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Vectren
Energy Delivery of Ohio
Liberty conducted the 2002 Gas
Cost Recovery management/performance audit of Vectren Energy
Delivery of Ohio (VEDO) for the Public Utilities Commission of
Ohio. The overall mission of the audit was to investigate VEDO’s
management policies and operational procedures in order to determine
VEDO’s effectiveness in fuel procurement to achieve an adequate and
reliable supply of gas at minimum prices. In addition, the audit
evaluated steps being taken by VEDO to encourage competitive
alternatives to traditional utility services, while at the same time
minimizing any negative impact to its sales customers. The focus
areas included supply planning; organization, staffing and controls;
gas supply management; gas transportation; and operational issues.
Liberty specifically evaluated
whether the Company’s purchasing policies were designed to meet the
Company’s service requirements. A review was conducted of the
Company’s audit period, and planned, supply and capacity portfolios,
with an assessment of whether the portfolios were reasonable in
light of the Company’s audit period and anticipated service
requirements and obligations. Also, the procurement (capacity and
supply) planning process was examined to ensure the appropriate
allocation of services between sales and non-sales customers.
Other specific issues of
interest to the Commission were examined, and were as follows:
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Review of VEDO’s plan to procure a material portion
of its gas supply at pricings established more than one month
prior to delivery. The purpose of the plan was to reduce price
volatility;
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Ensure that VEDO had incorporated in it’s tariffs a
code of conduct for nondiscriminatory application of its tariff
provisions and rules for the transfer of information to its
marketing affiliate;
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Examine the forecasting methodology contained in a
previous PUCO Case and compare it to the forecast utilized in the
development of the Company’s contractual entitlement strategy;
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Examine the reasonableness of the level of
compensation received by VEDO from its Asset Manager for VEDO’s
capacity;
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Review the commodity reservation charges for base
load and swing volumes of natural gas.
The final report for this
project contained a number of recommendations for improvement in
VEDO operations, and the report was used in the Commissions GCR
hearing process.
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