Press Release

PUC Efficiency Investigation Shows Pennsylvania American Water Co. Could Realize an Additional $2.6 Million in Annual Savings; $650,000 in One-Time Savings

Published on 6/30/2011

Filed under: Water and Wastewater

HARRISBURG – According to an audit report released today by the Pennsylvania Public Utility Commission (PUC), Pennsylvania-American Water Co. (PAWC) could realize annual savings of up to $2.6 million and $650,000 in one-time savings by implementing the recommendations contained in the report.  These savings are in addition to the $223,500 to $323,500 annual savings and $67,000 in one-time savings already realized by implementing recommendations from a Stratified Management and Operations Audit report released in November 2008.

The Commission voted 5-0 to make the audit report and the company’s implementation plan to address those recommendations public.  The PUC Bureau of Audits’ Management Efficiency Investigation (MEI) examined PAWC’s progress in implementing 81 of the 114 original recommendations from the prior management audit report. 

According to the MEI, PAWC has effectively implemented 49 of the 81 prior recommendations reviewed and taken some action on 31 of the remaining 32 recommendations.  Some of the changes made by the company include:

• Enhancing the Company’s software to enable electronic deployment of software updates to remote workstations;

• Performing a server consolidation study and developing a long-range Information Technology (IT) plan, which is reviewed and updated annually;

• Updating its Information Technology disaster recovery plans and testing the plans on a regular basis;

• Implementing new financial monitoring processes to initiate actions to achieve improved profitability and financial health;

• Significantly reducing the number of billing over estimates;

• Allocating infrastructure improvement resources on a statewide basis rather than on a district by district basis;

• Reducing unplanned production overtime by approximately 11 percent;

• Improving the call centers’ core infrastructure and introducing website self service capabilities and electronic billing; and

• Finalizing a supplier diversity program and significantly increasing diversity participation and contract awards.

In addition, the Audits staff made 47 recommendations for further improvement that include:

• Implement the procurement/materials management application of the new software system across the PAWC organization in a timely manner which should allow it to reduce its inventory on a one time basis by up to $650,000 with associated annual savings of up to $162,500;

• Conduct an internal audit of the smaller inventory locations to determine the accuracy of the inventory data and develop comprehensive materials management policies and procedures;

• Accurately report Unaccounted for Water (UFW) levels to the Commission and implement long term initiatives designed to achieve actual UFW levels of no more than 20 percent which could result in annual production cost savings of up to $2.1 million;

• File an updated affiliated interest agreement with the PUC for review and approval; and

• Create a comprehensive damage prevention manual and establish goals to strengthen the damage prevention program.

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-2010-2192659

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