Regulatory accounting is specifically tailored for electric co-ops and utilities to manage financial outcomes and customer rates effectively. Neglecting this tool can place these organizations in unnecessary financial constraints.

There are common misunderstandings about using regulatory accounting. Thoughts are that maybe it’s taking advantage of accounting standards or a desperation move to help boost earnings. Reg accounting is a standard part of the power and utilities business. Here are some understandings and the counter.

Regulatory accounting under both ASC 980 and GASB 62 can be used for deferring revenues and matching revenue recognition to the related impact on customer rates. Here is an example of a common application for rate stabilization, stashing revenues now for use later when needed in meeting bond coverage in poor earnings years.