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Regulators blast Xcel Energy over auditor's finding that outage reporting system is 'corrupt'
by Bill Catlin, Minnesota Public Radio
April 3, 2003

At a meeting of the Public Utilities Commission, members blasted Xcel Energy's practices. (MPR Photo/Bill Catlin)

State regulators blasted Xcel energy officials over an auditor's preliminary conclusion that the company's outage reporting system is 'corrupt.' The Minnesota Public Utilities Commission also expressed concern that employees of the Minneapolis based utility are reluctant to speak to the auditors, for fear of reprisal. The PUC voted to continue the investigation and required Xcel to encourage employees to come forward.

St. Paul, Minn. — Last fall, the PUC ordered an audit of Xcel's record-keeping on power outages. In a hearing to decide whether to continue the investigation, Commissioner Greg Scott recalled the dramatic allegations that launched the inquiry.

Xcel employees alleged the company was deliberately falsifying outage records to remain within state standards for quality of service.

"What we've discovered is that not only is there that, but there's a completely invalid system for documenting Xcel's performance under the standard," Scott said.

The audit labelled Xcel's outage tracking system as "corrupt," saying it's nearly impossible to quantify how much Xcel has misstated the length of outages. The audit company, Fraudwise, says Xcel listed outages in spreadsheets, but lacked documentation for 81 percent of them.

Commissioner Marshall Johnson said the results raised a question of whether the commission should hire an investigator to check the company's performance more often.

"We had trust in your company to give us the right information that you picked the standards to do. And four years into this thing, now it comes up that you didn't know how to do it, or that there's some problem going on. I think this suggests the company never really intended to monitor the quality of service," Johnson said.

Xcel agreed to the standards to help win the PUC's approval for the merger of its component companies, Northern States Power and New Century Energies. Before the hearing Xcel filed comments with the PUC acknowledging the system has limitations. The company says it was not designed with the precision required for reporting to government agencies.

"By the way, our systems are trash," is how Commissioner Greg Scott characterized the memo, which he says amounts to an admission that Xcel's reports to the commission on service quality over the past two years are not reliable.

Scott pounced again when an Xcel official said the system dates back to the 1970s. "Don't sit here and whine that you have an old system. It's your job to have a system that meets the standard, folks. You've reported for two years already, and nobody said 'it was an old system and we can't do this well.' (Until) you get caught! Now in March, a week ago, all of a sudden, the systems don't work," he said.

But Xcel officials defended the system and the company. They said Fraudwise appeared to have misinterpreted some data, and not taken account of other information. Ken Zagzebski, vice president of delivery field operations, which is responsible for collecting the data, defended the system, but acknowledged it lacks a paper trail for auditing.

"I disagree with the findings of Fraudwise. And we haven't had an opportunity to discuss that with Fraudwise and to present why we believe those findings are not accurate. I believe the system is largely accurate and is reliable," he said.

He said the company takes the situation seriously "because it's the integrity of myself, the integrity of my company that's at stake. And we've done a lot to ensure that that information is accurate."

Fraudwise officials also said there are more Xcel employees they'd like to interview, but some declined citing fear of reprisals.

Union official Tom Koehler told the PUC that stories have circulated about company officials meeting with one worker telling him they believed he was the source of information in a news report. Koehler says there was no retaliation, but "that story got out and you're not going to get information from them. They are nervous, they're scared. To be quite frank with you, they've been trying to go to management for a long long time. Why did they come here, why did they go to the media? They didn't feel they were getting anywhere, they didn't feel they were getting the response they wanted."

Xcel officials dispute that a meeting happened as Koehler described, but say they will look into the concerns. PUC officials decided to compel Xcel to encourage employees to come forward. They also decided to continue the audit investigation of Xcel's outage records.

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