Press Release

PUC Releases UGI Management Efficiency Investigation Reports, Makes Additional Recommendations

Published on 6/9/2016

Filed under: Electric Gas

HARRISBURG – The Pennsylvania Public Utility Commission (PUC) today released a Management Efficiency Investigation report for UGI Utilities Inc., UGI Central Penn Gas Inc. and UGI Penn Natural Gas Inc. (collectively, UGI Utility Group) evaluating the implementation of recommendations from a May 2012 Focused Management and Operations Audit.
 
The Commission voted 4-0 to make the audit report and the UGI Utility Group’s Implementation Plan public. The report indicates that the companies have effectively or substantially implemented 14 of the 30 prior recommendations and has taken some action on the remaining 16 recommendations. The Commission’s Bureau of Audits has made 20 follow-up recommendations for improvement.

Chairman Gladys M. Brown issued a statement, noting the importance of the recommendation related to cybersecurity and physical security plans.

“I wish to use these recommendations to remind the UGI companies and our regulated utilities – gas, electric, water, and telecommunications – to continue to focus on security, both physical and cybersecurity,” said Chairman Brown. “The creation of robust cybersecurity plans should be a priority for all of our utility companies because of system reliability and, therefore, citizen welfare and the Commonwealth’s economy depend on it.”

Commissioner Robert F. Powelson also issued a statement.

“Today’s audit demonstrates that UGI has made several significant improvements in notable areas, including accelerated cast iron and bare steel replacement, a reduction in the number of annual line hits and unification of the company’s safety manual,” said Commissioner Powelson. “I encourage UGI to continue in its efforts, particularly with respect to developing a comprehensive cybersecurity plan, standardizing its physical security mitigation and providing the PUC with documentation of an emergency response plan.”           

Among the more notable improvements achieved by the UGI Utility Group are:

• Established short- and long-term goals for UGI’s natural gas distribution companies’ (NGDCs’) replacement of cast iron and bare steel mains, and are on track to meet the goals;
• Reduced the total number of annual line hits occurring within UGI Penn Natural Gas Inc.’s service territory;
• Updated UGI’s NGDCs’ integrity management plans and continues to do so regularly;
• Refined the allocation process to include a more accurate assignment of indirect shared costs between entities, saving the UGI Utility Group approximately $22,000 in 2013 and $28,000 in 2014;
• Implemented an outage management system within UGI’s Electric Service Division; and
• Documented customer service goals and maintained metrics for call centers and customer care representatives.

The audit report also identified 20 follow-up recommendations for additional improvements, some of which include the following:

• Develop a comprehensive cybersecurity plan, and test and review it annually;
• Improve safety performance at the UGI Utility Group;
• Standardize the approach for mitigating physical security risks across the UGI Utility Group;
• Fully document emergency response provisions within UGI’s Electric Service Division’s emergency response plan;
• Improve the inventory turnover ratio to at least 2.0 turns or higher at all operating companies, which could result in a one-time savings of $465,000 and annual carrying cost savings of $70,000;
• Ensure UGI’s Gas Service Division meets its goal of replacing mercury meters by 2018;
• Improve the accuracy of UGI’s NGDCs’ unaccounted for gas calculation;
• Complete implementation of the customer information management and enterprise asset management software, and then reassess the  consolidation of call centers; and
• Strive to achieve a more automated materials management system.

The UGI Utility Group has accepted 17 follow-up recommendations in full and three in part. It has indicated that it will implement the majority of quantifiable actions by December 2018, some with ongoing implementation.

UGI Utilities Inc. – Gas Division provides natural gas service to approximately 380,000 customers in 16 counties in eastern and central Pennsylvania.  UGI Central Penn Gas Inc. provides natural gas service to approximately 82,000 customers in 36 counties in northeastern, central and northwestern Pennsylvania, and UGI Penn Natural Gas Inc. provides service to approximately 168,000 customers in 13 counties in northeastern Pennsylvania.

In addition, UGI Utilities, Inc. – Electric Division provides electric service to approximately 62,000 customers in Luzerne and Wyoming Counties.

The Pennsylvania Public Utility Commission balances the needs of consumers and utilities; ensures safe and reliable utility service at reasonable rates; protects the public interest; educates consumers to make independent and informed utility choices; furthers economic development; and fosters new technologies and competitive markets in an environmentally sound manner.

For recent news releases and video of select Commission proceedings or more information about the PUC, visit our website at www.puc.pa.gov. Follow the PUC on Twitter – @PA_PUC for all things utility. “Like” Pennsylvania Public Utility Commission on Facebook for easy access to information on utility issues.

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Docket Nos. D-2015-2473202, D-2015-2473203, D-2015-2473204

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