Press Release

PUC Audit Shows Equitable Could See $32.6 Million in Annual, One-Time Savings

Published on 4/13/2007

Filed under: Gas

HARRISBURG– According to an audit report released today by the Pennsylvania Public Utility Commission (PUC), Equitable Resources Inc. could experience yearly savings of about $30.4 million and one-time savings of $2.2 million by implementing new recommendations from the Commission’s Bureau of Audits. 

The Commission voted 4-0 to make the audit report and Equitable’s implementation plan public.  The PUC Bureau of Audits’ Management Efficiency Investigation (MEI) examined Equitable’s progress in implementing recommendations from a January 2003 Focused Management and Operations Audit and reviewed their corporate governance practices.

The Commission directed the company to proceed with its plan to implement the 19 follow-up recommendations in the audit report. Equitable’s implementation plan indicated that the company accepted all 19 of the PUC staff’s follow-up recommendations.  Furthermore, the company reported that it has already fully implemented five and partially implemented 11 of the follow-up recommendations.

The Commission found that Equitable has effectively implemented 6 of the 21 recommendations reviewed and has taken some action on 12 other recommendations from the 2003 audit.  As of the time of the MEI, the company had not taken any action on three recommendations.

As a result of its implementation efforts, the company has experienced annual savings of about $9 million. Some of the changes made by Equitable since the 2003 audit include:

• Decreasing write-offs of uncollectible accounts, achieving savings of about $17.5 million from 2002-2004;
• Obtaining competitive bids to assure costs for certain functions are reasonable and service is provided on a least cost basis;
• Decreasing residential service terminations;
• Reducing the number of indoor residential gas meters while implementing an automated meter reading system; and
• Implementing systems to assist in pipeline repair and replace decisions.

The 19 follow-up recommendations contained in the MEI include:

• Implementing procedures to improve customer service telephone performance to at least levels comparable with other Pennsylvania gas distribution companies;
• Investigating the causes of the high justified consumer complaint rate and strive to lower this rate;
• Continuing efforts to reduce the capital project backlog through the improved capital project monitoring process;
• Determining the causes of high PUC infraction rate and strive to lower this rate;
• Reducing response times to consumer complaints and payment arrangement requests;
• Continuing efforts to reduce the under-representation of women and minorities within the company’s workforce;
• Continuing to increase inventory management efforts and reduce inventory levels; and
• Striving to reduce distribution expenses by adopting the best operating practices of other gas distribution companies.

The Pennsylvania Public Utility Commission balances the needs of consumers and utilities to ensure safe and reliable utility service at reasonable rates; protect the public interest; educate consumers to make independent and informed utility choices; further economic development; and foster new technologies and competitive markets in an environmentally sound manner. For recent news releases, audio of select Commission proceedings or more information about the PUC, visit our Web site at www.puc.state.pa.us.

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Docket Nos. D-05MEI020

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