David Greenwell, former chairman of the Oklahoma Accountancy Board and a 2020 inductee into the Oklahoma Accounting Hall of Fame, offered public comment at the Oklahoma Corporation Commission (“OCC”) Monday (July 8) saying the agency’s claimed audits of the 2021 Winter Storm do not meet the requirements of state law.
“From my research, it does not appear the audit activities overseen by the Oklahoma Corporation Commission have complied with the auditing requirements specified in the statute establishing the 2021 Winter Storm bond program,” Greenwell writes in a 41-page filing in OG&E’s rate case.
“This compliance failure apparently occurred with respect to the utilities’ original February 2021 Winter Storm Uri costs and to the treatment of the subsequent financing costs incurred by using ratepayer-backed bonds. Consequently, this assessment applies both to the OCC’s past ‘audit’ activities and those it claims are ongoing.”
After OG&E, ONG, PSO and Summit spent almost $3 billion on fuel and purchased power during an unusual two-week cold snap in February 2021, the legislature and Oklahoma Corporation Commission authorized those utilities to pass that debt off to their customers using ratepayer-backed bonds. Corporation Commissioner Bob Anthony, who voted against the multi-decade bond deals, says the total price tag – with principal, interest, issuance and ongoing costs – is now near $5 billion.
Anthony first publicly questioned the audit activities of his agency’s Public Utility Division (“PUD”) in September 2022 shortly after the Winter Storm bonds were issued costing a billion dollars more than his agency had estimated. His criticisms have grown more frequent and pointed in the 22 months since, including repeated filings questioning “millions in issuance cost discrepancies” and demands to know “specifically who was paid how much for what.”
In September 2023, the OCC began sending one-page audits of individual utilities’ bonds to the governor and legislative leaders, allegedly in compliance with a section of the 2021 Securitization Act that explicitly required audits of the bond costs collected from customers. Anthony blasted the “so-called audits” of ONG and PSO’s bonds, calling them “ludicrous,” “pitiful,” “farcically inadequate,” and “another attempt at whitewash and cover-up.”
In the agency’s defense, Commission Chair Todd Hiett told OETA in September 2023:
"The statute itself calls it an audit, so therefore, we have referred to it as an audit. But it’s really just a simple financial calculation to assure that the proper collections were made of ratepayers."
In March 2024, after Anthony filed a blistering 18-page critical analysis entitled, “Unmasking the OCC’s So-Called ‘Audit’ Charade,” an OCC spokesperson issued another statement to The Oklahoman declaring:
"The language in this section of law does not contemplate and has never contemplated an audit to be conducted in accordance with government auditing standards as required by the State Auditor."
But according to CPA Greenwell, that is exactly what the law contemplates.
“The language of the Oklahoma Accountancy Act, a part of the Oklahoma Statutes (59 O.S. § 15.1 et seq.), resolves this dispute definitively,” Greenwell writes.
“When any statute requires an ‘audit,’ the law requires the audit to be conducted by a Certified Public Accountant (‘CPA’) or Public Accountant (‘PA’) licensed by the Oklahoma Accountancy Board and ‘performed in accordance with generally accepted auditing standards in the United States.’”
Greenwell, who is both a Certified Fraud Examiner (“CFE”) and Certified in Financial Forensics (“CFF”), says none of the OCC’s Winter Storm audits were conducted by independent, licensed CPAs as state law requires.
“The consequences of this failure to conduct a lawful ‘timely audit of all costs requested for recovery prior to the utility being authorized to recover costs’ may potentially have been significant,” Greenwell writes. He notes that the Securitization Act required the OCC’s bond authorization process to include determinations of “substantial savings” for customers and that the Winter Storm costs were “fair, just and reasonable expenses and prudently incurred.”
“To the extent that the Securitization Act’s requirement that an audit of the utility’s Winter Storm costs be conducted ‘prior to the utility being authorized to recover costs’ was specified so that the OCC’s various determinations could be informed by the results of the audit, then the failure to conduct a lawful audit may have unduly influenced much of the OCC’s subsequent securitization authorization process,” Greenwell writes.
In April 2024, the former head of the OCC PUD, now the agency’s director of administration, filed a six-page defense of his division’s 2021 audit work he labelled “Clarifications On Securitization Audits and Process.”
In it, he stated:
"Again, audits are conducted in all prudency review cases before the Commission. These audits include reviewing account records, contracts, settlements and other documents which often number into the thousands. Testimony is meant to be a summary of work performed. … To ask someone after the fact to prove what they did in person is as disingenuous as it is impossible. The only “evidence” to fully show the work performed would have been body camera footage from all of the parties’ experts that conducted audits."
Anthony’s filings have cited 2016 emails to the former OCC PUD head from officials at the State Auditor and Inspector’s Office warning about the division’s apparent “confusion” in its use of the word “audit.”
Greenwell calls the OCC’s loose use of the term “inappropriate” and “misleading.” He writes that consequently, he is equally concerned about the agency’s ongoing audits of the Winter Storm bonds. Citing an OCC PUD attorney who testified in the pending OG&E rate case that the OCC does not have any standardized definition for the word “audit,” Greenwell points out that none of the OCC PUD’s witnesses are CPAs.
“PUD may not have any standardized definition for the word ‘audit.’ State law, however, does,” Greenwell writes. “I am concerned with the seemingly casual or informal use of the term ‘audit.’ To describe as ‘audits’ these one-page summaries of costs prepared by the OCC Public Utility Division is misleading to the recipient officials, the ratepayers of these utilities, the public, and others who might rely upon these documents.”
A former Oklahoma City Ward 5 councilperson, Greenwell is also the former chairman of the Oklahoma Accountancy Board and has served on several professional committees with the Oklahoma Society of CPAs (OSCPA) and American Institute of CPAs (AICPA).
Before joining the faculty of the Oklahoma Baptist University’s College of Business, Greenwell was a partner with RSM US, LLP, the fifth largest CPA firm nationally and internationally. In addition to 40 years of tax and consulting experience, Greenwell was the financial investigation and disputes leader for RSM in Oklahoma. He led forensic investigations and provided expert testimony in numerous federal and state district courts, as well as representation before the Internal Revenue Service Appeals Division for more than 20 years.
“I respectfully suggest the Oklahoma Corporation Commission examine its compliance with the Oklahoma Accountancy Act – both with respect to the requirements of the Securitization Act and more broadly – so that the agency’s internal auditing, review and examination processes and procedures might be brought in line with state statutes and governmental auditing standards in name and in practice,” Greenwell concludes.
“Further, I caution the Commission to be careful to avoid casually or informally using the term ‘audit’ to describe any of its official responsibilities or activities without ensuring that it is in full compliance with the Oklahoma Statutes when doing so.”
“David Greenwell has done Oklahoma ratepayers a great favor today,” said Commissioner Anthony. “His accounting expertise is indisputable, and his willingness to contribute both his expertise and his time to assessing and addressing the OCC’s ongoing audit failures is a valuable public service. Essentially, he has publicly declared that when it comes to auditing at the OCC PUD, ‘The emperor wears no clothes.’ The consequences are potentially enormous, but I hope they eventually include the transparency and accountability the law always intended. Oklahoma ratepayers deserve to know the truth.”
Greenwell’s full 41-page filing is available online here: https://public.occ.ok.gov/WebLink/DocView.aspx?id=16824207
See also these references transmitted by Commissioner Anthony
Anthony, Bob. “Considerations and Dissent of Commissioner Bob Anthony, Part II: Unmasking the So-Called ‘Audit’ Charade” filed Apr. 8, 2024 in OCC Case Nos. PUD 2022-000093 and GD 2023-000005: https://public.occ.ok.gov/WebLink/DocView.aspx?id=16542008 .
Wreath, Brandy. “Clarifications On Securitization Audits and Process” filed Apr. 3, 2024 in OCC Case Nos. GD 2023-000005, PUD 2023-000086/87: https://public.occ.ok.gov/WebLink/DocView.aspx?id=16528474 .
Carter, M. Scott. “Commissioner renews call for audit of 2021 winter storm costs after two agencies report having none.” The Oklahoman (Mar. 27, 2024): https://www.oklahoman.com/story/news/2024/03/27/winter-storm-uri-2021-oklahoma-corporation-commissioner-bob-anthony/73105454007/ .
Anthony, Bob. “Commissioner Bob Anthony asks, ‘WHERE’S THE AUDIT?’ on behalf of utility customers. Spoiler Alert: There aren’t any yet.” filed Mar. 25, 2024 in OCC Case Nos. GD 2023-000005 and PUD 2023-000086/87: https://public.occ.ok.gov/WebLink/DocView.aspx?id=16486747 .
Anthony, Bob. “Dissenting Opinion of Commissioner Bob Anthony – Ongoing Dereliction of Duty: Once Again, the OCC Ignores both State Statutes and the Requirements of Its Own Orders!” filed Nov. 3, 2023 in OCC Case No. PUD 2022-000093: https://public.occ.ok.gov/WebLink/DocView.aspx?id=14158294 .
“Corporation Commissioner Bob Anthony calls for independent audit of Oklahoma Natural Gas.” OETA “Oklahoma News Report” (Sep. 29, 2023): https://www.youtube.com/watch?v=cNYnADIBNV0.
Carter, M. Scott. “Oklahoma commissioner demands better audit of utility company, $1.3 billion spent in winter storm.” The Oklahoman (Sep. 25, 2023): https://www.oklahoman.com/story/news/politics/government/2023/09/25/ong-2021-winter-storm-better-audit-billion-dollars-needed-commissioner-says/70911215007/ .
Anthony, Bob. “Opinion of Corporation Commissioner Bob Anthony Regarding the So-Called ‘Audit’ of ONG Sent by the OCC to the Governor, Legislative Leaders and ODFA” filed Sep. 18, 2023 in OCC Case No. PUD 2023-000012: https://public.occ.ok.gov/WebLink/DocView.aspx?id=14031966 .
Anthony, Bob. “Deliberations Statement of Commissioner Bob Anthony” filed Sep. 6, 2023 in OCC Case No. PUD 2022-000093: https://public.occ.ok.gov/WebLink/DocView.aspx?id=14001425 .
Anthony, Bob. “Commissioner Bob Anthony Questions Millions in Cost Discrepancies” filed Feb. 24, 2023 in OCC Case Nos. PUD 2022-000057/77/89/93: https://public.occ.ok.gov/WebLink/DocView.aspx?id=13468654 .
Anthony, Bob. “Report Card on Securitization: Anatomy of a State Government Screw-Up” filed Sept. 22, 2022 in OCC Cause Nos. PUD 202100072/76/79: https://public.occ.ok.gov/WebLink/DocView.aspx?id=12294753 .
“This compliance failure apparently occurred with respect to the utilities’ original February 2021 Winter Storm Uri costs and to the treatment of the subsequent financing costs incurred by using ratepayer-backed bonds. Consequently, this assessment applies both to the OCC’s past ‘audit’ activities and those it claims are ongoing.”
See also this trio of stories from CityNews, posted in 2023:
Corporation Commissioner Bob Anthony responds to Attorney General announcement to investigate 'market manipulators'
July 2023
https://www.citynewsokc.com/business/corporation-commissioner-bob-anthony-responds-to-attorney-general-announcement-to-investigate-market-manipulators/article_2ce3ef80-2592-11ee-96d4-03e51dd88aca.html
* A Media Advisory from Corporation Commissioner Bob Anthony
https://www.citynewsokc.com/business/a-media-advisory-from-corporation-commissioner-bob-anthony/article_6cee9ec8-3c3e-11ee-a665-cb46fd8599af.html
* Regarding the Motion to Consider Hiring an 'Independent Constulta' to review pending FAC/prudency Cases
March 2023
https://www.citynewsokc.com/business/regarding-the-motion-to-consider-hiring-an-independent-consultant-to-review-pending-fac-prudency-cases/article_df4d9bda-b855-11ed-aba0-7f6030bb0780.html
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