Press Release

PUC 2010-11 Fiscal Report Announces Management Audits, Efficiency Investigations Realized Savings of Approximately $29.7 Million Annually, $1.4 Million in One –Time Savings

Published on 11/10/2011

Filed under: Electric Gas Water and Wastewater

HARRISBURG – The Pennsylvania Public Utility Commission (PUC) today released a 2010-11 annual report on management audits (MAs) and management efficiency investigations (MEIs) that showed that the PUC has helped utilities save millions of dollars through voluntary improvements to operations, service reliability and safety by regulated utility companies.

The Commission voted 5-0 to make the annual report public.

In Fiscal Year 2010-11, the PUC Bureau of Audits released MAs of Newtown Artesian Water Co. (Newtown) and United Water Pennsylvania Inc. (United Water). These audits resulted in 27 improvement opportunities with 26 of the recommendations being accepted or partially accepted by the companies in their implementation plans.

The quantifiable recurring annual benefits from implementing the recommendations in the two MAs could save the utilities up to $315,000 in annual and $57,000 in one-time savings.  The quantifiable potential benefits were attributed to the recommendations for United Water.  It was estimated that United Water could annually save $189,000 in reduced production cost by reducing unaccounted-for-water and $120,000 by changing the methodology used to allocate the interest costs for debt incurred to finance specific infrastructure projects

Staff also released MEIs of Columbia Gas of Pennsylvania Inc. (Columbia Gas), Duquesne Light Co. (Duquesne), PECO Energy Co. (PECO), Pennsylvania American Water Co. (PAWC), and the York Water Co. (York Water).  The MEIs showed that 97 of the 150 total recommendations from prior MAs were effectively implemented and that the companies also had taken some action on all of 52 of the 53 remaining recommendations.

The MEI findings show that the five utilities combined are realizing annual savings of approximately $29.4 million and realized a one-time savings of $1.4 million by implementing recommendations from prior Mas, including the following:

• Columbia Gas is realizing annual savings of $11.5 million primarily attributable to refinancing its long-term debt, significantly decreasing its residential receivable gross write-offs, increased collection efforts, implementing a process for allocating the customer call center expenses based upon the number of call minutes applicable to the distribution companies, and initiating the allocation of charges to affiliates for the use of their main office. 
• Duquesne’s annual savings of $9.5 million were realized as a result of significantly reducing its amount of accounts receivable write-offs, reducing its long-term arrearages, and reducing its inventory levels. 
• PECO’s $8.1 million in realized annual savings were primarily attributable to implementation of the Mobile Dispatch System, successfully reducing its electric-theft caseload, improving the effectiveness of its Gas-Theft of Service Program, reducing corrective maintenance costs and increasing the charges for services provided to affiliates closer to market rates.
• Pennsylvania American’s $223,500 to $323,500 in annual savings were realized as a result of completing implementation of its use of software to enable electronic deployment of software updates to remote workstations, server consolidation, establishing a Fleet Management Policy which includes changes in vehicle assignment criteria, reducing unplanned overtime, increasing billing and collection of third-party line hit damages, and reducing its inventory levels.

Duquesne is realizing a one-time savings of approximately $1.2 million resulting from conducting regular reviews of its inactive inventory to identify, write off and dispose of obsolete inventory. York Water also realized a one-time savings of $174,000 as a result of reducing its inventory and increasing its inventory turnover rate. PAWC also realized a one-time savings of approximately $67,000 by removing obsolete items from its inventory. The MEIs included a total of 74 follow-up recommendations, with the companies accepting or partially accepting 72 of them. 

More specific information on each of the original audits and investigations can be found at the Commission’s website at www.puc.state.pa.us under press releases.

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-2011-2265901

Contact:

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