METROPOLITAN EDISON COMPANY - Pennsylvania Public Utility ...

uilding, in an effort to protect revenue and minimize fraudulent activities andfollow-up work and costs associated with meter tampering.However, the Audit Staff was informed that the personnel involved withimplementing the revenue protection strategy are no longer employed by FirstEnergy.FirstEnergy has attempted pilot programs in regards to the revenue protection strategy,but we were told that little benefit was gained from these pilot programs. As a result,the revenue protection process operates more on a day-to-day decentralized basis.Nevertheless, FirstEnergy believes that its current decentralized Revenue Protectionfunction is consistent across FirstEnergy. Existing field resources are responsible forfinding, reporting and correcting circumstances of theft. FirstEnergy has indicated thatthe decentralization of the Revenue Protection function to a more cost effectiveapproach during these difficult economic times has not reduced the continued majoremphasis on revenue protection.Other utilities have used Advanced Metering Infrastructure (AMI) technology to enhancetheir revenue protection services function. AMI meters provide a utility with automatedindicators when theft of service is occurring. Follow-up Finding and Conclusion No. XI-5discusses the fact that the FE-PA Companies have not begun any large scaleimplementation of AMI technology which, in part, limits the FE-PA Companies revenueprotection options from those used at other Pennsylvania EDCs.Staff’s Follow-up Recommendation – Complete the implementation of thepreviously approved revenue protection strategy or devise a new strategy andplan accordingly.Prior Recommendation – Take steps to further reduce meter reading costs anddevelop a plan and schedule for the implementation of AMI if determined to be costjustified.Prior Situation – The FE-PA Companies meter reading costs were above averagecompared to the panel of multi-state EDCs used for statistical comparison despitesignificant decreases in meter reading costs since 2000 for Met-Ed and Penelec. Costsper meter read in 2005 were $0.74, $0.82, and $0.75 for Met-Ed, Penelec and PennPower, respectively; all significantly above the electric industry average of $0.52 permeter based on an electric industry benchmarking study. BWG indicated that furtherimprovements in productivity, accuracy and efficiency could be achieved through theuse of advanced meter reading technology. FirstEnergy had postponed implementationof advanced metering infrastructure due to the required significant capital outlay;despite the fact that a 2005 FirstEnergy study indicated that, at that time, an investmentin AMI would be economically justified.Follow-up Finding and Conclusion No. XI-5 –From 2005 to 2009, the cost permeter read for residential customers decreased for Met-Ed and Penn Power butincreased for Penelec; moreover the FE-PA Companies have not begun largescale implementation of AMI.- 83 -