Internal Audit Checklist of Utilities - Water

and Power / Electricity cost

UTILITIES - POWER & WATER

Check the power bills raised by the State Electricity Board and locate if any amount has been paid
towards LPF (low power factor), surcharge on delayed payment or any other payment in the nature
of penalty. Such expenses can be avoided.

Ensure whether the consumption of electricity (in units) is within the contracted demand because a
penal amount is required to be paid if the contracted demand (in KVA) is exceeded and a fixed sum
has to be paid even if the actual consumption is less than the minimum consumption guarantee. Both
the situations i.e. exceeding the contracted demand and consuming less than the minimum guarantee
should be avoided.

Check the Water bills raised by the Water Department and ensure that the actual consumption is
neither more than the contracted demand nor less than the minimum consumption guarantee. Penal
payments have to be made if the contracted demand is exceeded to or if the actual consumption is
less than the minimum guarantee consumption. Penal payments of any nature should be avoided.

In case of Captive power plants (CPP) / DG sets it should be ensured that proper records are
maintained in respect of consumption of Diesel/ other consumables and raw material. Power cost per
unit should be worked out in case of CPP and compared with the per unit cost of power of the State
Electricity Board. It should be the objective to balance the utilization of CPP and purchased power to
get the maximum benefit.

The per unit cost of power of CPP should include the depreciation and interest element. The per unit
cost can be worked out by dividing the total cost of running and maintaining the CPP (variable +
Fixed) by the No. of units produced by the CPP.

Check the agreement with the SEB for power consumption and ensure that the terms and conditions
of the agreement are complied to by the parties as regard to security deposits required to be held /
power tariff / power consumption / billing / refund of security deposits etc.

Check the following ratios (actual) against the Norms set

(a) Steam / Production
(c) Air / Production
(e) Coal / Steam
(g) Coal / Production

(b) Water / production

(d) Coal / Production

(f) Steam / Power

(h) Coal GCV (Gross Colorific value)-Heat

In respect of Cooling Towers / Chillers check the actual results against the Norms in respect of
Temperature.

Water treatment Plant

Check the actual results against the Norms set in respect of Pollution etc.