DAISY NANPEI

Finding 2023-003 Federal Agency: U.S Department of Agriculture AL Program: 10.859 Assistance to High Energy Cost Rural Communities Federal Award No: HCEG FM001-B84 Area: Special Tests and Provisions Questioned Costs: $0 Criteria: Section 8.8, Final Project Report, of the underlying grant agreement requires the grantee to provide the Rural Utilities Service (RUS) with a final project report detailing: project performance, final project expenditures, and one full year of operating data. Such data must include energy produced, fuel savings, and/or cost savings associated with the project, and community benefits. The report must demonstrate whether the performance objectives listed in the grant application were achieved, including: 1. A reduction in per unit cost of power by $0.01 – 0.02/kWh. 2. An additional 188 kW of energy for available waste heat, equating to 1.61 MW of additional renewable energy annually. 3. A quantified decrease in the number of blackouts experienced over the prior year. Condition: PUC submitted a final project report to RUS that included project performance information, expenditures, and operating data; however, the report covered only four (4) months of operating data. The submission did not include the required one full year of operating data. No adverse or corrective feedback was issued by the awarding agency regarding the submission. Cause: PUC management did not establish procedures to ensure that all required operating data covering a full twelve-month period was collected and reported prior to submission. Effect: PUC is in noncompliance with the special tests and provisions requirements of the grant agreement. Although no questioned costs were identified, incomplete reporting may limit RUS’s ability to fully assess whether the project achieved its intended performance objectives. Recommendation: We recommend that PUC implement internal controls to ensure compliance with all reporting requirements under its federal awards, including: 1. Establishing procedures to track required reporting timelines and data periods. 2. Assigning responsibility for the compilation of complete annual operating data prior to submission. 3. Reviewing future submissions for compliance with the full scope of grant reporting criteria before transmittal to the awarding agency. Identification as a Repeat Finding: N/A View of Responsible Officials: PUC’s response and corrective action plan addressing this finding is included in the accompanying corrective action plan.

PUC concurs with the auditor's recommendation. PUC will access its' needs for additional personnel and resources. October 2025, Daisy Nanpei, CFO

Finding 2023-003 Federal Agency: U.S Department of Agriculture AL Program: 10.859 Assistance to High Energy Cost Rural Communities Federal Award No: HCEG FM001-B84 Area: Special Tests and Provisions Questioned Costs: $0 Criteria: Section 8.8, Final Project Report, of the underlying grant agreement requires the grantee to provide the Rural Utilities Service (RUS) with a final project report detailing: project performance, final project expenditures, and one full year of operating data. Such data must include energy produced, fuel savings, and/or cost savings associated with the project, and community benefits. The report must demonstrate whether the performance objectives listed in the grant application were achieved, including: 1. A reduction in per unit cost of power by $0.01 – 0.02/kWh. 2. An additional 188 kW of energy for available waste heat, equating to 1.61 MW of additional renewable energy annually. 3. A quantified decrease in the number of blackouts experienced over the prior year. Condition: PUC submitted a final project report to RUS that included project performance information, expenditures, and operating data; however, the report covered only four (4) months of operating data. The submission did not include the required one full year of operating data. No adverse or corrective feedback was issued by the awarding agency regarding the submission. Cause: PUC management did not establish procedures to ensure that all required operating data covering a full twelve-month period was collected and reported prior to submission. Effect: PUC is in noncompliance with the special tests and provisions requirements of the grant agreement. Although no questioned costs were identified, incomplete reporting may limit RUS’s ability to fully assess whether the project achieved its intended performance objectives. Recommendation: We recommend that PUC implement internal controls to ensure compliance with all reporting requirements under its federal awards, including: 1. Establishing procedures to track required reporting timelines and data periods. 2. Assigning responsibility for the compilation of complete annual operating data prior to submission. 3. Reviewing future submissions for compliance with the full scope of grant reporting criteria before transmittal to the awarding agency. Identification as a Repeat Finding: N/A View of Responsible Officials: PUC’s response and corrective action plan addressing this finding is included in the accompanying corrective action plan.

PUC concurs with the auditor's recommendation. PUC will access its' needs for additional personnel and resources. October 2025, Daisy Nanpei, CFO