Bureau of Audits
The Bureau of Audits is responsible for the conduct of audit activity of Pennsylvania
fixed utilities, including:
Gas, steam-heat and certain municipal electric utilities require an annual adjustment
clause audit as mandated by the legislature. The audits verify the energy costs
incurred by a utility, determining if the utility overbilled or underbilled customers
for yearly energy charges. The PUC then decides if customer rates will be appropriately
reduced or increased. The bureau performs audits of certain water utilities that
are authorized to charge ratepayers a Distribution System Improvement Charge (DSIC).
The DSIC enables water utilities to accelerate compliance with the Safe Drinking
Water Act. Audits are conducted to ensure that only Commission-authorized expenses
are included in the DSIC rates. Certain electric utilities impacted by the Electric
Competition Act are authorized to recover a portion of their stranded costs through
Competitive and Intangible Transition Charges. The utilities are required to file
annual reconciliation statements associated with the application of these charges.
The bureau will perform audits designed to determine the accuracy and the propriety
of the reconciliation statements.
These audits cover a wide variety of financial issues. They also include original
cost audits (OC), original cost studies (OCS), and continuing property records audits
(CPR). The audits determine the propriety of the property, plant and equipment records
together with an evaluation of the usefulness of that equipment. The CPR audits
are scheduled on a five-year cycle whereas the OC audits are dependent upon certain
conditions being met and the utility submitting an OC study. Compliance audits examine
a broad range of utility operations and determine adherence to prescribed laws and
regulations.
Management audits are performed to determine the extent to which a utility has contained
costs; developed reasonable long-range and short-range plans for its continued operation
and maintenance; provided proper service to customers; and provided proper management
and organizational structure. Management efficiency investigations examine management
effectiveness and the operating efficiency of the utilities and also assess the
utilities' progress in implementing recommendations from prior management audits.
The audits are mandated for approximately 32 large and medium-size fixed utilities.
These utilities must be audited every five to eight years. There are a few hundred
utilities, with plant-in-service of less than $10 million, subject to audit procedures
on an as-needed basis. Bureau staff generally performs such audits as a result of
a specific problem or complaint.
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