Press Release

PUC Efficiency Investigation Shows Philadelphia Gas Works Could Continue to Realize $21 Million in Annual Savings

Published on 8/30/2012

Filed under: Gas

HARRISBURG – According to an audit report released today by the Pennsylvania Public Utility Commission (PUC or Commission), Philadelphia Gas Works (PGW or company) could continue to realize annual savings of up to $21 million and will implement the recommendations contained in the report. These savings are in addition to the $25 million annual savings and $2 million in one-time savings already realized by implementing recommendations from a Stratified Management and Operations Audit report released in February 2009.

The Commission voted 5-0 to make the audit report and the Company’s implementation plan to address those recommendations public.  The PUC Bureau of Audits’ Management Efficiency Investigation (MEI) examined PGW’s progress in implementing 55 of the 93 original recommendations from the prior management audit report. 

According to the MEI, PGW has effectively implemented 31of the 55 prior recommendations and has taken some action on the remaining 24 recommendations.  Some of the changes made by the company include:

• Finalizing a program for performing periodic credit checks on new and existing gas suppliers;
• Tracking, quantifying and trending cost recovery efforts related to the gas theft program;
• Initiating efforts to routinely identify and track the value of emergency stock levels;
• Developing a comprehensive policies and procedures manual to guide the daily operations of the Supply Chain Department; and
• Developing a method to track absenteeism separately for the call center and perform periodic absenteeism root cause analyses to facilitate efforts to reduce absenteeism levels.

In addition, the audit staff made 25 recommendations for further improvement.  In its Implementation Plan released today PGW accepted 23 recommendations, partially accepted one recommendation and rejected one recommendation.  The recommendations accepted in full or in-part by PGW include:

• Monitor and assess absenteeism root causes and take corrective action to reduce absenteeism to at least 2006 levels;
• Expand knowledge loss risk assessment and workforce planning at PGW; and
• Initiate efforts to encourage the Philadelphia Facilities Management Corporation (PFMC), Philadelphia Gas Commission (PGC) and City Council to make changes to streamline PGW’s corporate governance.

PGW indicated that it had already implemented five recommendations, partially implemented nine recommendations and plans to complete implementation of the majority of the recommendations by June 2014.  PGW rejected the recommendation to initiate efforts to encourage the Philadelphia Facilities Management Corporation, Philadelphia Gas Commission and City Council to make changes to streamline PGW’s corporate governance.

PGW provides natural gas service to about 512,000 residential, commercial and industrial customers throughout the City of Philadelphia.

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.

For recent news releases, audio of select Commission proceedings or more information about the PUC, visit our website at www.puc.pa.gov.

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Docket No. D-2011-2265174

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