Audit Report on the Compliance of GSF Energy, L.L.C. with Certain Provisions of Its Concession Agreement

Audit Report In Brief

This audit determined whether the GSF Energy, L.L.C. properly paid its fees due the City and complied with certain non-revenue provisions of the agreement.

The agreement required that GSF annually pay the City $950,000, a payment in lieu of taxes (PILOT), bonus payments if production exceeded certain thresholds, and a payment if the amount of gas flared exceeded certain production levels. In addition, GSF was required to pay a $1,265,000 biannual facility fee. GSF was also required to upgrade the existing purification plant and construct a second plant.

GSF generally paid the required fees and complied with certain provisions of the agreement. GSF paid the annual concession fee of $950,000, the biannual facility fee of $1,265,000, and the $50,000 due under the PILOT provision. In addition, based on the amount of landfill gas processed, we determined that GSF was not required to make bonus payments for calendar years 1999 through 2002.

GSF did not complete the construction of the additional purification plant and did not pay $200,000 in excess flaring payments due for calendar years 2000 and 2001. Under normal circumstances, GSF would have been required to pay the City for excess flaring in the calendar years occurred; however, under the terms of a revised agreement, GSF is no longer obligated to pay outstanding flaring fees or to construct the additional plant. Accordingly, this report makes no recommendations.