Pago Pago, AMERICAN SAMOA — At the end of fiscal year 2019, American Samoa Power Authority’s local operating revenue had increased by more than $7 million from the previous year, while overall expenses — excluding fuel oil expenses — decreased significantly, according to the independent audit of ASPA’s financial statement conducted by the firm, Moss Adams LLP based in Portland, Oregon.

The 45-page audit, released in May this year and published on its website (www.aspower.com) is the subject of requests for financial reports that some lawmakers plan to seek from the government before the Fono gets involved in reviewing the FY 2021 budget, which is expected to be submitted to the Legislature soon.

Three lawmakers told Samoa News last week that they and some of their colleagues want to see the financial status of ASPA especially with its current projects for renewable energy — involving a proposed wind farm project and a second PV solar panel system.

 Lawmakers, who are currently in a mid-session recess, also plan to seek audit reports of other ASG semi autonomous agencies, as well as their profit and loss statements.

Among the “financial highlights” in the ASPA audit report is that total assets increased by $5.4 million in FY 2019. During the year, the Electric division completed the Ottoville Underground and Tafuna Plant Hardening projects. ASPA worked closely with the US Federal Emergency Management Agency (FEMA) on the close-out of these two projects.

For local operating revenue, auditors says it increased by $7.8 million from the previous year, mainly due to the increase in fuel prices, which averaged $2.89 per gallon as well as increases in sales to customers primarily due to rate increases.

During the year, the report says volume of loads delivered to landfill showed an increase in tipping fee revenues of $1.2 million. In addition, ASPA provides services such as online debit meter power purchasing and allows customers to buy power at local stores.

Auditors also say that ASPA’s overall local operating expenses in FY2019 excluding fuel oil expense decreased significantly by $3.3 million over FY2018. “This decrease was attributed to the decrease in electric, water, wastewater, solid waste and general and administrative costs of $4.6 million, which were offset by an increase in pension expense of $1.4 million,” it says.

According the report, net income before capital contributions was $474,000 in FY19 compared to a loss of $7.7 million in FY2018. “ASPA management team enforced control over spending within all divisions during the year while operating with a very tight cash flow,” it points out.

In FY 2019, ASPA recorded federal capital grants of $16.9 million for US Environmental Protection Agency funded projects, FEMA projects and US Department of Interior projects.

The auditors also cited several issues in the report. For example, is “risk management” where auditors point out that ASPA is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters.

At September 30, 2019 and 2018, the audit report says ASPA carried life insurance on behalf of its employees, directors and officers, and maintained a comprehensive business policy and general liability insurance.

ASPA also participates in ASG's self- insurance pool for workers' compensation claims, where ASPA pays ASG 1.05% of gross payroll for workers' compensation coverage. “ASPA had no claims settlements in excess of coverage for the years ended September 30, 2019 and 2018,” it says.

Another potential area of risk relates to the price of fuel. The report says ASPA has incorporated a fuel factor in the billing rate that is adjusted monthly based on actual fuel costs to mitigate the possibility of substantial losses or windfalls due to the varying cost of fuel.

Regarding ASPA’s “Notes Payable and Long-Term Debt” — which lawmakers are always interested in during budget hearings — as of Sept. 30, 2019, notes payable consist of a note drawn on a bank line of credit of $3 million for working capital requirements.

The total financing package consists of two tranches (or portions of investment) — a capital expenditure loan of $9.7 million and a $3.6 million working capital term loan. The revolving line of credit will expire on August 30, 2020.

Interest is at the bank's prime rate plus 3.00%, secured by all fixed and floating assets excluding the Manu’a Islands Solar PV parks (Ta’u Solar PV Hybrid and Ofu Solar PV Hybrid) first position leasehold mortgage on the Satala Power Plant and the Operations Center Building.

Another long term debt is the December 2000 revenue bond purchased by the United States Department of Agriculture, Rural Utilities Services (RUS), original principal of $550,000, payable in monthly installments of $2,497 with interest fixed at 4.5%, due on Dec. 20, 2040.

The report says that the revenue bond was established to finance water improvements. It says that the bond resolution requires — among other things — that ASPA maintain and collect rates and charges for water supplied and for wastewater collection and disposal services furnished that will be sufficient to pay principal and interest on the bond and normal system costs of maintenance and operation.