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Using IT pricing and sourcing knowledge to ensure consumers are charged fairly for utility costs
Canada is known for its cold winters. Ensuring that consumers have equitable access to fairly priced utilities is a key goal for regulators and local and city governments. We supported the City of Calgary in reviewing pricing in an IT outsourcing contract for a natural gas and electric utility. During the four-year process, we brought cross-industry expertise to bear, resulting in rate reductions that will benefit residents and businesses operating in Alberta.
provided benchmarking expertise and best practices to evaluate value pricing of IT services
developed a business case with global services insights and analytics
reduced rates for the 10-year regulatory contract benefiting customers
Utilities are tightly regulated organizations whose services and rates are closely monitored by regulators, consumers and key stakeholders to ensure that they’re delivered as stated and accurately computed. Alberta is one of two deregulated regions in Canada, which enables consumers to buy energy from either regulated or competitive energy providers. However, the charges for transmission and distribution of energy by utilities remains regulated.
PA’s utility expertise, sourcing insights and benchmarking knowledge were invaluable to the City of Calgary’s review of ATCO’s rate case submission.
The City of Calgary reviews applications by regulated natural gas utilities seeking general rate increases. When a natural gas utility files for a rate increase, city officials needed to perform an in-depth analysis of the application. A recent application included the methodology and benchmarks used for pricing IT services which were being provided by an external vendor. The City wanted to determine if consumers were being charged fairly for the IT services.
PA supplied analysis of benchmarking, outsourced IT contract pricing and proceeding testimony to assist the regulator in determining just and reasonable rates for consumers.
Our diverse team saw an opportunity to provide regulatory and benchmarking expertise to this complex project by sourcing best practices, providing analytics and rate case testimony. Because our experts work across industries, we have insights into global supply chain services, service levels, negotiation techniques and costs that can be leveraged to obtain competitive pricing for clients in local markets.
Together with other key City support team members, we developed an independent business case that considered these insights and provided information on how IT innovations and productivity gains, such as cloud services, analytics, increased automation and artificial intelligence, should impact IT pricing in the future. By so doing, we were able to support the City’s efforts in serving as an intervenor in its rate case challenge.
We supported the City through the four-year-long rate case process, providing data and testimony in support of city’s legal case and being cross-examined by the utility’s attorneys. The analytics-based business case bolstered the City’s intervention, and the Alberta Utilities Commission agreed with the City that natural gas customers were being overcharged. The reductions range between $10 for the average consumer to $263 for high-use consumers such as businesses and industrial companies for each year of the 10-year contract.