Comptroller releases findings in Newport Utilities investigation

The Tennessee Comptroller’s Office has released its findings after investigating the misuse of funds related to Newport Utilities.
The Tennessee Comptroller’s Office has released its findings after investigating the misuse of funds related to Newport Utilities.
Published: Nov. 30, 2022 at 12:22 PM EST|Updated: Nov. 30, 2022 at 8:07 PM EST
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KNOXVILLE, Tenn. (WVLT) - The Tennessee Comptroller’s Office has released their findings after investigating the misuse of funds related to Newport Utilities. The investigation was sparked after Newport Utilities officials reported the use of funds for “questionable purchases” and work on private property, Comptroller officials said.

Newport Utilities supplies electric services, water, wastewater and broadband internet to the city of Newport. According to the report released by the Comptroller’s Office, the organization approved a plan for installing broadband in its service area, but did not consider the affects of market competition, which later meant that officials were unsure if the established plan was feasible.

The first section of the findings outlined Newport Utilities’ violation of a contract with the Tennessee Valley Authority. The organization reportedly agreed to purchase electricity from the TVA for use in supplying power to their customers, but more than $4 million of the power they purchased was used for broadband internet.

Additionally, Newport Utilities did not set up proper accounting units for the broadband system, the report said. Those decisions then cost the organization $900,000 in settlement payments, according to the investigators.

Newport Utilities also reportedly used $160,739.36 of a $467,827 grant from the Appalachian Regional Commission incorrectly, using that money to install broadband in an incorrect area.

The group also allegedly overpaid for rental space during the project, paying an avoidable $102,175. In addition to these funds, the Newport Utilities manager, who was fired in 2020, also failed to record leave and sick time, meaning investigators were unable to verify portions of his pay, totaling to $93,678.95. That same manager reportedly used a corporate credit card to purchase $9,914.18 worth of personal items, only some of which he eventually payed for.

Again, that manager authorized renovations to a private building adjacent to the Newport Utilities office building without board approval, the report said. That allegedly cost $3,635.

According to the findings, Newport Utilities has corrected or intends to correct the problems outlined in the report.