Press Release

PUC Issues Audit Recommendations to National Fuel Gas Distribution Corp.

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 National Fuel Gas Distribution Corp. (NFG Distribution) that contained recommendations that could improve the company.

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

The audit makes 12 recommendations to the company for improvement.  The company’s implementation plan accepted 10 recommendations and indicated partial acceptance of the other two recommendations. The audit recommendations include:

• Initiate efforts to increase the amount of work hours with support service departments that are directly charged based on the task performed rather than allocated as a common cost.
• Submit updated affiliated interest agreement(s) to the Commission for approval of all transactions with affiliates whom NFG Distribution transacts business.
• Study possible alternatives for obtaining external financing separate from the corporate parent.
• Rotate the external audit firm on a periodic basis.
• Periodically rebid and/or conduct cost comparisons of external audit services.
• Establish a formal dividend policy.
• Submit a detailed, written explanation for each dividend payout exceeding 85 percent of net income to the Commission
• Ensure that contact information for all local public and emergency officials as well as the Pennsylvania State Police is included in the company’s emergency response manual.

NFG Distribution provides natural gas service to approximately 212,000 customers in northwestern Pennsylvania, including the metropolitan areas of Erie and Sharon.

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-2011-2228385

Contact:

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