Assisted the Pennsylvania Public Utility Commission in a stratified management and operations audit of Equitable Gas Company (EGC), a subsidiary of EQT Corporation, and EGC’s relationship with its affiliates. The primary focus was the business components of EGC still subject to regulation by the PaPUC. Specifically, we addressed EGC service delivery and production, whose costs are borne ultimately by Pennsylvania ratepayers. The objectives included determination of possible improvements for the management and operations of EGC pursuant to Section 522(b) of the Public Utility Code 66 Pa. C.S. §522(b). This audit consisted of two phases: 1) a diagnostic review that assessed the condition of each functional area or business unit against evaluative criteria or expected business practice; and 2) an in-depth analysis of pre-identified areas or issues.This assignment involved eight consultants over roughly 2,312hours during an 11-month effort, for a total project cost of approximately $528,114.

Assisted the Pennsylvania Public Utility Commission (PaPUC) in a stratified management and operations audit of Philadelphia Gas Works (PGW). Areas reviewed included executive management and human resources, support services, corporate governance, financial management, diversity/EEO, system reliability performance, and customer service. The primary focus was to review those PGW business components subject to regulation by the PaPUC. Specifically, we addressed PGW service delivery and production, whose costs are borne ultimately by Pennsylvania ratepayers. The objectives included determination of possible improvements for the management and operations of PGW pursuant to Section 522(b) of the Public Utility Code 66 Ps. C.S. §522(b). This audit consisted of two phases: 1) a diagnostic review that assessed the condition of each functional area or business unit against evaluative criteria or expected business practice; and 2) an in-depth analysis of pre-identified areas or issues. These analyses provided specific recommendations for changes in combination with projected costs and potential dollar savings or other quantifiable benefits, if any. This 14-month engagement involved nine consultants and approximately 2,340 hours, for total project costs of approximately $526,271.

Assisted the Pennsylvania Public Utility Commission (PaPUC) staff in a stratified management and operations audit of PECO Energy Company. This audit consisted of three phases. The first phase involved a diagnostic review that assessed the condition of each functional area or business unit against evaluative criteria or expected business practice. While this review was primarily limited to determining if appropriate management controls, systems and processes are in place, it was of sufficient scope to identify significant problems, if any, requiring additional focused analysis. The second phase entailed an in-depth analysis of pre-identified areas or issues. These analyses were of sufficient depth to provide specific recommendations for changes in combination with projected costs and potential dollar savings or other quantifiable benefits, if any. The third phase constituted an in-depth, focused analysis of two issues (emergency response and GIS) that were approved by the Bureau of Audits as a result of the diagnostic review. This assignment involved 10 consultants over roughly 4,064 hours of effort during a 13-month period, for a total project cost of approximately $843,112.

Collaborated on a multimillion-dollar asset management solution delivery to Enbridge, a large energy utility in Canada. Partnered with Opvantek (previously VMSI) and Accenture as a subcontractor to deliver two major enhancements to Pipe Maintenance Tracking System (PMTS), a gas asset management system. Designed, developed, and implemented enhancements on time and under budget using Microsoft C#.Net, Crystal Reports, and Oracle. This assignment involved four consultants over a four-month time period totaling approximately 870 hours and $55,000 in costs.

Conducted compliance audits of the competitive services of New Jersey’s gas utilities, specifically South Jersey Gas Company (South Jersey Industries Corporation), New Jersey Natural Gas Company (New Jersey Resources Corporation), and Elizabethtown Gas Company (NUI Corporation), as a part of utility industry restructuring in New Jersey. The purpose was to ensure that the utilities or their related competitive business segments did not have an unfair competitive advantage over other, non-affiliated purveyors of competitive services. The audits were also conducted to evaluate and review the allocation of costs between the utilities’ competitive and non-competitive services. We offered our expert opinion, based on appropriate methodology, as to whether strict separation and allocation of each utility’s revenues, costs, assets, risks, and functions existed between the utility’s electric and/or gas distribution operations and its related competitive business segments.

The audits determined (1) whether cross subsidization existed between utility and non-utility segments within a public utility or holding company; (2) whether the separation of utility and non-utility organizations was reasonable based on the New Jersey Board of Public Utilities (BPU) affiliate relation and fair competition standards; (3) what the effect of the use of utility assets in the provision of non-safety-related competitive services was on ratepayers; (4) what the effect was on utility workers; (5) what the effect of utility practices was on the market for such services; and (6) compliance with New Jersey legislation. The audits provided the BPU with the necessary information to determine whether the competitive services identified were in any way cross-subsidized by the individual utility’s regulated activities. They also helped determine the reasonableness of the lump-sum charges (i.e., service contract rates) and time-and-materials charges encountered in a competitive environment. This assignment involved six consultants over approximately 1,700 hours of effort during a three-month period, for a total project cost of approximately $357,000.

Performed a compliance audit of the costs of PG&E’s gas pipeline expansion project for the California Public Utilities Commission to determine if the appropriate level of incremental A&G and O&M costs were charged to the project before and after commercial operation in November 1993. Also provided the data needed to forecast the incremental operating costs of expanding interstate and intrastate pipeline operations serving California markets. Reviewed PG&E’s integrated pipeline operations that supply natural gas from Canada to California for retail customers, pipeline shippers, and interruptible customers. Our review showed that the intended project costing had been properly implemented, thereby ensuring an equitable distribution of costs between regulated retail customers and unregulated project shippers. Schumaker & Company subcontracted as one of seven consultants spending approximately 1,500 hours over four months.

Reviewed PG&W gas operations, cash flow statements, dividends paid to PG&W’s parent company (Pennsylvania Enterprises, Inc.), allocation of fees (affiliated relationships and transactions with affiliated companies), management information systems; data processing, staffing and compensation levels, and recruiting, hiring, and promotion for the Pennsylvania Public Utility Commission. Schumaker & Company served as a subcontractor on this assignment.

For the Public Utilities Commission of Ohio, investigated the fuel procurement policies and procedures for fossil and nuclear fuels and provided testimony on the findings and conclusions.

For the Philadelphia Gas Commission, performed a follow-up review two years after a management and operations review that involved examining the results of additional studies recommended during the management audit. Also entailed developing a request for proposal for long-term strategic options.

Performed a two-year review of gas supply and purchasing practices. This unique project included formal training of Maryland Public Service Commission (MPSC) staff members in gas supply review methods and the establishment of formal MPSC gas purchasing reporting requirements for the three companies beginning in 1989. Schumaker & Company provided oversight to MPSC staff during an internal review of gas supply plans submitted for 1989/90 by these gas distribution companies. This 27-month assignment involved three consultants and approximately 1,000 hours of effort, for a total project cost of approximately $99,880.

Performed a management and operations review for the Kentucky Public Service Commission that covered all areas of this gas company’s operations: management and organization, gas supply and operations, customer service, financial management, human resources, marketing and external relations, and corporate services. Also reviewed Western Kentucky Gas’ (WKG’s)relationships and transactions with its parent company (Atmos Energy Corporation) and other Atmos affiliate companies in Louisiana and West Texas. (WKG’s service territory was essentially a rural area with many smaller communities in Kentucky.) This project proved particularly successful in that the results of the study were presented by all three participants –specifically, the WKG president, a Kentucky Public Service Commission representative, and Schumaker & Company’s engagement manager –before the Subcommittee on Management Analysis during the NARUC 1990 Summer Meeting. This nine-month project involved 10 consultants and more than 3,000 hours of effort, for a total project of approximately $343,360.

For the Philadelphia Gas Commission, reviewed all operational areas, including organization structure and planning (corporate policy, philosophy, and strategic planning; corporate and operations planning; organizational structure, authority, and responsibility; human resources; capital program planning; gas operations organization and work-management effectiveness), systems supply; finance and accounting, procurement of outside services and non fuel commodities, support functions, and quality of service (corporate mission, customer billing, meter reading, customer dispute process, office operations, energy theft, and customer relations). This nine-month engagement involved 15 consultants and approximately 4,000 hours of effort, for a total project cost of approximately $400,000.

For the Pennsylvania Public Utility Commission, reviewed all areas of this gas distribution company’s operations, including gas supply, gas operations finance and accounting, marketing, data processing, and materials management. Made over 100 recommendations for improvement. A subcontractor on this assignment, Schumaker & Company completed its 13-month engagement with 10 consultants in approximately 4,000 hours.

Assisted the New Jersey Board of Public Utilities by performing an audit of the affiliated transactions between New Jersey American Water, American Water Works Company, Inc. and its Affiliates, including a review of operational and financial performance of New Jersey American Water Company pursuant to N.J.S.A. 48:3-49, 48:3-55, 48:3-56, 48:3-58 & N.J.A.C. 14:4-3.7(e) and (f), and comprehensive management audit of New Jersey American Water Company pursuant to N.J.S.A. 48:2-16.4 & N.J.A.C. 14:3-12.1 ET SEQ (Docket No. WA18080849). This assignment involved seven consultants over roughly 2,608 hours during a 12-month effort, for a total project cost of $633.000.

Provided an independent performance audit of the City of Toledo Department of Public Utilities (DPU)for the specific purpose of assessing current operations and proposing improvements in planning and processes to assure that future capital expenditures are made on a timely basis, scheduled maintenance and repairs are done when necessary, appropriate staffing levels are maintained, and best management practices of the industry are incorporated in the DPU’s long term plans.This assignment involved four consultants over roughly 692hours during a 6-month effort, for a total project cost of approximately $149,787. 

Provided a management support study for the Philadelphia Water Department (PWD)customer service and field operations activities to optimize operations, including evaluation of its resource utilization, so as to ensure that it is cost effective, to improve customer service, and to meet its core services and regulatory requirements in a responsible way. Subsequently provided assistance to PWD management and staff for implementing recommendations.The study portion of this assignment involved six consultants over roughly 1,576hours during a 1-year effort, for a total project cost of approximately $355,200.The implementation assistance portion of this assignment involved six consultants over roughly 2-3 years.

Provided a management and operations audit of Twin Lakes utility organization and its affiliate, Water Service Corporation (WSC), on behalf of the Indiana Utility Regulatory Commission (IURC), including operations, customer service/support units, and financial management. The study was organized into three task areas. The first task area was a detailed analysis of the financial management of Twin Lakes Utilities. The second task area was examinations of the water and wastewater utility operations, workforce, and service levels. The third task area comprised key Utilities, Inc. units that support Twin Lakes Utilities, including customer service operations, and included an examination of their operations, workforce, and contribution to the mission of the utilities. This assignment involved three consultants over roughly 216hours during a 4-month effort, for a total project cost of approximately $42,000.

Schumaker & Company and its subcontractor Work & Greer, PC (Work & Greer), a certified public accounting firm, conducted an affiliate audit of Tennessee-American Water Company (TAWC) at the request of the Tennessee Regulatory Authority (TRA).The audit included an investigation and assessment of the American Water Works Service Company management performance and decisions relating to internal processes and internal controls involving affiliate relationships and transactions, and the resulting recommendations of any management process changes needed for those controls and implementation. Further, the audit evaluated the charges allocated to TAWC, including the efficiency of processes and/or functions performed on behalf of TAWC, as well as the accuracy and reasonableness of the allocation factors utilized.This assignment involved ten consultants in roughly 304 hours during a 6-month effort for total project costs of approximately $184,964.

Assisted the Pennsylvania Public Utility Commission (PaPUC) staff in a stratified management and operations audit of Pennsylvania-American Water Company (PAWC). Specifically, it was intended that the management audit encourage economies, efficiencies or improvements which benefit the utility and its ratepayers and identify which, if any, cost saving measures can be instituted. The ultimate purpose was to explore economically practical opportunities for giving ratepayers lower rates and/or better service. This audit consisted of three phases. The first phase was a diagnostic review assessing the condition of each functional area or business unit against evaluative criteria or expected business practice. While this review was primarily limited to determining if appropriate management controls, systems and processes were in place, it was of sufficient scope to identify significant problems, if any, requiring additional focused analysis. The second phase was an in-depth analysis of pre-identified areas or issues. These analyses were of sufficient depth to provide specific recommendations for changes together with projected costs and potential dollar savings or other quantifiable benefits, if any. The third phase was an in-depth, focused analysis of two issues approved by the Bureau of Audits resulting from the first phase, specifically items in the human resources and water operations areas. This assignment involved eight consultants in roughly 3,093 hours during a 12-month effort for total project costs of approximately $651,694.

Assisted the South Carolina Office of Regulatory Staff (SOR) staff to conduct a management audit of Water Services Corporation (WSC) with regard to five subsidiary water and wastewater companies operating in South Carolina with a focus on the following three areas: 1) basic corporate decision-making; 2) major operational activities; and 3) staff functions. The final report consisted of audit findings and management recommendations. A cost/benefit analysis accompanied each recommendation. The bottom line of this project focused on WSC was to determine whether the rates charged to the South Carolina ratepayers could be reduced through the implementation of greater efficiencies in organizations, operations, or both. Additionally, another relevant analysis was the determination of whether the ratepayers of South Carolina were being properly and economically served by the range of corporate services provided to the WSC operations in South Carolina by the managers located in both West Columbia and Northbrook. Significant consideration was given to the investigation and quantification of potential benefits that would result from the consolidation or merger of the affiliated companies of WSC. This assignment involved five consultants in roughly 520 hours during a 10-month effort for a total project cost of approximately $75,000.

For the New Jersey Board of Public Utilities, analyzed financial management, information technology and other support services, customer service, and human resources in a comprehensive management and operations review. Schumaker & Company was a subcontractor on this assignment, in which six consultants spent 1,500 hours during a five-month period, with fees and expenses totaling $65,500.

For the Arkansas Public Service Commission, performed a management and operations review, including a review of affiliated relationships and transactions. At the request of the Arkansas Public Service Commission, our final report was submitted as testimony in a general rate hearing of General Waterworks Corporation of Pine Bluffs. This five-month assignment involved four consultants and approximately 500 hours.

Reviewed PG&W gas operations; cash flow statements; dividends paid to PG&W’s parent company (Pennsylvania Enterprises, Inc.); allocation of fees (affiliated relationships and transactions with affiliated companies); management information systems; data processing; staffing and compensation levels; and recruiting, hiring, and promotion for the Pennsylvania Public Utilities Commission. Schumaker & Company was a subcontractor on this assignment.

For the Kentucky Public Service Commission, performed a comprehensive management and operations review involving executive management, corporate planning, operations planning, engineering and construction, transmission and distribution, treatment and pumping, financial systems, customer service and marketing, human resource management, support functions, and comparative analysis. This project also included a review of Kentucky-American’s relationships and transactions with its parent company (American Water Works Company) and other affiliate companies (primarily American Water Works Service Company). This eight-month engagement involved over 10 consultants and 2,000 hours of effort for a total project cost of approximately $223,307.

For the Pennsylvania Public Utility Commission, performed a comprehensive management review involving all company functions. Specific emphasis was placed on staffing and compensation levels, management information systems, allocation of fees from affiliated companies, customer service, engineering and construction, operations and maintenance, water purchase agreements, and capacity planning. This project also included PSW’s relationships and transactions with its parent company and other affiliate companies. This 13-month engagement involved 10 consultants and over 3,000 hours for a total project cost of approximately $289,400.