Press Release

PUC Efficiency Investigation Shows Aqua PA Could Realize an Additional $113,000 in Annual Savings, $251,000 in One-Time Savings

Published on 8/27/2009

Filed under: Water and Wastewater

HARRISBURG – According to an audit report released today by the Pennsylvania Public Utility Commission (PUC), Aqua Pennsylvania Inc. could realize combined yearly savings up to $113,600 and one-time savings of up to $251,000 by implementing the recommendations contained in the report.

The Commission voted 5-0 to approve the release of the report and the company’s implementation plan. Commissioner Kim Pizzingrilli issued a statement. The PUC Bureau of Audits’ Management Efficiency Investigation (MEI) examined Aqua’s progress in implementing 20 of the 27 original recommendations from an October 2006 Focused Management and Operations Audit. 

The auditors found that Aqua effectively implemented 9 of the 20 prior recommendations reviewed and has taken some action on the 11 remaining recommendations resulting in the realization of annual savings of approximately $801,000 and one-time savings of $15,000.  Some of the changes made by the company included:

• Adopting policies and procedures to address the allocation of costs incurred by Aqua Services while providing shared services to Aqua PA and its affiliates resulting in a savings of about $83,000;
• Adopting a policy of applying a 60 percent overhead factor to all labor costs charged to affiliates for service provided by Aqua PA resulting in an additional $268,000 in overhead charges being recovered;
• Standardizing its distribution mapping administrative controls and tracking mechanisms; and
• Reducing unaccounted-for-water levels in the northeast region realizing avoided production and purification expenses of about $370,000.

Additionally, the audit report contained 15 follow-up recommendations for improvement. The company accepted 12 of the recommendations and partially accepted the remaining three.  The Commission directed the companies to proceed with its plans to implement the follow-up recommendations.  The follow-up recommendations accepted by the companies include:

• Charging and collecting the interest that should have accrued on the Suburban Environmental Resources accounts receivable conservatively estimated at $251,000 during the period monthly inter-company account balances were occurring and also for the period of delayed interest payment;
• Striving to further strengthen and more effectively utilize the internal audit function;
• Striving to drive the unaccounted-for-water levels in the northeast region to 20 percent or less to achieve additional savings of about $114,000 and continuing participation in the Commission’s non-revenue water pilot program;
• Creating a damage prevention program in the northeast and western regions that standardizes a statewide procedure for facility hit data capture, tracking and analysis methods; expand customer, contractor and employee education in all regions; and eliminate gentleman’s agreements; and
• Reevaluating inventory management performance by correcting the inventory order quantities to maintain current inventory turnover levels.

 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 website at www.puc.state.pa.us.

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Docket No. D-2008-2081721

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