NY Audit Of O&R, Con Ed Faults Leak-Prone Pipe Replacement, Planning

The New York State Public Service Commission published an independent, third-party management and operations audit of Consolidated Edison Company of New York, Inc. and subsidiary Orange and Rockland Utilities, Inc.

The auditor recommended the two utilities do a better job of aligning short- and long-term planning and said risk should be the primary factor for replacing leak-prone gas pipelines.

The audit focused on the utilities’ construction program planning and operational efficiency, information systems planning and implementation, improvements to electric load forecasting processes to support clean-energy goals, contractor oversight, and coordination with municipalities.

"The scope of this audit focused on areas which should provide the highest value," said Commission Chair Rory M. Christian.

"This audit is an opportunity for us to continue improving how we serve our customers, protect the safety of our workers and the public, and lead the clean energy transition," Con Ed spokesman Allan Drury told Patch. "The audit will provide guidance to our continuous efforts to improve the efficiency of our operations and customer experience. Our talented women and men are dedicated to ensuring that our investments provide maximum safety, reliability, and environmental benefits."

Findings include:

• Con Edison’s long-range plans describe a significant business transformation to become a clean energy company adopting New York State’s CLCPA goals. Still, the auditor found that long-term planning is not well aligned with short-term planning.
• The auditor discovered that Con Edison and O&R prioritize leak-prone pipe replacement by several variables, including geographical area, emergent work, and risk. The auditor recommends that risk be the primary factor.
• Con Edison and O&R have implemented software to improve estimating accuracy, but NorthStar found they need to actively track the accuracy of project costs and schedules.
• The auditor found that Con Edison’s management variable pay incentive program and O&R’s annual team incentive plan use quantifiable goals to promote the corporate mission, safety and reliability, environmental goals, and Commission objectives; however, the programs could be better constructed to promote continuous improvement.

The PSC last completed a comprehensive management audit of Con Edison and O&R in 2016. The companies also participated in two statewide operations audits along with other large investor-owned utilities in New York. The companies have completed the implementation of all recommendations from those three audits, PSC officials said.

The management audit approach in New York includes, but is not limited to, a prospective investigation of the construction program planning process and an evaluation of operational efficiency with a focus on opportunities to improve performance. The auditor analyzed current and historical information to identify opportunities to improve existing processes, practices, systems, and organizational structures.

The audit focused on the electric and gas utility services in New York State.

Con Edison’s electric service territory includes all of New York City, with the exception of a section of Queens, and most of Westchester County. Electric service is provided to approximately 3.5 million customers in a 660 square mile service area.

The company’s gas service territory consists of Manhattan, Bronx, parts of Queens, and most of Westchester County; and supplies approximately 1.1 million customers in those areas.

O&R’s electric service territory is located in southeastern New York. O&R’s gas service is concentrated in southeastern New York and supplies approximately 100,000 customers.

In September 2021, the Commission selected NorthStar Consulting Group to perform the audit.

Consistent with Public Service Law, the two utilities will file an implementation plan within 30 days of the issuance of the audit report. Once filed with the Secretary, staff will review the implementation plan to ensure it addresses the underlying findings in the audit report.

The plan will be submitted for public comment and, including any revisions resulting from staff's review and further refinement by the utilities, will be presented to the commission at a future date for approval or modification.

Today’s decision may be obtained by going to the Commission Documents section of the Commission’s Web site at www.dps.ny.gov and entering Case Number 21-M-0193 in the input box labeled "Search for Case/Matter Number".

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