Press Release

PUC Releases Management Efficiency Investigation Report for FirstEnergy Companies

Published on 10/4/2018

Filed under: Electric

HARRISBURG – The Pennsylvania Public Utility Commission (PUC) today released a report of the Management Efficiency Investigation of the FirstEnergy-Pennsylvania companies – including Metropolitan Edison Company (Met-Ed), Pennsylvania Electric Company (Penelec), Pennsylvania Power Company (Penn Power) and West Penn Power Company (West Penn Power) – evaluating the implementation of selected recommendations from a 2014 Focused Management and Operations Audit.

The Commission voted 5-0 to approve a motion by Vice Chairman Andrew G. Place that makes the audit report public, along with the publication of FirstEnergy’s Implementation Plan, and extends the previously required reporting requirements regarding implementation of the recommendations for an additional three years, or until October 2021.

The report indicates that the FirstEnergy companies have effectively or substantially implemented 13 of the 27 recommendations from the prior Management Audit and has taken some action on the 14 remaining recommendations.

According to the report, FirstEnergy achieved the following improvements based on audit recommendations:

• Increased inventory turnover that led to one-time savings of approximately $13.4 million in reduced inventory and annual savings from reduced carrying costs of approximately $1.34 million for the FirstEnergy-Pennsylvania companies combined.
• Periodically rebidding and/or conducting cost comparisons for external audit services resulted in an approximate $331,000 reduction in audit fees.
• Improved meter reading performance due to smart meter deployment.
• Decreased the percentage of billing reversals through the deployment of smart meters, and changes to identifying the causes for billing reversals.
• Reduced customer service representative turnover and related costs resulting in annual savings of approximately $24,000 - $31,000 for the FirstEnergy-Pennsylvania companies combined while improving contact center performance.
• Reduced the number of residential disputes with a response time greater than 30 days to zero.
• Completed a vehicle usage analysis that resulted in the elimination of excess vehicles from 2015 to 2017 for an average one-time savings of approximately $45,000 and an average annual savings from related maintenance expenses of approximately $96,000 for the FirstEnergy-Pennsylvania companies combined.
• Significantly reduced the number of overdue critical preventative maintenance jobs and overdue preventative maintenance jobs for vehicles owned by the FirstEnergy-Pennsylvania companies.

Additionally, the PUC audit identified 14 follow-up recommendations for further improvement, including:

• Review best practices to ensure that all performance measure targets are being met, establish targets and monitor performance related to shift work, if implemented, and ensure, at a minimum, targets are at a level that meets regulatory requirements.
• Improve electric reliability performance to meet minimum standards and strive towards achieving benchmark performance through the continued coordination of reliability activities with the PUC’s Bureau of Technical Utility Services.
• Enhance workforce planning and reporting to ensure adequate staffing and periodically report on staffing reviews with the PUC’s Bureau of Technical Utility Services.
• Conduct a best practices review of Penn Power’s worst performing circuit rehabilitation strategy; implement changes across the FirstEnergy-Pennsylvania company footprint based on the review; and continue to coordinate with the PUC’s Bureau of Technical Utility Services.
• Enhance the Damage Prevention Program by defining roles and responsibilities, developing mapping standards, and fully referencing all operational practices and manuals within the Damage Prevention Program.
• Continue to decrease the percentage and number of meters not read in six and twelve months to be in full compliance with § 56.12.
• Continue to periodically review and improve upon the existing safety program and the implementation of new safety programs to attain performance consistent with established safety goals.

FirstEnergy has accepted 12 of the 14 follow-up recommendations and partially accepted the remaining two.  The companies have indicated they will implement the majority of the recommendations by December 2019.

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.

Visit the PUC’s website at www.puc.pa.gov for recent news releases and video of select proceedings. You can also follow us on Twitter, Facebook, LinkedIn, Instagram and YouTube. Search for the “Pennsylvania Public Utility Commission” or “PA PUC” on your favorite social media channel for updates on utility issues and other helpful consumer information.

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Docket Nos.:

D-2017-2626664
D-2017-2626665
D-2017-2626666
D-2017-2626667

Contact:

• Nils Hagen-Frederiksen
  Press Secretary
  717-418-2701
  nhagen-fre@pa.gov