A latest audit of CenterPoint Power’s administration discovered that the utility firm didn’t adequately assess the dangers or potential conflicts of curiosity earlier than agreeing to an $800 million cell generator lease.
The audit was initiated by the Public Utility Fee of Texas (PUCT) after state leaders questioned why CenterPoint had didn’t make the most of its leased cell mills final July throughout Hurricane Beryl, when greater than 2.2 million residents and companies within the Houston space misplaced energy and prolonged electrical energy outages contributed to a number of deaths. Moss Adams LLP — which was contracted to conduct the audit — mentioned its findings with the PUCT throughout a gathering final Thursday.
Maria Stroth, a senior supervisor at Moss Adams, informed the fee that whereas CenterPoint did usually comply with “greatest practices” when establishing the generator lease, the audit discovered two areas of potential enchancment.
The primary is said to CenterPoint’s threat evaluation and procurement in acquiring the mills. Stroth mentioned the corporate didn’t correctly doc its threat evaluation course of earlier than agreeing to the lease.
“CenterPoint mentioned that they did assess dangers, and we did see, through e mail, that some dangers have been assessed, like monetary stability,” Stroth mentioned. “However we weren’t in a position to confirm that dangers have been comprehensively assessed and addressed as a result of that course of had not been adopted and documented on the time.”
To deal with this, Moss Adams beneficial that CenterPoint ought to full threat assessments of distributors for all procurements and be certain that all procurement-related paperwork are precisely recorded.
In a press release to Houston Public Media, CenterPoint mentioned it values the suggestions from Moss Adams and is working to implement them.
“CenterPoint significantly appreciates the precious insights supplied by Moss Adams in addition to the various different stakeholders who’ve supplied suggestions over the past yr,” CenterPoint mentioned within the assertion. “We now have already accomplished or are making progress towards finishing every of Moss Adams’ key suggestions.”
CenterPoint additionally addressed the audit’s findings in a submitting with the PUCT. The utility firm mentioned it’s working to enhance its threat evaluation course of and to keep up higher data.
“CenterPoint appreciates Moss Adams’ suggestions relating to vendor threat assessments and, in truth, has been steadily enhancing this course of over time,” CenterPoint wrote in its submitting. “CenterPoint agrees with Moss Adams in regards to the significance of continuous to keep up vendor threat evaluation documentation, and CenterPoint continues to take action.”
Different suggestions from Moss Adams associated to CenterPoint’s personal guidelines for avoiding conflicts of curiosity. Stroth mentioned that whereas the audit discovered CenterPoint to have a conflict-of-interest coverage in place, it didn’t comprehensively comply with it when it leased the mills.
“We did not see that [the] vendor threat evaluation course of was comprehensively accomplished and once we spoke to employees who have been nonetheless on the group at the moment, they mentioned that that they had not been requested in regards to the battle of curiosity,” Stroth mentioned. “Whereas we didn’t, and do not, communicate to the veracity of the battle of curiosity within the report, we do be aware that CenterPoint didn’t adequately think about battle of curiosity.”
Final yr, Lt. Gov. Dan Patrick voiced his criticism of CenterPoint at a particular PUCT assembly in Houston. Throughout the assembly, Patrick tiptoed round the concept corruption may need been concerned within the lease settlement, however these allegations haven’t been confirmed.
In its official audit response, CenterPoint mentioned it has an present battle of curiosity coverage and doesn’t imagine that there was any battle within the generator lease.
“Within the spirit of steady enchancment, we welcome the suggestions to boost the conflict-of-interest insurance policies and procedures we have already got in place to bolster stakeholder confidence,” CenterPoint wrote. “CenterPoint respectfully disagrees, nonetheless, with options that there was any battle of curiosity relating to the [mobile generators] and notes that this difficulty was raised and never substantiated in a previous fee continuing.”
The audit additionally discovered that CenterPoint had lacked clear communication when discussing the aim of the mills with the general public.
Stroth mentioned that earlier than Hurricane Beryl, CenterPoint’s messaging didn’t make clear that the mills have been meant for use in conditions wherein energy vegetation have been offline, like through the 2021 winter storm, and never for occasions like Beryl, which broken infrastructure like powerlines.
“CenterPoint’s communication to the neighborhood previous to Hurricane Beryl associated to its leasing of cell era models … implied that the cell era models may very well be used within the occasion of serious outages to maintain individuals from not having energy throughout an emergency,” Stroth mentioned. “However they did not specify that there are scenario-specific and technical limitations by way of when and the way these cell era models may very well be deployed.”
RELATED: CenterPoint agrees to soak up prices of cell mills and lower charges for Houston-area prospects
In its response submitting, CenterPoint mentioned it was already attempting to higher talk with the general public about how and when its various kinds of mills may be used.
“For the small and medium models, we now have already developed a complete communications technique with the target of accelerating high-level consciousness and managing public expectations on the operational limitation and growth standards of the Firm’s leased [generators].”
On the finish of Moss Adams’ presentation, the committee mentioned having CenterPoint present its personal presentation in a number of months relating to the implementation of the audit’s suggestions, however a selected date has not but been set.
