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Audit confirms Xcel falsified records
by Bill Catlin, Minnesota Public Radio
August 5, 2003

An audit of Xcel Energy says a small number of employees recorded inaccurate information that resulted in unreliable reporting of power outages. State regulators commissioned the audit last fall. The decision to examine Xcel's records followed accusations that the company falsified the length of power outages so it would to meet state-ordered reliability standards. Xcel says it has found instances where company documentation procedures were not followed consistently.

St. Paul, Minn. — Based on interviews and records analysis, the audit by a firm called Fraudwise says the records Xcel supplied for review are unreliable and inaccurate. A preliminary report several months ago labelled the Xcel system "corrupt."

The final report says problems stem from a small number of employees entering inaccurate information into the system.

Fraudwise says it appears records were manipulated to ensure favorable reports to state regulators on the average length of power outages.

Fraudwise officials could not be reached for comment.

After the initial allegations last fall, Xcel officials admitted altering records, but said they only made changes to remove errors. They have defended the system's accuracy and reliability and said their own internal audit of outage records turned up no evidence of falsification.

Now the company appears to have shifted its stance somewhat. Spokesman Paul Adelmann read from a statement issued Monday night.

"Xcel Energy has very dedicated employees whose main concerns lie in the quality of service provided to our customers. However, instances were found where the company's documentation processes were not followed consistently in prior years. Most deviations occurred at one service center for Minneapolis and involved a small number of employees," Adelmann said.

The statement says Xcel is fully committed to improved procedures that will eliminate inconsistent or inaccurate outage reporting. Xcel says it has new safeguards to ensure reliable reporting, including a management reorganization.

The company can be fined $100,000 for violations of reliability standards.

The Fraudwise report found 22 percent of outages recorded electronically did not match what a repair person wrote on a paper record.

The report also cites employee interviews. One unidentified worker dealing with outage reports daily said a supervisor instructed the employee to enter a duration of 90 minutes on each job, regardless of what the paper record indicated. Later the instruction was changed to 60 minutes.

The report also said employees provided documentation of discrepancies in which outages lasting from nearly 8 to 20 hours were eventually recorded as only a fraction of their length.

The report includes a curious twist -- a former NSP employee offered to consult with Fraudwise, but then resigned and wrote a rebuttal to the preliminary findings. The report includes a similar rebuttal sent anonymously to the Commerce Department, agreeing that Xcel's data appears unreliable. But the letter says allegations of manipulation appear based on unreliable data and/or a misunderstanding of industry practices.

The Fraudwise findings now go to the Minnesota Public Utilities Commission. Chairman Leroy Koppendrayer declined an interview request, saying it would be unethical to comment on a matter on which has to rule eventually.

Xcel says its improvements include a suggestion from the International Brotherhood of Electrical Workers. Local 160 assistant business manager Tom Koehler says the change allows repair crews to verify the outage times recorded. He says that will address a weakness in the old system.

"Once we were done with the job and turned the paperwork in, we usually didn't see those numbers or see that paperwork again," said Koehler.

Xcel's statement says company officials are reviewing the Fraudwise report and are committed to maintaining the company's credibility with regulators, customers and employees.

"We are committed to addressing the issues in the report, and we anticipate discussing them further with FraudWise and state regulators," said Xcel spokesman Paul Adelmann.

Officials with the state Commerce Department and Attorney General's office say they, too, are reviewing the report.

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