Press Release

PUC Audit Makes Management Recommendations for Electric, Natural Gas Companies in Tioga, Bradford and Union Counties

Published on 3/11/2010

Filed under: Electric Gas

HARRISBURG – According to an audit report released today the Pennsylvania Public Utility Commission (PUC); C&T Enterprises, Inc.’s (C&T) regulated utilities - Citizens Electric Co., Wellsboro Electric Co. and Valley Energy Inc. - could realize combined one-time savings up to $11,000 by implementing the recommendations contained in the report. 

The Commission voted 4-0 to make the audit report and the companies’ implementation plans public.  The PUC Bureau of Audits’ Management Efficiency Investigation examined the companies’ progress in implementing 20 of the 28 original recommendations from a June 2007 Focused Management and Operation Audit. The auditors found that the companies effectively implemented 15 of the 20 prior recommendations reviewed and has taken some action on the five remaining recommendations resulting in the realization of annual savings of approximately $3,000 and one-time savings of $800,000.  Some of the changes made by the companies included:

• Allocating vehicle expenses between Wellsboro and an affiliate reflecting actual charges to each company, saving Wellsboro $2,800 in annual operating costs;
• Eliminating problematic vehicle leases with C&T and establishing their own vehicle acquisition programs resulting in one-time savings of $800,000;
• Updating various aspects of their emergency response, business continuity, physical security and cyber security plans; and
• Wellsboro implementing a multiple year tree-trimming contract that provides more flexibility and control.

Additionally, the audit report contained five follow-up recommendations for improvement. The companies’ implementation plan indicated that they have already begun to implement all five of the recommendations and plan to complete implementation by the end of 2010. The Commission directed the companies to proceed with their plans to implement the follow-up recommendations.  The follow-up recommendations accepted by the companies include:

• Striving to more fully comply with the spirit of general corporate governance rules and regulations by documenting the procedures for director orientation and training, requiring Finance Committee members to be independent, and documenting the committee structure and member composition at Valley;
• Revising Wellsboro’s conflict of interest policy to specifically prohibit directors and employees from having direct or indirect financial interests in organizations that do business with Wellsboro;
• Allocating all expenses related to acquisition and operation of the Wellsboro’s Chief Executive Officer’s (CEO) vehicle between Wellsboro and Tri-County based on the methodology used to allocate the CEO’s salary; and
• Preparing periodic written variance explanations by line item for the capital budget at Wellsboro and Citizens’.

Wellsboro serves about 5,900 electric customers in Tioga County.  Citizens’ serves about 6,560 electric customers in Union County.  Valley Energy serves about 5,500 natural gas 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, 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 Nos. D-2009-2126811; D-2009-2126812; and D-2009-2126813

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