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PSE&G Affiliate Audit

The overall objective of the audit is to assist the Board in assessing the extent to which the competitive services offerings of PSE&G and its affiliates are in compliance with the Electric Discount and Energy Competition Act (the Act) and the Board’s Affiliate Relations, Fair Competition and Accounting Standards (the Standards).  To accomplish this objective, the audit (1) examined the practices, programs and methodologies employed by PSE&G to comply with the Standards and (2) examined PSE&G’s cost allocation and accounting procedures to determine if any competitive services offerings are being subsidized by the ratepayers.

The basis for the audit project work plan was the Request For Proposal (RFP) prepared by the BPU.  This RFP provided direction as to the scope of the project and the specifics of this audit.  Our team developed much of its work plan based on the attachments to the RFP, the information provided by PSE&G at the pre-bid conference, and other public information. Specific areas that were addressed include:

Cross subsidization between utility and non-utility segments.

Separation of utility and non-utility organizations.

Effects on ratepayers of the use of utility assets in the provision of non-safety related competitive services.

Effects on utility workers.

The effect of utility practices on the market for such services.

Overall compliance with the Act and the Standards.

Reasonableness of lump sum charges or service contract rates.

Time and material charges encountered in the competitive environment.

Determination as to whether other services offered by the utility are competitive.

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