The rumors are so rampant that the district on June 12 released a document titled "Status of power department reserves."
Two California Public Records Act requests by this newspaper for information about the issue have gone ignored by the district.
The most interesting document supplied by the district to counter the rumors is titled "power expenditures and funds 1997 through 2001." It shows power department capital reserves of $68.2 million in 1998, and $22 million in 2001.
Division 3 Director Lloyd Allen said lead times on obtaining equipment for capital projects vary, as do construction schedules, and sometimes the two don't match up. He said power department personnel are taking a new look at capital projects and district management was directed to ensure things are done properly.
"I'm sure (General Manager) Jesse (Silva) is trying to get it under control," Allen said. "He's been told by the board to get things under control."
Allen said he does not know how much money is in the power department reserves, but knows a certain amount is required in order to maintain the district's bond rating.
That amount is $15 million.
"It's a case of inventory control," said Division 2 Director Bruce Kuhn. He said it has become evident the power department is overspending its capital projects budget and that the board's internal auditor was directed to review the issue. He said the auditor had reported to the board but has not issued an expected written report.
"It appears that amount budgeted for an entire year has been spent in the first six months," said Kuhn. "My concern is how, and why were these expenditures approved without approval of the board, who authorized them and how the money was moved without the (chief financial officer) being appraised of it."
The audit report is one of the items requested by this newspaper through a California Public Records Act request. A letter from the district's public affairs department, dated June 28, 2002, states the report is not yet available.
Kuhn and board President Stella Mendoza said they do not believe anything illegal has taken place.
"I do not feel the company's in jeopardy of going upside down, but this incident begs an explanation because it involves substantial amounts of money," Kuhn said. "I expect, and will accept nothing less than, full accountability for the money and/or the materials/labor purchased with the money."
Kuhn said he believes the power department is on solid footing.
"There needs to be a logical explanation as to how, why and where," he said. "I do not believe there has been any theft of district money or material at this time."
Mendoza said she is concerned with the lack of proper processes in planning in recent years.
"We have initiated project management and major work authorization (policies)," she said, adding the two should preclude perceptions of mismanagement. "I don't believe there is any criminal activity, missing money or missing equipment."
She said it is now up to Silva to make sure everything works properly.
Division 5 Director Rudy Maldonado, previously a power department employee, said he has long advocated a higher reserve for the power department. He said he'd prefer the reserve be a percentage of budget rather than the $15 million.
"I think it's too small a number," he said. "Fiscally, there is some room for improvement as older ways of business were still being followed."
He said the district has substations where "the land is barren but there's been costs." He also acknowledged there are a number of power department capital projects with cost overruns and movements of money without proper authorization.
To remedy the latter, Maldonado convinced the board to adopt a new budget amendment policy that requires department heads, the general manager or board to approve budget amendments, depending on the amount of money.
"We want to be more fiscally sound and we want all projects justified," he said. "No more buying equipment for one project and using it at another project."