No Futilities For Utilities

CFEs' Roles In Energy Company Anti-Fraud Efforts


By Michael Ferguson, CFE, CPA

2009-JulyAug-No Futilities for Utilities pollution 
Some public utility companies still have a skewed set of incentives ... As CFEs, we can help deter fraud and mitigate some of the inefficiencies with many of the same methods we've used to solve dilemmas for other industries in the past.

 

On April 6, 2001, San Francisco-based power supplier Pacific Gas and Electric (PG&E) filed for Chapter 11 bankruptcy in federal court. According to that day's CNN story, "PG&E Seeks Bankruptcy," it was the culmination of an extremely bizarre year in which the once-proud energy company became insolvent as a result of being charged higher prices for electricity than it was legally allowed to pass on to its customers. Baffled experts and other energy companies scrambled to determine the failure's cause. Certainly nothing in PG&E's history would have suggested that something like this was even remotely possible, and no company wanted to be the next to falter.

During the aftermath from this crisis, investigators would find that fraudulent practices in some of PG&E's suppliers were major catalysts for its collapse. Though the bad actors are no longer in the picture, many of the conditions that caused the bankruptcy are still prevalent. CFEs have the specialized skills municipality clients should seek to ensure public energy companies are doing their part to deter fraud and provide optimal service for customers at reasonable prices.


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