Press Release

PUC Audit Shows T.W. Phillips Gas & Oil Co. Could See $1.3 Million in Annual, One-Time Savings

Published on 4/16/2009

Filed under: Gas

HARRISBURG – According to an audit report released today by the Pennsylvania Public Utility Commission (PUC), T. W. Phillips Gas & Oil Co. (T.W. Phillips) could experience yearly savings up to $1.1 million and one-time savings of up to $266,000 by implementing new recommendations from the Commission’s Bureau of Audits.

The Commission voted 5-0 to make the audit report and T.W. Phillips’ implementation plan public.  The PUC’s Bureau of Audits Focused Management and Operations audit analyzed and evaluated management performance in various functional areas.  As a result, the Commission has directed the company to implement 28 recommendations for improvement.

PUC Chairman James H. Cawley issued a statement.

Some of the areas recommended for further improvement include:

• Establish a debt reduction/financial management plan to reduce total debt and control the level of its short-term debt;
• Modify, track and enforce the damage prevention program, bill for all non-company caused hits and initiate solutions to reduce the number of company-at-fault hits;
• Initiate actions to increase collection agency recovery rates;
• Reevaluate economic order quantities and economic order points with a goal of reducing inventory levels and improving turnover;
• Apply an overhead rate to all salary and labor charges for recovery of the cost of employee benefits from Energy Corp. and Supply Corp., and annually recalculate and modify the rate; and
• File an affiliated interest agreement with the Commission for approval of the goods and services provided by T.W. Phillips to Supply Corp.

In its implementation plan submitted to the Commission on March 20, 2009, T.W. Phillips accepted 15 recommendations, and partially accepted the other 13 recommendations.

The company reports it has already implemented five of the recommendations, 12 of the implementation efforts are ongoing, nine are scheduled for implementation by Dec. 31, 2010, and the remaining two recommendations are subject to the Collective Bargaining Agreement, which does not expire until Dec. 31, 2011.  The Commission will conduct a follow-up on the company’s implementation efforts during a future Management Efficiency Investigation.

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.

                                                            ###

Docket No. D-2009-2084332; D-07MGT022

Contact:

• Denise McCracken
  Senior Communications Specialist
  717-787-5722
  demccracken@pa.gov