METROPOLITAN EDISON COMPANY - Pennsylvania Public Utility ...

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FIRSTENERGY PENNSYLVANIA COMPANIESMANAGEMENT EFFICIENCY INVESTIGATIONSUMMARY OF JANUARY 2007 MANAGEMENT AUDIT RECOMMENDATIONS ANDSTAFF’S FOLLOW-UP FINDINGS, CONCLUSIONS, AND RECOMMENDATIONSPublic Utility CommissionBureau of Audit’sPrior RecommendationsOriginallyTargetedCompletionDateMEIFindingNumberStaff’s Follow-upFindingsand ConclusionsAs of January 31, 2011Staff’sFollow-upRecommendationIII. AFFILIATE INTERESTS- 6 -Submit affiliate transactioncontracts for Commissionapproval for all FE-PACompanies’ transactions withaffiliates in accordance withSection 2102.September 2007 III-1 The Amended & Restated MutualAssistance Agreement submittedto the Commission in January2009 does not cover all affiliateswith whom Met-Ed, Penelec andPenn Power conduct business.Revise the Amended & RestatedMutual Assistance Agreement toinclude all affiliates with whom theFE-PA Companies transactbusiness and submit it to theCommission for review andapproval.Provide to the Commission Staffa detailed, written justification fordividend payouts above 85percent against other potentialuses for cash within the utilities.None.RecommendationRejected.III-2In certain years, Met-Ed,Penelec, and Penn Power havemade dividend payouts thatexceeded 85% of their netincome, but have never providedthe Commission with a detailed,written justification why suchpayouts were appropriate.Submit a detailed, writtenexplanation for each dividendpayout that has exceeded 85% ofnet income to the Commissionwithin 60 days after public releaseof this audit report, and ensure thatadvance notice and explanationsare submitted to the Commissionwhen such dividend payouts occurin the future.IV. CORPORATE GOVERNANCEHave the Director of Internal Auditreport administratively to a seniorofficer of FirstEnergy other thanthe Chief Financial Officer (CFO).None.RecommendationRejected.IV-1FirstEnergy has not modified thereporting structure for theInternal Audit Department.Modify the Internal AuditDepartment reporting structure sothat it no longer administrativelyreports to the FirstEnergy CFO.Exhibit II-1Page 1 of 12
FIRSTENERGY PENNSYLVANIA COMPANIESMANAGEMENT EFFICIENCY INVESTIGATIONSUMMARY OF JANUARY 2007 MANAGEMENT AUDIT RECOMMENDATIONS ANDSTAFF’S FOLLOW-UP FINDINGS, CONCLUSIONS, AND RECOMMENDATIONSPublic Utility CommissionBureau of Audit’sPrior RecommendationsOriginallyTargetedCompletionDateMEIFindingNumberStaff’s Follow-upFindingsand ConclusionsAs of January 31, 2011Staff’sFollow-upRecommendationV. FINANCIAL MANAGEMENT- 7 -Finalize the analysis of theFederal Energy RegulatoryCommission (FERC) accountmapping verification processes forAdministrative and General (A&G)to provide assurance that theFirstEnergy (FE) account mappingprocesses are appropriate andrelated systems of internalcontrols are effective. Notify thePAPUC Audit Staff when theseefforts are complete.December 2008 V-1 FirstEnergy has completed itsanalysis of the FERC accountmapping verification processesfor Administrative & General(A&G) accounts, reduced thethreshold for reviewing variancesin these accounts to $500,000,and conducted an internal auditof FERC Form No. 1 reportmapping.None.Provide a copy of the InternalAuditing Department (IAD) ThirdQuarter Assessment of InternalControls Over Financial Reporting,as well as thePricewaterhouseCoopers, LLP(PwC) management letter for the2006 financial audit, to PAPUCAudit Staff when available.June 2007 V-2 FirstEnergy has correcteddeficiencies identified in itsassessment of internal controlsover financial reporting.None.Exhibit II-1Page 2 of 12
Page 5: METROPOLITAN EDISON COMPANYPENNSYLV
Page 8 and 9: • Support Services• Human Resou
Page 10 and 11: • Developed and implemented forma
Page 14 and 15: FIRSTENERGY PENNSYLVANIA COMPANIESM
Page 24 and 25: III. AFFILIATE INTERESTSBackground
Page 26 and 27: In addition, subsidiary or related
Page 28 and 29: BWG recommended that a detailed, wr
Page 30 and 31: management. Other potential uses of
Page 32 and 33: IV. CORPORATE GOVERNANCEBackground
Page 34 and 35: V. FINANCIAL MANAGEMENTBackground -
Page 36 and 37: the internal audit was to determine
Page 38 and 39: Committee citing the internal contr
Page 40 and 41: VI. ELECTRIC RELIABILITYBackground
Page 42: Exhibit VI-1Metropolitan Edison Com
Page 45 and 46: provide additional details to the C
Page 47 and 48: Exhibit VI-6FirstEnergy Pennsylvani
Page 49 and 50: All three FE-PA Companies have had
Page 51 and 52: FirstEnergy is following the right
Page 53 and 54: Company, and The Toledo Edison Comp
Page 55 and 56: technicians. These strategies are u
Page 57 and 58: VIII. EMERGENCY PREPAREDNESSBackgro
Page 59 and 60: Routine periodic updating of the em
Page 61 and 62: Follow-up Finding and Conclusion No
Page 63 and 64:
old excess inventory. Spare invento
Page 65 and 66:
controls were automated. Moreover,
Page 67 and 68:
Exhibit IX-6FE-PA CompaniesPercenta
Page 69 and 70:
FE-PA Companies were unable to iden
Page 71 and 72:
Staff’s Follow-up Recommendation
Page 73 and 74:
Exhibit X-6Metropolitan Edison Comp
Page 75 and 76:
Prior Recommendation - Develop a co
Page 77 and 78:
Therefore, BWG suggested that First
Page 79 and 80:
XI. CUSTOMER SERVICEBackground - Th
Page 81 and 82:
Exhibit XI-2FE-PA CompaniesPercenta
Page 83 and 84:
Exhibit XI-5FE-PA Companies Compare
Page 85 and 86:
Exhibit XI-7FE-PA Companies Compare
Page 87 and 88:
Follow-up Finding and Conclusion No
Page 89 and 90:
uilding, in an effort to protect re
Page 91 and 92:
Companies would submit a supplement
Page 93 and 94:
3. The "four-fifths" rule (underuti
Page 95 and 96:
Met-Ed has female underutilization
Page 97 and 98:
Exhibit XII-4Page 1 of 2FirstEnergy
Page 99 and 100:
The number of years that FirstEnerg
Page 101 and 102:
FE-PA Companies do track purchases
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