METROPOLITAN EDISON COMPANY - Pennsylvania Public Utility ...

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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 <strong>Pennsylvania</strong> 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 <strong>Pennsylvania</strong>EDCs 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 -
Follow-up Finding and Conclusion No. XI-4 – FirstEnergy has not fully developedor implemented its revenue protection strategy and the systems and processesnecessary to improve the Revenue Protection Services.In 2006, subsequent to the BWG’s field work, FirstEnergy conducted anassessment of revenue protection. The recommendations from the assessment wereincorporated into a business case, which was approved by FirstEnergy in October 2006.The adopted recommendations were as follows:1. Develop a central focus and consistency across operating companies.2. Add two new corporate coordinators to help screen and manage the workloadof all states and all companies.3. Enhance the systems and tools for prioritizing, tracking and reportingRevenue Protection Services (RPS) cases.4. Evaluate meter tampering technology and vendors to identify Commercial andIndustrial losses and issues for all states and all companies.The actions taken by FirstEnergy to address each of the four majorrecommendations from the approved business case can be summarized as follows:Develop a central focus and consistency across operating companies.Implementation began with a pilot program in the fourth quarter of 2006with an analyst leading the evaluation of the existing process and thebaseline state of Revenue Protection Services. Efforts were initiated toidentify and define roles, responsibilities, develop a structure for acentralized RPS function, and develop standardized processes andprocedures.Add 2 new corporate coordinators to help screen and manage theworkload of all states and all companies. In contrast to the first update tothe implementation plan (dated February 29, 2008), which noted that twoanalysts were hired and had begun work on processes relative toRevenue Protection Services, only one of the two coordinators (ananalyst) was hired. The analyst was to develop a database, pilot thescreening process, and coordinate the workload assigned to thecontractor for whose services FirstEnergy contracted to help in theimplementation of the fourth recommendation (see below). However,according to the Director, Revenue Operations, FirstEnergy has not addedcorporate coordinators to its workforce. The Company believed thatstandardizing and streamlining operations has added value to theorganization whereas the addition of the corporate coordinators would nothave added value.- 81 -
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METROPOLITAN EDISON COMPANYPENNSYLV
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• Support Services• Human Resou
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• Developed and implemented forma
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FIRSTENERGY PENNSYLVANIA COMPANIESM
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III. AFFILIATE INTERESTSBackground
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In addition, subsidiary or related
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BWG recommended that a detailed, wr
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management. Other potential uses of
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IV. CORPORATE GOVERNANCEBackground
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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: Exhibit XI-7FE-PA Companies Compare
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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