Arizona Power Authority—Authority’s process for allocating Hoover Dam power allowed for public input and was consistent with legal requirements, but it should formally approve power pooling arrangements and improve some administrative practices

The Office of the Auditor General has completed a performance audit of the Arizona Power Authority (Authority) pursuant to Laws 2016, Ch. 107, §4. The Authority was created in 1944 to receive and manage Arizona’s share of hydroelectric power generated by the Hoover Dam (Hoover power). Federal law allocates Hoover power to Arizona, Nevada, and specific entities in California. The Authority contracts with a federal agency, the Western Area Power Administration, to receive Arizona’s allocation. In turn, the Authority allocates the State’s Hoover power to eligible Arizona entities and enters into long-term power sales contracts with those entities for a portion of this power. We found that the Authority’s most recent process for allocating Arizona’s Hoover power, which occurred from June 2011 through July 2015 and will take effect in October 2017, allowed for public input and was consistent with federal and state legal requirements. Additionally, the Authority works with its customers, who have some flexibility in using their Hoover power, to manage their allocations of this power. Customers may also participate in power pooling, and the Authority should ensure that any such arrangements taking effect in October 2017 are approved in accordance with its rules. Further, the Authority should implement the new policies and procedures it developed during the audit to improve conflict-of-interest disclosures and procurement practices.