METROPOLITAN EDISON COMPANY - Pennsylvania Public Utility ...

automatic meter reading technology than the FE-PA Companies. For whateverreasons, the FE-PA Companies have not improved their meter reading frequencysufficiently to be on a level comparable with the other Pennsylvania EDCs. Moreover,the FE-PA Companies are not in compliance with 52 Pa. Code § 56.12 (4) because anactual meter reading for all customer accounts has not been obtained at least onceevery 12 months in order to verify the accuracy of the estimated or ratepayer suppliedreading.Staff’s Follow-up Recommendation – Reduce the number of meters not read in 6and 12 months to achieve levels comparable to that of the other PennsylvaniaEDCs and strive for compliance with Commission regulations.Prior Recommendation – Develop a consistent revenue protection strategy.Prior Situation – Revenue Protection Services was the process used by FirstEnergyfor the detection and prevention of theft of service and included the investigation ofcases of suspected theft of service, theft by deception (fraud) and any other form ofunauthorized use of electric service resulting in revenue loss or a potential unsafecondition.A FirstEnergy internal audit report, dated January 4, 2006, described the revenueprotection process as inefficient, fragmented, and lacking in overall managementownership and strategic direction. There was a lack of formal policies and proceduresand FirstEnergy inconsistently implemented the process across the Company. Theinternal audit report also indicated that improvements could be made in theadministering of rewards which were paid to employees for their detection of a potentialunauthorized use situation, and it was difficult for the company to determine how muchFirst Energy spent to pursue unauthorized use through the existing Revenue Protectionprocess.Subsequently, in FirstEnergy’s Revenue Cycle Process Improvement Initiative -Phase III, the Company’s revenue cycle process improvement team recommendedimplementation of a consistent revenue protection strategy across FirstEnergy. Arelated recommendation of the team was to pursue a revenue protection strategy withsufficient management ownership and to implement formal policies and proceduresconsistently across FirstEnergy. The team also recommended that FirstEnergy addresscontrol weaknesses in the administration of the reward system; develop a method toidentify and track costs incurred in the Revenue Protection process; establishunauthorized use fees that recover 100% of reward and investigation fees; and considersupplementing the internal Revenue Protection sub-process with an outside agency thatspecializes in this subject area.BWG suggested that the FE-PA Companies report the findings,recommendations and implementation plan of the Revenue Protection processimprovement team to the Commission Staff when approved by senior management.- 80 -