DCR Has Not Established Proper User Fees for Utility Providers.

While progress has been made, DCR has not fully updated utility user fees for utility providers.

Table of Contents

Overview

In our prior audit, we found that DCR had not updated the fee rates it had established as far back as 1923 for utility providers.5 We also determined that, as of June 30, 2011, DCR had not developed and implemented a method for setting fair user fees6 for boat and yacht clubs located on DCR properties in a timely manner.

During our current audit, we determined that DCR and the Division of Capital Asset Management and Maintenance had developed a method for setting fair user fees and then implemented them for all 28 boat and yacht clubs. However, although DCR has started the process of updating its user fees for utility providers, this process has not been completed. As a result, there is inadequate assurance that DCR is collecting all potential revenue from utility providers.

Authoritative Guidance

DCR is charged by its enabling legislation with properly administering programs related to state parks, forests, reservations, and recreational facilities, including programs that involve the leasing of its facilities. Therefore, DCR has a fiduciary responsibility to the Commonwealth to ensure that it establishes fair user fees for all of its facilities, including those used by utility providers, as it has done for its other lessees.

Reasons for Noncompliance

Senior management stated that although DCR had hired a contractor in 2014 to assist it in working with the Department of Public Utilities to determine a method for assessing fair user fees and identifying all instances in which utility companies use property at state parks, this activity has yet to be completed because DCR has inadequate staffing levels. Further, DCR does not have written policies, procedures, and internal controls to help ensure that fair user fees are charged to, and collected from, these users.

Recommendations

  1. DCR should continue to develop a method to determine fair user fees that should be included in new, updated agreements for all utility providers.
  2. DCR should develop written policies, procedures, and internal controls to ensure that fair user fees are charged to, and collected from, utility providers.

Auditee's Response

In September 2017, DCR executed a contract amendment with TRA to specifically conduct a targeted utility review project, under which TRA is reviewing utility company agreements and uses of DCR property to: identify and confirm current uses and locations; make recommendations to DCR regarding a proposed fee structure to ensure that DCR is charging fair user fees that reflect industry-accepted and uniformly applied market rates; assist DCR in developing standard form permit agreements for the various types of utility occupancy; and assist DCR in notifying and working with utility companies to create new or update existing agreements to reflect the new pricing structure and any other changes to the standard permit agreement terms and conditions. During the course of the audit, DCR informed the OSA staff of the ongoing utility review project and provided OSA with a copy of the contract amendment. Once the project is completed, DCR Permits and Leases intends to review its policies and procedures and make any necessary updates to ensure that they reflect DCR’s processes with respect to its permit agreements with utility providers.

Auditor's Response

During our audit period, DCR had not established proper user fees for utility providers. Although we acknowledge that DCR has been working with TRA since 2014 to update utility fee rates, during our audit period this was still an ongoing project. Based on its response, once this process is complete, DCR will implement our recommendation to make sure it has effective written policies and procedures that ensure that fair user fees are charged to, and collected from, utility providers.

5. Permits have been issued for utility companies to use DCR property for gas pipelines and electricity-producing equipment under various agreements executed between 1923 and 1991 (mostly between 1951 and 1967). The agreements remain in force until revoked by the state, and some fees have not changed since the agreements were executed.

6. Fair user fees are fees that have been set at amounts required by regulation or at rates consistent with fair-market-based pricing principles.

Date published: June 14, 2018

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