The report on the Focused Management and Operations Audit (MA) of Aqua Pennsylvania, Inc. (Aqua PA), completed by staff from the Bureau of Audits, was publicly released on May 23, 2013. The audit report contained 27 recommendations. Aqua PA’s Implementation Plan, dated May 13, 2013, indicated acceptance of 20 recommendations and partial acceptance of seven recommendations. Aqua PA indicated that it planned to complete implementation of all recommendations by December 31, 2014. During the course of the audit, 11 functional areas or specific issues were examined in-depth. The distribution of the audit staff’s functional ratings and the number of recommendations by chapter/functional area are as follows: Functional Ratings Chapter / Functional Area Number of Recommendations Major Improvement Needed (0) None None Significant Improvement Needed (0) None None Moderate Improvement Needed (6) V – Affiliated Interests and Cost Allocations VII – Water Operations IX – Materials Management X – Customer Service XI – Fleet Management XII – Human Resources and Safety Programs 3 5 4 4 2 3 Minor Improvement Needed (3) III – Executive Management and Organizational Structure VI – Financial Management XIII – Diversity 1 3 2 Meets Expected Performance Level (2) IV – Corporate Governance VIII – Emergency Preparedness None Total Number of Recommendations 27 A number of staff’s recommendations, if effectively implemented, could yield significant quantitative and/or qualitative benefits. Examples of these recommendations include:
The audit staff concluded that further improvement was warranted and developed 25 recommendations for improvement. In its August 2012 Implementation Plan, PGW indicated acceptance of 23 recommendations, partial acceptance of one recommendation and rejection of one recommendation. PGW indicated that it had already implemented five follow-up recommendations and planned to complete implementation of most follow-up recommendations by June 2014. The follow-up recommendations 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; 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; Track, quantify, and trend cost recovery efforts related to the gas theft program; Complete the automation of the monthly fleet preventative maintenance schedule in a timely manner which will reduce unneeded work, allow time to be spent on value added tasks; Evaluate internal fleet services and its costs, compared to those provided by outside contractors prior to replacing mechanics that are expected to retire in the near future; Consolidate warehouse facilities to achieve projected annual savings of approximately $5 million from increased productivity and reduced operating and capital costs; and Improve material forecasting techniques and complete the implementation of the forecasting module in order to reduce the time and effort needed to create monthly material forecasts. Presented below is a summary of the estimated benefits or savings that could be quantified with implementation of the MEI recommendations. Annual (recurring) $21,041,000 One-time (non-recurring) none No incremental implementation costs associated with the follow-up recommendations were specifically identified. Pike County Light & Power Company (D-2012-2305866) The report on the Management Efficiency Investigation (MEI) of Pike County Light & Power Company (PCL&P or Company), which was completed by Bureau of Audits’ staff, was publicly released on October 24, 2012. The scope of this investigation was confined to an examination of the progress in implementing the six original