Press Release

PUC Issues Audit Recommendations to UGI Utilities Inc., UGI Central Penn Gas Inc. and UGI Penn Natural Gas Inc.

Published on 5/24/2012

Filed under: Gas

HARRISBURG – The Pennsylvania Public Utility Commission (PUC) today released a report on the Focused Management and Operations Audit of UGI Utilities Inc., UGI Central Penn Gas Inc. and UGI Penn Natural Gas Inc. (collectively the UGI Utility Group) that contained recommendations that could save the companies a combined $787,300 to $1,066,600 annually and one-time savings of $2,544,000 to $4,405,000.

The Commission voted 5-0 to make the audit report and the company’s Implementation Plan public.  Commission Wayne E. Gardner issued a statement. The Focused Management and Operations Audit analyzed and evaluated management performance in twelve functional areas.  The audit was conducted by the PUC’s Bureau of Audits.

The audit report makes 31 recommendations to the UGI Utility Group for improvements.  In their Implementation Plan, the companies indicated agreement with 25 recommendations, partial agreement with three recommendations and disagreement with three recommendations.  The audit recommendations that the UGI Utility Group agreed or partially agreed with include:

·       Strive to reduce inventory levels and achieve inventory turnover rates of 2.0 to 4.0 in all UGI Utility Group warehouses.

·       Establish appropriate emergency stock levels for each UGI Utility Group warehouse and strive to reduce the actual overall emergency stock levels maintained to 15 percent of total inventory.

·       Establish short and long-term goals for main replacement at UGI’s natural gas distribution companies, specifically for cast iron and bare steel, and accelerate the replacement of cast iron and bare steel infrastructure.

·       Refine the UGI Utility Group’s strategic planning process to include defined initiatives and establishing operating company and overall corporate goals with related performance indicators.

·       Develop, maintain and make available a cost allocation manual to all appropriate employees.

According to the UGI Utility Group, the companies plan to complete implementation of all recommendations that they have agreed and partially agreed with by March 31, 2014.  The UGI Utility Group disagreed with recommendations related to identifying when to repair Class A leaks and to reduce the number of Class A leaks; accelerating the safe removal of mercury regulators; and filing an updated affiliated interest agreement reflecting current corporate structure, affiliate relationships, and allocation methodologies with the Commission for review and approval.  The Commission will conduct a follow-up on the UGI Utility Group’s Implementation efforts during a future Management Efficiency Investigation.

UGI Utilities Inc. provides natural gas service to approximately 341,300 customers in 16 counties in southeastern and central Pennsylvania.  UGI Central Penn Gas Inc. provides natural gas service to approximately 76,500 customers in 33 counties across Pennsylvania, and UGI Penn Natural Gas Inc. provides service to approximately 160,800 customers in 13 counties in northeastern Pennsylvania.

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-2011-2221061; D-2011-2221062; and D-2011-2221063

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