METROPOLITAN EDISON COMPANY - Pennsylvania Public Utility ...

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• Support Services• Human Resources• Customer Service• Diversity and EEOAdditionally, it was deemed prudent to review the FE-PA Companies’ compliancewith PUC regulations at 52 Pa. Code Chapter 101 regarding physical security, cybersecurity, emergency response, and business continuity plans.C. ApproachThis MEI was performed by the Management Audit Staff of the Commission’sBureau of Audits (Audit Staff). Actual fieldwork began on June 8, 2010, and continuedintermittently through January 2011. The fact gathering process included:• Interviews with FirstEnergy personnel.• Analysis of selected FirstEnergy records, documents, reports, andother information for the period 2006 through 2010.• Visits to select facilities at each of the FE-PA Companies andFirstEnergy in Akron, OH.- 2 -
II. SUMMARY OF MANAGEMENT EFFECTIVENESSAND OPERATING EFFICIENCYThe Audit Staff found that Metropolitan Edison Company (Met-Ed), PennsylvaniaElectric Company (Penelec), and Pennsylvania Power Company (Penn Power)(collectively referred to as the FirstEnergy Pennsylvania Companies or FE-PACompanies) have effectively or substantially implemented 10 of the 26 priorManagement Audit recommendations reviewed. It is noteworthy that all three FE-PACompanies are owned by FirstEnergy Corp. (FirstEnergy), and that they all receive asubstantial amount of support services from FirstEnergy Service Company.The improvements achieved by the management of the FE-PA Companies,FirstEnergy and/or FirstEnergy Service Company include:• Developed a Federal Energy Regulatory Commission (FERC) and RegionalTransmission Organization (RTO) policy department for dealing withtransmission related issues. Moreover, FirstEnergy has been an activeparticipant in PJM’s Planning Committee (PC) and the Regional TransmissionExpansion Planning (RTEP) process.• Improved inventory turnover rates and reduced total inventory levels. Totalinventory levels were reduced by approximately $7.4 million (i.e., $1,839,000at Met-Ed, $5,409,000 at Penelec and $130,000 at Penn Power) resulting inestimated total annual carrying cost savings of $738,000 (i.e., $184,000 forMet-Ed, $541,000 for Penelec and $13,000 for Penn Power).• Developed and implemented reliability improvement plans which have helpedeach of the FE-PA Companies improve their System Average InterruptionFrequency Index (SAIFI) and System Average Interruption Duration Index(SAIDI) performance.• Developed a Work Management Initiative Group to plan, schedule andmanage workload across FirstEnergy’s system and determine current andfuture staffing levels.• Completed its analysis of the FERC account mapping 1 verification processesfor Administrative & General (A&G) accounts, reduced the threshold forreviewing variances in these accounts to $500,000, and conducted an internalaudit of FERC Form 1 report mapping.• Corrected deficiencies identified in its assessment of internal controls overfinancial reporting.• Rerouted meter reader routes that resulted in reduced annual meter readingcosts at Met-Ed and Penn Power by approximately $233,000 and $202,000,respectively.• Significantly reduced the percentage of residential and small business billsnot rendered each billing cycle.1 Process used to transfer data from accounts used for FirstEnergy’s financial and management reportingsystem into the FERC Uniform System of Accounts.- 3 -
Page 5: METROPOLITAN EDISON COMPANYPENNSYLV
Page 10 and 11: • Developed and implemented forma
Page 12 and 13: 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
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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
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Therefore, BWG suggested that First
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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
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uilding, in an effort to protect re
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Companies would submit a supplement
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3. The "four-fifths" rule (underuti
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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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