DR-TN) to obtain a grant. Portions of the application are pending appeal by the Board to FEMA. The Board experienced damage and loss to the distribution system as a result of tornadoes and straight-line winds in the Middle Tennessee area, including parts of metropolitan Nashville and Davidson County, and in parts of several surrounding counties, in December 2021. The severe weather events resulted in the declaration of a federal disaster by FEMA. During December 2021, the Board repaired the damages recognizing $1.7 million of net operating expense and $1.7 million of capital expenditures in its financial statements for that period. NES submitted an application for a portion of these costs to FEMA in 2022 (via the Tennessee Emergency Management Agency contract number FEMA 4637-DR-TN) to obtain a grant. Major portions of the application are pending final approval with FEMA. The Board experienced damage and loss to the distribution system as a result of severe winter storms in the Middle Tennessee area, including parts of metropolitan Nashville and Davidson County, in December 2022. The severe weather events resulted in the declaration of a federal disaster by FEMA. During December 2022, the Board repaired the damages recognizing $0.7 million of net operating expense and $0.7 million of capital expenditures in its financial statements for that period. NES submitted an application for a portion of these costs to FEMA in 2023 (via the Tennessee Emergency Management Agency contract number FEMA 4691-DR-TN) to obtain a grant. FEMA approved and obligated funding of a grant for $1.5 million in 2024. Obligated funds in excess of storm damage expenditures were awarded for infrastructure improvements made during the repair of damages associated with this disaster. The Board experienced damage and loss to the distribution system as a result of severe storms in the Middle Tennessee area, including parts of metropolitan Nashville and Davidson County, and in parts of several surrounding counties, in March 2023. The severe weather events resulted in the declaration of a federal disaster by FEMA. During March 2023, the Board repaired the damages recognizing $2.8 million of net operating expense and $0.4 million of capital expenditures in its financial statements for that period. NES submitted an application for a portion of these costs to FEMA in 2023 (via the Tennessee Emergency Management Agency contract number FEMA 4712-DR-TN) to obtain a grant. FEMA approved and obligated funding of a grant for $5.8 million in 2024. Obligated funds in excess of storm damage expenditures were awarded for infrastructure improvements made during the repair of damages associated with this disaster. The Board experienced damage and loss to the distribution system as a result of tornadoes in the Middle Tennessee area, including parts of metropolitan Nashville and Davidson County, and in parts of several surrounding counties, in December 2023. The severe weather events resulted in the declaration of a federal disaster by FEMA. During December 2023, the Board repaired the damages recognizing $1.7 million of net operating expense and $2.5 million of capital expenditures in its financial statements for that period. NES submitted an application for a portion of these costs to FEMA in 2024 (via the Tennessee Emergency Management Agency contract number FEMA 4751-DR-TN) to obtain a grant. FEMA approved and obligated funding of a grant for $0.1 million in 2024.