Press Release

PUC Issues Management and Operations Audit for Peoples Natural Gas and Aqua PA

Published on 4/24/2025

Filed under: Gas Water and Wastewater

Follow-Up Review of 2021 Management and Operations Audit Reflects Progress on 25 Recommendations

HARRISBURG – The Pennsylvania Public Utility Commission (PUC) today released the results of a follow-up review of the prior Management and Operations Audit of Aqua Pennsylvania Inc. (Aqua PA) and Peoples Natural Gas Company LLC (Peoples) (together, the Companies), which highlights progress on prior PUC recommendations for improving operations at the Companies.

The Commission voted 5-0 to issue both the Management Efficiency Audit and the Companies’ Implementation Plan.  This most recent audit examined the Companies’ progress in implementing 25 of the 47 original recommendations from the Management and Operations Audit released in May 2021.

About the Companies

Essential Utilities Inc. (Essential) is the parent corporation of Aqua PA and Peoples. During the prior management audit, Peoples was comprised of two distinct natural gas distribution companies, jointly referred to as the Peoples Companies; however, as of January 2023, they have been consolidated into a single entity with two operating divisions serving separate customer bases under two different tariffs.

Aqua PA provides water and wastewater services in Pennsylvania.  Aqua Water provides water service to approximately 445,000 customers across more than 200 municipalities in 32 Pennsylvania counties.  Aqua Wastewater serves approximately 75,000 customers in more than 40 municipalities across 16 counties.

Peoples provides natural gas distribution service to approximately 700,000 residents and businesses in Pittsburgh and surrounding counties in southwestern Pennsylvania.

PUC Audit Recommendations

The audit shows that the Companies have effectively or substantially implemented 15 of the 25 prior recommendations reviewed and have taken some action on the remaining 10 recommendations. 

Among the more notable improvements are:

• Essential completed a successful request-for-proposals to ensure external audit services are being procured at a reasonable cost.
  
  
• Aqua PA submitted and received the PUC’s approval of an office space lease agreement collecting an additional $2 million in rent charges.
  
  
• Peoples increased construction staffing which supported its ability to maintain its expedited pipeline replacement schedule.
  
  
• Essential contracted a third-party vendor for vehicle leasing and management that could potentially save $2.8 million over its fleet replacement cycle.
  
  
• Peoples installed a safety management system which enhanced its safety monitoring and tracking and has also consistently met its safety goals throughout the review period.
  
  
• Essential established a formal succession plan which covers all critical executive positions.

Additionally, auditors identified further opportunities for improvement within the Companies, recommending:

• Correct the noted concerns in governance over transactions amongst affiliates throughout Essential’s organization and then perform a comprehensive study of the affiliated transaction and cost allocation processes at PNG Companies, LLC and Peoples.
  
  
• Complete a comprehensive market study, considering cost and service level, for all shared services to/from Aqua PA and Peoples and develop a formal policy to conduct periodic comprehensive market studies going forward.
  
  
• Strive to reduce company-at-fault damages to a minimum and increase outreach efforts to decrease company-not-at-fault hits at Aqua PA.
  
  
• Maintain focus on damage prevention strategies to further decrease line hits at Peoples.
  
  
• Centralize the oversight of security and business continuity functions and establish verification controls to commit to an enhanced emergency preparedness culture throughout Essential’s companies.
  
  
• Establish relevant security requirements based on facility criticality.
  
  
• Conduct investigations of inventory variances to determine root cause and then institute measures to improve inventory accuracy to within industry standards potentially saving $615,000 – $1.25 million.

In response to the report, the Companies submitted an Implementation Plan on April 4, 2025, indicating acceptance of 22 follow-up recommendations and partial acceptance of six follow-up recommendations.  The Companies indicated that they plan to complete the majority of the follow-up recommendations by the second quarter of 2026.

About the PUC

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 puc.pa.gov for recent news releases and video of select proceedings. You can also follow us on X (formerly 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-2024-3046564
D-2024-3046565

Contact:

• David Hixson
  Deputy Press Secretary
  717-772-2766
  dhixson@pa.gov