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WILKES-BARRE — The Pennsylvania Public Utility Commission (PUC) on Thursday released the results of a detailed Management and Operations Audit of the Pennsylvania American Water Company (PAWC), which includes 31 recommendations for improving operations at PAWC.
This follows the PUC’s action earlier this week to suspend rate increase requests for water and wastewater services proposed by PAWC to allow for a detailed investigation and analysis.
The Commission voted 5-0 to suspend the proposed rate increases, which would increase the company’s total annual operating revenues for water services by approximately $199.2 million (24.2%) and increase total annual operating revenues for wastewater services by approximately $4.7 million (2.5%).
The management audit review examined key functional areas at PAWC, which serves approximately 679,000 water and 97,000 wastewater customers in 37 counties and is the largest regulated water and wastewater service provider in Pennsylvania.
The Commission voted 5-0 at the PUC’s Dec. 21, public meeting to release the PAWC Audit Report, along with the Implementation Plan that was submitted by PAWC to address recommendations in the report.
Audit report and recommendations
The PUC audit report includes recommendations that identify operational and service improvements for PAWC customers, including several significant items:
• Reducing unaccounted-for-water (UFW) below the PUC’s 20% threshold and reporting UFW correctly.
• Reducing line hits to the company’s underground facilities, including damage by PAWC employees and contractors.
• Improving physical security for control rooms and SCADA (Supervisory Control and Data Acquisition) control systems.
• Improving customer service performance to pre-pandemic levels, at a minimum.
• Continuing outreach efforts to payment troubled customers and leveraging low-income resources to help reduce the level of outstanding customer balances.
In addition to recommendations for enhancing operational issues and customer service, the PUC audit report identified $4 million in one-time savings and approximately $3.1 million in annual savings, which if effectively implemented will yield an overall cost savings for ratepayers.
PAWC’s implementation plan accepts 23 of the recommendations detailed in the PUC audit report and partially agrees with the remaining eight recommendations — indicating that most of the recommendations will be completely implemented by the end of 2024.
The PUC’s audit staff will examine PAWC’s implementation efforts related to the more significant recommendations during the next PUC Management Efficiency Investigation, which is expected to begin early 2026.
Water rate hike ruling
The Commission suspends the rate change request for up to seven months and the case will now be assigned to the PUC’s Office of Administrative Law Judge for an investigation, the scheduling of hearings and the issuance of a recommended decision.
A final decision by the PUC on the rate increase request is due by Aug. 7, 2024.
• Under the proposals filed with the PUC by PAWC, the average monthly bills for a residential water customer in Rate Zone 1, based on 3,201 gallons of metered usage per month, would increase from $70.65 to $88.24 (24.9%). Changes to average monthly water bills in other PAWC rate zones vary from a a 20.1% increase ($8.93 per month) to a 63% increase (approximately $34 per month).
• For PAWC wastewater customers, the average monthly bill for a residential customer in Rate Zone 1, based on 3,122 gallons of metered usage per month, would fall from $105.18 to $100.08 (-4.8%). Changes to the average monthly wastewater bills in other PAWC rate zones vary from a 121.3% increase (nearly $35 per month) to a 4.8% decrease (nearly $5 per month).
PAWC issues response
Susan Turcmanovich, spokesperson for Pennsylvania American Water Co., issued a statement on behalf of the company:
“Pennsylvania American Water appreciates the PA Public Utility Commission for conducting its periodic, comprehensive management and operations audit in accordance with PA public utility code. This audit was demonstrably successful, with fewer findings than the Commission’s last audit in 2014-2016.
“We accepted the Commission’s 31 recommendations in full or in part, and we are confident that our implementation plan demonstrates our commitment to take appropriate actions resulting from this important effort. As we have indicated to the Commission, most of the recommendations will be implemented by the end of 2024.
“The suspension is a typical action in every large utility rate filing. This is why we indicated in our customer notices that any new rates established in this case would likely not go into effect until August 2024.
“This allows time for the Commission and other parties to thoroughly review the request and provide opportunities for public input.”
Reach Bill O’Boyle at 570-991-6118 or on Twitter @TLBillOBoyle.