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PUC Audit Shows Pennsylvania American Water Co. Could See $1.1 Million in Annual, and $400,000 in One-Time Savings

November 06, 2008

HARRISBURG – According to an audit report released today by the Pennsylvania Public Utility Commission (PUC), Pennsylvania American Water Company (PAWC) could experience yearly savings of up to $1.1 million and one-time savings of up to $400,000 by implementing recommendations contained in the audit report.

The Commission voted 5-0 to make the audit report and PAWC’s implementation plan public. PUC Vice Chairman Tyrone J. Christy issued a statement.

The Stratified Management and Operations Audit was conducted by the consulting firm Shumaker and Co. Inc. on behalf of the Commission.  The audit analyzed and evaluated management performance in 20 functional areas and resulted in 114 recommendations for improvement.  In its implementation plan, submitted to the Commission on Sept. 8, 2008, PAWC accepted 106 recommendations, partially accepted seven recommendations and rejected one recommendation.

The audit recommendations accepted in full or in-part by the company include:


  • Expediting efforts to develop a long-range Information Technology (IT) plan, and subsequently performing yearly review and update activities;
  • Enhancing the Company’s network to enable electronic deployment of software updates to employees;
  • Updating the Information Technology Services disaster recovery plan and beginning to routinely review and test disaster recovery plans and document the results;
  • Performing an internal audit of the inventory data to determine its accuracy;
  • Establishing a central point of management and responsibility for the materials management function at both PAWC and the American Water Works Service Company (AWWSC);
  • Analyzing employee turnover at the Pensacola Call Center and developing strategies to reduce turnover;
  • Initiating actions to lower the number of over estimates in meter readings;
  • Allocating infrastructure improvement budgets on a state-wide basis versus district by district;
  • Developing a comprehensive damage prevention program;
  • Conducting comprehensive workforce planning for all levels of the organization and providing necessary resources for implementation;
  • Assessing PAWC’s HR needs and staff accordingly and increasing accountability to the PAWC President;
  • Updating the AWWSC/PAWC affiliate agreement, as necessary, and submitting it to the PUC for review and approval; and
  • Submitting comprehensive diversity reports to the PUC annually.

PAWC rejected the recommendation to modify the Internal Audit Department reporting structure.

The Company reports it has already implemented nine recommendations, and plans to complete implementation of the majority of the accepted and partially accepted recommendations by December 2010.  The Commission will conduct a follow-up on the Company’s implementation efforts during a future Management Efficiency Investigation.

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.

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Docket No. D-06MGT029


Contact:Denise McCracken
Senior Communications Specialist

Pennsylvania Public Utility Commission
Press Office
P.O. Box 3265, Harrisburg, PA 17105-3265
(717) 787-5722 FAX (717) 787-4193

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