Shared support services costs: are you transparent?
What’s the bottom line?
Utilities cannot afford the possibility that rate increases will be denied due to a lack of transparency in their shared services.
Regulators will continue to ask utilities to provide more rigorous justification of operating expenses and capital investments before allowing recovery through increased rates.
They will target costs associated with A&G support corporate functions via a shared services delivery model.
It is our view that utilities cannot assume that their shared services are sufficiently transparent to regulators to withstand challenges and possible denials of requested rate increases.
Utilities need to implement immediately a next-generation model that will:
- Improve transparency and defensibility of support service costs
- Increase the likelihood of cost recovery
- Augment overall utility returns
Not doing so can have drastic consequences.
Answers to your questions, at a glance