Jet Purchase

The TVA audit: Purchase of jet not "inexpensive"[document]

TVA's purchase of an $11.2 million company jet nearly four years ago was not inexpensive, and the exclusive methods of purchasing the jet and a $6.5 million King Air turbo-prop aircraft, according to TVA auditor, could have breached state regulations."

Tennessee Valley Authority Chief of Inspectors said Thursday that TVA did not warrant the purchase of a Citation jet to refuel its turbo-prop jets in 2015, and has since often used its plane to carry TVA executives through Tennessee Valley, and CEO Bill Johnson to his second home in Raleigh, N.C., where his spouse Sally still is.

Several of these journeys and other deployments of the plane were not sufficiently recorded and may have violated the government's itinerary, found investigators. "Buying an airplane instead of a second turbo prop was not cost-effective," concludes the General Superintendent in a 34-page review of TVA airplane purchase and use.

"TVA's arguments for the exclusive purchase of the plane (in 2015) were not endorsed and did not contain analysis of historic use to identify TVA's need for rigid wings. "See the TVA inspector's general auditing. One Cessna Citation Excel jet was purchased by TVA in 2015 for $11.2 million and a similar jet in 2017 for $10.7 million.

An EC145 Mercedes Benz-like chopper, previously used by Dallas Cowboys proprietor Jerry Jones, was purchased for $6.95 million. A Cessna Citation Excel jet was purchased by TVA in.... One Cessna Citation Excel jet was purchased by TVA in 2015 for $11.2 million and a similar jet in 2017 for $10.7 million.

An EC145 Mercedes Benz-like chopper, previously used by Dallas Cowboys proprietor Jerry Jones, was sold for $6.95 million. A Cessna Citation Excel jet was acquired by TVA in.... In spite of such misgivings, last year TVA acquired a second Cessna Citation Excel jet for $10.6 million and a Mercedes-Benz Styles Executive chopper previously used by Dallas cowboy proprietor Jerry Jones for $6.5 million.

But the TVA auditor doubted why the agent spent more to buy and run a jet when turbo-prop airplanes at a lower rate were almost as efficient. "Buying a jet instead of a second turbo prop was not economical as the turbo prop, in conjunction with the higher purchase value for the jet, has lower running costs and the saving of the jet's deployment period in comparison to the turbo prop is insignificant due to the use of TVA," the IG concluded.

TVA's jet operation costs on avarage 18% more than the turbo-prop aircraft they were replacing, even without the higher purchase of the jet, and the aircraft cannot end up at many smaller aerodromes in TVA's seven-state area. "The TVA couldn't even warrant a jet, yet last year they went out and purchased a second jet, and then they used those jet liners to carry Bill Johnson and his missus to Johnson's house in Raleigh, N.C.," said Stephen Smith, a Tennessee passenger and managing partner of the Southern Alliance for Clean Energy, who wants Johnson to fire for his use of the company jet liners.

" Energy and Policy Institute of the Federal Aviation Administration record shows that TVA aircraft have flown at least 18 flights to Raleigh-Durham between 2015 and 2017. Situated outside the TVA area, Raleigh is the site of a "second home" of Johnson and his spouse Sally, a University of North Carolina-Chapel Hill lecturer.

Mr Smith said that TVA had neglected to answer inquiries for Freedom of Information Act recordings of who was using TVA's plane. However, in their report, the TVA inspectors at the Inspector General's office said that Sally Johnson was on 18 jet and 3 turbo-prop missions during the year.

"Wherever a further IG audit-based examination found that some things might have been overlooked because our records were not up to date, we have gone back and fixed that and are in the midst of going back even further. "However, the inspection by the Chief of Staff revealed that "TVA did not report guidelines for notifying the use of TVA planes for individual purposes" and "no individual trips by the Chief Executive Officer or his partner to the Group Accounts were reported" or in TVA's annual accounts on Johnson's remuneration packages.

Johnson is still getting nearly 40 per cent below the media salary of similar CEOs at other similar energy providers, according to Willis Towers Watson, and TVA's use of business jets is almost a third less than the use of similar utility companies in the Southern, Duke and NextEra regions, said Southern, Duke and NextEra audiences.

TVA's test showed that the agency's entire air force is " generally similar to the number of fixed-wing planes serviced by eight of its colleagues. "Mike Skaggs, TVA senior VP and in charge of TVA's aviation business, said the company needed to make some enhancements to its records, "but there was no proof of misuse of our planes.

Disagreeing with the Chief Inspector's observations, Mr. Skaggs stressed that the new planes have enhanced the TVA's overall security, effectiveness and output "and are an important part of our overall reduction of costs policy". Mr Scaggs said the new planes are likely to be five times more secure than the planes they replace, enabling TVA to enhance communications and responsiveness to customers and supply concerns across the entire seven-state area.

Said also that jet planes are only 7 per cent more costly to fly than planes and the results of the audits were disputed with a 18 per cent discrepancy. "There are fewer planes than our colleagues in the business and we have not identified cases where these planes have been used improperly," said Mr Skaggs.

The TVA managers, who head the Supervisory Boards of the utilities on a part-time basis and meet in person four and a half years a year, travelled 243 flights in TVA planes or aeroplanes during the year. During a TVA executive assembly in Chattanooga last week, during which issues were asked at a press conference about the agency's planes, TVA President Richard Howorth pleaded to buy the jet and compensate Johnson.

" One Cessna Citation Excel jet was purchased by TVA in 2015 for $11.2 million and a similar jet in 2017 for $10.7 million. An EC145 Mercedes Benz-like chopper, previously used by Dallas Cowboys proprietor Jerry Jones, was purchased for $6.95 million. A Cessna Citation Excel jet was purchased by TVA in....

TVA's executives and choppers are part of TVA's entire air transport portfolio, which includes nine powered choppers, planes and planes, as well as a King Air 350 that TVA purchased for $6.5 million and is now for Sale. Prior to Johnson's arriving, TVA did not own any jet or helicopter flight crew, but Johnson said the airplane enabled him and other TVA managers to frequent the agency's facilities and staff more often and met with community guides and TVA Coops who buy TVA-electricity.

" General Superintendent said that the exclusive purchase methodology for the plane purchased in 2015 "does not conform to various U.S. and TVA guidelines and procedures...". "Non-compliance with Federal law and regulation will prevent TVA from being able to pinpoint demand for airplanes precisely, will prevent TVA from assuring that air fares are administered efficiently, and may pose reputation risk to TVA regarding abuse (or noticed abuse ) of the aircraft," the auditor said.

However, in reply, Jacinda Woodward and William Croin, the TVA executive directors in charge of the airplane acquisitions, said the acquisitions were made as bargained disposals that spared $2. 8 million off the aircraft's fair value. Last year, when TVA superseded one of its turbo-prop jets with another jet, Skaggs said the utilities company did not use the same single-source methodology, "although we don't believe this was unreasonable when we did in 2015.