Press Release

PUC Audit Shows Energy Companies Serving Union, Northumberland, Tioga, Bradford Counties Could Achieve up to $474,400 in Annual, One-Time Savings

Published on 7/11/2007

Filed under: Electric

HARRISBURG –According to an audit report released today by the Pennsylvania Public Utility Commission (PUC), three of the state’s energy companies may realize yearly savings up to $233,400 and one-time savings up to $241,000 by implementing recommendations contained in the audit.

The Commission voted 5-0 to make the audit report and the companies’ implementation plan public.  Electric companies Citizens’ Electric Co. and Wellsboro Electric Co. as well as natural gas company Valley Energy Inc. are owned by C&T Enterprises Inc., who in turn is jointly owned by two electric cooperatives. The Focused Management and Operations Audit analyzed and evaluated management performance in 8 areas.   

The audit makes 28 recommendations to the companies for improvement. According to the companies, seven of the recommendations have been implemented; four have been partially implemented; and plans are underway to implement the remaining recommendations by June 2008. The audit recommendations include:

• Using policies and procedures as defined by the New York Stock Exchange Corporate Governance rules as guidelines to develop the charters, polices and procedures of the committee structure for the companies’ boards of directors;
• Conducting a cost benefit study to examine the economics of replacing or supplementing one-year tree trimming contracts at Wellsboro with multi-year contracts;
• Revising Citizens’ budget billing process to conform to Commission regulations and requirements;
• Utilizing inventory management tools and reports to reduce excess inventory and increase inventory turnover levels;
• Submitting the contracts for services that C&T Enterprises has with each of the regulated companies as well as all lease agreements between affiliates to the Commission for approval;
• Changing the structure of the current vehicle lease agreements to be more cost effective and in compliance with the current affiliated interest agreement;
• Altering the way that the Wellsboro chief executive officer’s vehicle expenses are allocated;
• Ensuring that reviews and updates of the emergency response, business continuity, cyber security and physical security plans include verification signatures and are dated at the companies; and
• Securing the availability of offsite operation centers for Citizens’ and Valley that can be activated quickly in the event of an emergency.

The Commission’s Bureau of Audits will conduct a follow-up on the companies’ implementation efforts during a future Management Efficiency Investigation.

Citizens’ serves about 6,500 customers in Union and Northumberland counties. Wellsboro serves about 5,900 customers in Tioga County. Valley Energy serves about 5,500 customers in Bradford County.

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, or more information about the PUC, visit our Internet homepage www.puc.state.pa.us.

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Docket Nos. D-06MGT001; D-06MGT002; D-06MGT0003

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