BRISTOL, VA (WJHL) – Customers of Bristol Virginia Utilities’ OptiNet Division could see a rate increase as the result of what auditors are calling an improper accounting decision by the utility’s former management team, according to CEO Don Bowman.
As we reported Friday, the Virginia Auditor of Public Accounts flagged a decision made by BVU a decade ago regarding debt. State auditors found BVU management gave the public utility’s OptiNet Division an improper loan in 2006 without ever reconciling the debt or interest, taking the money from its electric division and giving it to its cable, phone and internet division.
Because of that decision, auditors say BVU now has to come up with a plan to pay off $14 million in newly discovered OptiNet debt. The CEO says that could end up costing OptiNet customers in the form of a rate increase. He says the board will now have to figure out a way to pay off the debt.
“That’s something we’ll have to carefully look at as well” Bowman said. “We’ll have to set our rates so that we’re not cross-subsidizing and generating enough money to pay our bills and so that’s something that we’ll be running several scenarios over between now and July 1 when this money comes back on. For OptiNet it means we’ll have less working capital. It might mean that there’s less investment in new territories. There may be some other actions that it has, unattended consequences.”
According to Bowman, public records show BVU management checked with its auditor in 2006 before moving forward with the transaction, but may not have secured a legal opinion as suggested. He says it appears that management based its decision on a new law that managers thought allowed for the transfer.
Bowman says it appears the BVU board and Bristol City Council did not approve the loan.
Auditors said the improper loan could impact the proposed sale of OptiNet.
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