Press Release

PUC Releases Management Efficiency Investigation Report for Philadelphia Gas Works

Published on 9/20/2018

Filed under: Gas

HARRISBURG – The Pennsylvania Public Utility Commission (PUC) today released a report on a Management Efficiency Investigation of the Philadelphia Gas Works (PGW), evaluating the implementation of selected recommendations from a 2015 Management and Operations Audit.

The Commission voted 5-0 to make the audit report public, along with publication of PGW’s Implementation Plan.

The report indicates that PGW has effectively or substantially implemented 28 of the 65 recommendations from the prior Management Audit and has taken some action on the remaining 37 recommendations.

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

• Maximizing gas purchases from the Marcellus Basin, which resulted in an estimated savings of $47 million from Aug. 2015 through Oct. 2017.
• Reduction in cast iron main breaks and leaks by incorporating additional factors into its main replacement program.
• Implementation of measures to address anticipated retirements and adopted elements of a comprehensive workforce planning process.
• Incorporation of diversity into its business strategy, corporate initiatives, employee engagement, training, and development.
• Completion of a management compensation study and realignment of compensation levels for most positions.
• Reduction of expenses related to the internal auditing function by adding staff and reducing reliance on an external auditing firm which related in an annual savings of approximately $215,000.
• Improvement of customer service satisfaction scores.

Additionally, the Commissioners continued to encourage PGW to streamline its overlapping governance structure – an issue that the Commission has repeatedly highlighted since PGW first came under jurisdiction of the PUC.

As noted in a statement from Commissioner David W. Sweet, “these redundancies not only create a layer of administrative confusion, but it comes at a cost of nearly one million dollars (per year) and it’s a cost borne by PGW ratepayers.”

The Commission urged Philadelphia City Council and the Mayor to seriously evaluate the recommendations and take steps to reduce the duplicative and costly governance structure for PGW.

Additionally, the PUC audit identified 47 follow-up recommendations for further improvement, including:

• Aggressively replace cast iron main and all risky pipe.
• Reduce the number of open or backlogged leaks.
• Update all emergency plans annually and consider testing scenarios on a rotating basis.
• Perform disaster recovery tests semi-annually.
• Develop and implement a policy promoting cyber safe usage of electronic communications devices.
• Focus efforts toward preventing or quickly identifying undetected gas use.
• Make additional efforts to prepare for upcoming retirements within the Gas Control Center.
• Continue to increase diversity in underutilized job categories.

PGW has accepted 46 of the 47 follow-up recommendations and has indicated it will implement the majority of the recommendations by the end of 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 No.: D-2017-2627521

Contact:

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