Tuesday, August 24, 2010
By Joe Smydo, Pittsburgh Post-Gazette

The Pittsburgh Water and Sewer Authority’s controversial line-insurance program is a “pretty good deal,” City Controller Michael Lamb said this morning, but the program is so lucrative that he recommended the agency consider bringing it in-house.

Mr. Lamb this morning released an audit of PWSA that looked at the line insurance program, other financial matters and a customer-service program he said is seriously wanting.

Under an agreement worked out last year and approved by the PWSA board, Utility Line Security LLC of Wilkinsburg provides water and sewer line warranties to about 100,000 customers.

The monthly charge is $5 per customer, and customers must opt out if they don’t want the protection. Some customers resented the idea.

PWSA executive director Michael Kenney has personal and professional ties to ULS president Christopher Kerr. In addition, Mr. Kenney’s daughter briefly worked for ULS after it won the contract, though he has said she had no involvement in administering the project.

Mr. Lamb said he was “not happy” that Mr. Kenney didn’t do a better job of disclosing his ties to ULS as the program debuted. He said the program offers needed service at a reasonable price but believes the authority could benefit financially by offering the insurance itself.

The contract “is of significant benefit to the provider. With 110,000 customers billed at $5 per month, PWSA is guaranteeing ULS an income of $550,000 a month or $6.6 million a year unless customers opt out. Even at 75 percent participation, the number of customers participating is 82,500, yielding a monthly income of $412,500 or $4,950,000 a year,” the audit said.
In all, Mr. Lamb said, the number and scope of audit findings revealed nothing out of the ordinary at PWSA.

He said PWSA does need to improve customer-service operations, which were tested by auditors who approached the agency with customer complaints. The audit noted rude treatment by a receptionist and an e-mail that had received no response three months after it was sent.

The auditors made “some good recommendations,” and the agency is “certainly going to look at all of them,” authority spokeswoman Melissa Rubin said.
However, she said the agency may not be ready to assume the liability that would accompany a takeover of the ULS program of insuring homeowner lines. She noted the insurance would make PWSA responsible for “what is now private plumbing.”

Ms. Rubin said the agency already has added a person to the phone bank and taken other steps to improve customer service.
She noted the authority leases office space in the Strip District. Ms. Rubin said the receptionist Mr. Lamb referred to in the audit was not an authority employee but a security guard hired by the building’s owner, and that person has been replaced.