INTERNAL AUDIT REPORT 
OPERATIONAL AUDIT 
SEA-TAC UTILITIES 

JANUARY 2017  OCTOBER 2018 


ISSUE DATE: DECEMBER 4, 2018 
REPORT NO. 2018-13 
INTERNAL AUDIT



Sea-Tac Utilities 
January 2017 October 2018 


TABLE OF CONTENTS 

EXECUTIVE SUMMARY ................................................................................................................................................. 3 
BACKGROUND .............................................................................................................................................................. 4 
AUDIT SCOPE AND METHODOLOGY ........................................................................................................................... 5 
SCHEDULE OF FINDINGS AND RECOMMENDATIONS............................................................................................... 6 
APPENDIX A: RISK RATINGS ........................................................................................................................................ 9 












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Sea-Tac Utilities 
January 2017 October 2018 
EXECUTIVE SUMMARY 
Internal Audit (IA) completed an audit of Sea-Tac Utilities for the period January 1, 2017 through October 
31, 2018. The objective of the audit was to assess the accuracy, completeness, and timeliness of utility
billing and supporting processes. 
In 2001, the Port of Seattle established the Sea-Tac Utility. The utility provides water, natural gas,
electricity, garbage and waste water service to Port tenants. Utility rates are established in Tariff No. 1
and are designed to recover the cost of the utility program. These costs include internal operating
expenses and the price of the utility. The Port recovers the total utility costs through Port tenants and
airlines. 
Management has been transparent and forthcoming with known areas to improve. They have also been
proactive and conducted meetings with key stakeholders to discuss the root cause of the breakdowns
and to assign individuals responsible to remediate the issues captured in this report (reflected below). 
1) Aviation Utilities is responsible for billing over 750 metered accounts. They are also responsible for
billing utility usage for other utility use that is not captured using meters, such as Electric Ground Support
Equipment Vehicles (eGSE) and Surface Water Management (SWM) fees. However, a process to
validate the completeness of this list or the accuracy of the reads has not been established. 
2) The Ports Aviation Utility department is not always provided with timely billing information. We
identified instances when Aviation Utilities was not provided with lease notifications prior to the date the 
tenant terminated, adjusted, or entered into a new lease. We also identified instances when meter usage
wasn't provided in time to bill by the end of the month. 
These issues are discussed in more detail beginning on page six. 
We extend our appreciation to Port management and staff for their assistance and cooperation during the
audit. 


Glenn Fernandes, CPA 
Director, Internal Audit 


Responsible Management Team 
Jeffrey Brown, Director, Aviation Facility and Capital Program 
Lance Lyttle, Managing Director Aviation 
Stuart Mathews, Director, Aviation Maintenance 
Jim Schone, Director, Aviation Business Development 

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Sea-Tac Utilities 
January 2017 October 2018 

BACKGROUND 

In 2001, the Port of Seattle established the Sea-Tac Utility. The utility includes water, natural gas,
electricity, waste water (sanitary waste, storm water, and industrial process water), solid waste, and cable
TV. Water is obtained from three sources: Highline Water District, Seattle Public Utilities, and King
County Water District 125 and 49. Electricity is supplied by Bonneville Power Administration, Puget
Sound Energy, and Seattle City Light while natural gas is provided from Cost Management Services and
Puget Sound Energy. Waste Water is delivered to King County, Valley View Sewer District, and Midway
Sewer District. Solid waste is handled by Recology. The Washington Administrative Code Title 480
(Utilities and Transportation Commission) provides guidelines for managing a utility. 
Utility rates are established in Tariff No. 1 and are designed to recover the cost of the utility program.
These costs include internal operating expenses and the price to obtain the utility. The Port recovers the
total utility costs either through metered billing of Port tenants for actual consumption or internally from
airlines and terminals. 
Below reflects the utilities operating expenses for the four years ended 2017 (2014 - 2017), and for the six
month period ended June 30, 2018. 
YTD 
Operating Expenses             2014          2015          2016          2017      6/30/2018 
$13,861,000   $13,682,000   $14,690,000   $16,374,000    $9,589,000 
Source: Quarterly Performance Reports 









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Sea-Tac Utilities 
January 2017 October 2018 

AUDIT SCOPE AND METHODOLOGY 
We conducted this audit in accordance with Generally Accepted Government Auditing Standards and the
International Standards for the Professional Practice of Internal Auditing. Those standards require that we
plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit objectives.
The period audited was January 2017 through October 2018 and included the following procedures: 
Effectiveness of Meters 
Inquired with Engineers in Aviation  Facilities  and Infrastructure  to understand how punch list
walkthroughs are performed. 
Meter Billing Analysis 
Analyzed billing by utility type and customer to determine whether customers were billed correctly. 
Agreed tenant billing from the Utility billing worksheets to tenant billing in PropWorks. 
Performed a two-way match from the Utility billing worksheets to those on the reading worksheets to
verify that all billable meters had been billed. 
Timeliness and Accuracy of Lease Notification Forms 
Compared lease effective dates (i.e. occupancy, update, and termination) to the dates the Aviation
Utility Billing Analyst was notified. 
Timeliness of Meter Reads 
Determined if electrical, water, and gas reading reports were provided to the Aviation Utility Billing
Analyst for timely billing. 
Completeness of Billing  Electric Ground Support Equipment Vehicles 
Obtained usage reports to determine the total amount of un-billed revenue. 
Completeness of Billing  Surface Water Management 
Obtained the period and amount of un-billed revenue. 






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Sea-Tac Utilities 
January 2017 October 2018 
SCHEDULE OF FINDINGS AND RECOMMENDATIONS 
1) RATING: MEDIUM
Aviation Utilities is responsible for billing over 750 metered accounts. They are also responsible
for billing utility usage for other utility use that is not captured using meters, such as Electric 
Ground Support Equipment (eGSE) Vehicles and Surface Water Management (SWM) fees.
However, a process to validate the completeness of this list or the accuracy of the reads has not
been established. 
During the audit, management was forthcoming and self-disclosed the following issues:
1) The connection between the battery and the charging station in some eGSE Vehicles has not been
installed correctly. Therefore, Aviation Utilities is unable to determine which airlines to bill. As a result,
approximately $29,000 for the period January 2017 through June 2017 and November 2017 through
September 2018 has not been billed. From July 2017 through October 2017, the data was not available
and not included in the total amount un-billed. 
2) Surface Water Management fees for seven Ground Lease Agreement tenants had not been billed in
2016, 2017, and 2018. The un-billed revenue was identified when Aviation Utilities performed a billing
analysis. All tenants have been billed with the exception of the City of Sea-Tac. According to Aviation
Utilities, they were not billed for a 21 year period (1995  2016). Management estimates the amount of
un-billed revenue at approximately $4,000. 
3) A process has not been established to identify and repair broken meters. Management indicated that in
some cases, meters were not installed or configured correctly or have not been replaced, when not
working correctly. 
Recommendations 
Develop a geographical master list of meters to assist management in identifying the location of meters.
We also recommend developing, a tool to identify and a process to escalate, when information used for
billing is incomplete.
Management Response/Action 
Regarding the overall recommendation, management agrees with the need to develop a geographical
master list of meters.  There is a Geographic Information Systems (GIS) project already underway within
the Airport Dining and Retail (ADR) Program whose objective is to track open and closure dates for all the
ADR units that are under construction. ADR staff will work with Information Technology staff to
incorporate the inclusion of the meter locations as a layer of information into this GIS project. 
Regarding item #1, management agrees with the need for accurate billing for eGSE customers. There
are a few components that the Sea-Tac Utility will have to address in order to accomplish this. 
A. There is currently not a hardware interlock on the charging infrastructure. As such, any vehicle
can be pulled up to the charging infrastructure and receive a charge without the Port receiving
proper billing data for that vehicle. The Sea-Tac Utility is coordinating with the charging equipment
vendor to determine potential solutions. 

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Sea-Tac Utilities 
January 2017 October 2018 
B. The Sea-Tac Utility, AV Facilities & Infrastructure and AV Maintenance staff and the airlines
need to agree on an application for the connection process for each new vehicle to ensure the
appropriate vehicle data is entered into the system in order to be billed correctly. 
C. The Sea-Tac Utility and AV Facilities & Infrastructure staff needs to evaluate the charger
efficiency to determine energy loss between the main meter and the equipment being charged as
there is a quantifiable difference between the two. Then, there is a need to determine which party
is responsible for this energy loss. 
D. Regarding the $29,000 in electricity charges that were not billed, it is important to note that this
amount was recovered through rates and charges paid by the airlines as part of the normal costrecovery
basis for the aeronautical business. 
Regarding item #2, management agrees with the finding regarding Surface Water Management (SWM)
fees. Aviation Utilities staff identified the issue of inaccurate SWM fee billings in Q4 2017 and has worked
diligently since that time to ensure that SWM fees were appropriately billed and collected. In the case of
the Port's lease with the City of Sea-Tac for the North SeaTac Park, the lack of billing was an
oversight. The lease is clear that the City of SeaTac is responsible for all utility payments and Port staff
has communicated the intention to bill the City for these fees. In order to reduce the complexity of the
SWM fee allocation process, Port staff will also explore development of a GIS overlay that would show
lease boundaries across all airport property. 
Regarding item #3, management agrees that a more formal process for identifying and correcting meter
problems is needed. The informal process that exists today contains several gaps in information flow
between departments.    Aviation Utilities/Facilities & Infrastructure will coordinate with Aviation
Maintenance to develop the formal process for dealing with broken meters. Aviation Utilities will also
work with Airport Dining and Retail and Aviation Properties staff to modify contracts to allow a tariff rate to 
be billed during the period of unit construction and until the tenant can be formally billed by meter, based
on when the tenant is open for business. 








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Sea-Tac Utilities 
January 2017 October 2018 
2) RATING: MEDIUM
The Ports Aviation Utility department is not always provided with timely billing information. We
identified instances when Aviation Utilities was not provided with lease notifications prior to the
date the tenant terminated, adjusted, or entered into a new lease. We also identified instances
when meter usage wasn't provided in time to bill by the end of the month. 
Lease Notification - Within a 22 month period (January 2017  October 2018), Aviation Utility received
88 lease notifications. Of the 88 notifications, only 39 notices or 44% were received by the lease effective
date. Lease notifications are obtained by Aviation Properties and Airport Dining and Retail. Table 1 
reflects the number of days between the lease effective date and the date that the billing specialist was
provided with the lease notification. 
Table 1 
Days Past Due        Lease Notification*      Percentage% 
Over 60                              15                 17 
30 - 60                                  15                   17 
1 - 30                                     19                    22 
Less than 0                            39                  44 
Total                                     88                100% 
*Includes terminations, changes, or commencements 
Meter Usage - Electricity, Water, and Gas meter usage is obtained monthly by Aviation Maintenance
personnel, captured in a worksheet, and is provided to Aviation Utilities for billing. For the 21 month
period ended January 2017 through September 2018, the worksheet for electrical usage was received
late for 14 of the months, with the number of days delinquent ranging between 2 and 24. The Water and
Gas usage worksheet was received late for 16 of the months, with the number of days delinquent ranging
between 2 and 19. 
Table 2 
Days Past Due                Electricity        Percentage        Water / Gas        Percentage 
11 - 24                                    8                   42                    6                   33 
0 - 10                                       6                    32                    10                    56 
On Time*                            5                26                 2                11 
Total                                     19               100%                   18                100% 
*Electricity excludes two months / Water Gas excludes three months  data not available 
Recommendations 
The Aviation Utility department relies on Aviation Maintenance to provide meter usage. If not provided
timely, billing is delayed. Therefore, we recommend developing a process so that meter reads that are not
received timely are identified and escalated to senior management. We also recommend engaging a lean
team to identify opportunities to streamline and implement best practices. 
Management Response/Action 
Management agrees with the need for a better, more comprehensive method for delivering and tracking
timely notification for new, changes to and termination dates for tenant utility services. Airport Dining and
Retail staff has the lead for development of this notification system. 
Given the complex nature of the Sea-Tac Utility and its billing processes, it has been nominated for
inclusion within the 2019 work plan for the Continuous Process Improvement team. 

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Sea-Tac Utilities 
January 2017 October 2018 
Appendix 
APPENDIX A: RISK RATINGS 
Findings identified during the course of the audit are assigned a risk rating, as outlined in the table below.
The risk rating is based on the financial, operational, compliance or reputational impact the issue
identified has on the Port. Items deemed "Low Risk" will be considered "Exit Items" and will not be
brought to the final report. 
Port
Rating        Financial      Internal Controls      Compliance           Public         Commission/
Management 
Large financial
impact                              Noncompliance
High probability        Important 
Missing, or        with applicable
for external audit
Remiss in      inadequate key      Federal, State,
HIGH                                                        issues and/or       Requires
responsibilities     internal controls       and Local Laws,
negative public        immediate
of being a                             or Port Policies 
perception           attention 
custodian of
public trust 
Partial controls                                                        Relatively
Inconsistent         Potential for          important 
Moderate      Not adequate to     compliance with     external audit
MEDIUM      financial         identify        Federal, State,     issues and/or    May or may not
impact        noncompliance or     and Local Laws,     negative public         require
misappropriation      or Port Policies        perception          immediate
timely                                                            attention 
Internal controls in
Generally
place but not                             Low probability
complies with                              Lower
consistently                             for external audit
Federal, State and                         significance 
Low financial    efficient or effective                           issues and/or
LOW/                                    Local Laws or Port
impact                                                  negative public
Exit Items                                           Policies, but some                        May not require
Implementing/enha                         perception 
minor                             immediate
ncing controls
discrepancies                            attention 
could prevent
exist 
future problems 
Efficiency      An efficiency opportunity is where controls are functioning as intended; however, a modification
Opportunity                              would make the process more efficient 






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