Press Release

PUC Audit Shows PPL Utility Companies Could See $12.5 Million in Annual, One-Time Savings

Published on 6/22/2006

Filed under: Electric Gas

HARRISBURG—According to an audit report released today by the Pennsylvania Public Utility Commission (PUC), PPL Electric Utilities Corp. could experience a yearly savings of about $1.6 million and one-time savings of $10.9 million by implementing new recommendations from the Commission’s Bureau of Audits. 

The Commission voted 5-0 to make the audit report public.  The Commission directed the company to proceed with its plan to implement the ten recommendations in the audit report.

The PUC Bureau of Audits’ Management Efficiency Investigation examined PPL Utility Companies’ progress in implementing recommendations from a May 2002 Focused Management and Operations Audit, and reviewed their corporate governance practices. 

The Commission found that PPL Utility Companies have effectively implemented 12 of the 21 recommendations reviewed and have taken some action on the remaining nine recommendations from a 2002 audit.  As a result of those implementation efforts, the companies have experienced combined annual savings of $20.8 million and one-time savings of approximately $1.3 million.

One of the most significant changes recommended in the May 2002 audit report was the way the companies distribute indirect costs among affiliates.  The company’s implementation of this recommendation resulted in a savings of $11.3 million in 2003 and $13.5 million in 2004 to PPL Electric and PPL Gas. 

Some of the other changes made by PPL include:

• Comparing cost of services provided among affiliates to market rates resulting in approximately $8 million annual savings;
• Establishing a documented competitive bid policy for PPL Gas projects;
• Reducing inventory levels for a one-time savings of approximately $1.3 million and annual carrying-cost savings of approximately $195,000; and
• Initiating and partially implementing reliability improvement measures which have reduced the frequency of interruptions.

The Pennsylvania Public Utility Commission ensures safe, reliable and reasonably priced electric, natural gas, water, telephone and transportation service for Pennsylvania consumers, by regulating public utilities and by serving as stewards of competition.

For recent news releases, or more information about the PUC, visit our website at www.puc.state.pa.us.

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Docket No. D-05MEI001, D-05MEI049 and D-05MEI050

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