CASE STUDY
The Province of New Brunswick, Canada
Controlling Natural Gas Costs

In the Winter of 2002/2003, the Supply Services Department of the Province of New Brunswick had developed a fear of volatile natural gas markets.  The Department had just converted some of its building's heating systems to natural gas in an effort to upgrade equipment and assist the new utility, Enbridge Gas New Brunswick, in its efforts to initiate market penetration.  During the winter heating season when temperatures dropped below normal for an extended period of time and natural gas prices spiked, the decision to convert began to look like a very bad one.  Supply Services received its March commodity bill from its natural gas supplier, and the price was significantly higher than the Department had budgeted.  As a result, the Department found itself under tremendous criticism for its natural gas conversion decision.

After numerous meetings, the Department of Supply Services retained CES to assist them in managing and navigating all the issues that relate to natural gas.  CES's first task was to develop a methodology to conduct a cost benefit analysis on future buildings that were being contemplated for conversion to natural gas.  This analysis would be used when capital had to be raised for conversions, the conversions were not planned, or incentives or budgeted dollars were not available.  The next task was to develop building and account profiles, which included usage by building and respective meters.  Once this was complete, a Request for Proposal (or Tender as it is called in New Brunswick) was drafted.  This Tender was specifically different from those in the past, as it included existing and prospective buildings, their existing and prospective usage and product and price options.  Once the Tender was issued, CES became engaged with the participating suppliers to answer questions, through the Department, and direct the process. The results: