Power and Utilities Cost of Service and Rates
FERC Order No. 1920 - Designed to rebuild the new grid but may have unintended impacts
FERC Order No. 1920, issued by the Federal Energy Regulatory Commission, is a regulatory mandate to modernize and enhance the nation's energy infrastructure's reliability, security, and efficiency. As with any broad order, there are winners and other impacts to consider, plus future court challenges.
Electric vehicle charging subscription rates? An app for that?
An electric vehicle subscription charging rate is gaining traction in the industry. That is, the same flat monthly rate paid by EV customers to charge their vehicles as much or as little as they'd like. What are the financial considerations for an EV subscription rate and the benefits to the EV customer and electric provider?
FERC Accounting Report 2023 - Not just compliance, but best practices
This article discusses the 2023 FERC compliance audit report on issues from auditors. Here are areas of focus, not just for a FERC rate filing, but as best practices.
Best Practices in Electric Cost of Service Studies
Using FERC accounting drives electric cost of service studies and electric rates. Electric rates drive revenues and recover the full costs of operations, debt service, and capital additions of a utility. While most investor-owned utilities, electric cooperatives, and large municipal utilities use the “utility method” to develop electric rates, many small to mid-sized utilities base their rates on utility cash flows. What’s the difference? Does it matter? This article dives into the differences between the two methods and provides an opinion on what method would benefit your utility’s ratemaking and cost recovery.
AMI - the new standard in allocating overhead costs of service?
This article outlines some of the advances in cost allocation theory, basing allocations on the timing of beneficial use of overhead activities. The application benefits your utility's investment in smart metering and load-measuring technology.
Use ASC 980 or GASB 62 to Bridge the Gap Between Solar Power and Electric Budgets
ASC 980 and GASB 62 can help revenue recovery of budget misses due to unforecasted solar and renewable energy generation, from distributed energy resources (DER).
With analytical trend tools at our disposal, budgets are more realistic and numbers can be tighter. However, as your DER customers grow, their increased generation trends may not show up yet in historical sales data and not be included in budgets. This article discusses the use of ASC 980 and GASB 62 in making sure budget shortfalls are not “lost” revenues.
FERC Accounting Report 2022 Uses Data Analytics to Identify Areas for Review
This article discusses the 2022 FERC compliance audit report on issues from auditors. It can be helpful to consider this FERC view when considering items to include in electric rates or accounting approaches to take on various transactions.
Are you part owner of a power plant? Regular joint power supply contract audits will help you sleep at night
A common arrangement in the power supply process is joint ownership of power plants. Joint ownership arrangements involve two or more owners of a power plant, with one of the owners called the operator owner, who operates the power plant, bills the owners for operating costs, and all owners partake of the power supply. The joint ownership is governed by an overall power supply agreement, which designates various committees (management, operating, and finance) that are charged with the governance and management of the contract.
The contracts generally have audit provisions that allow any owner to audit billings under the contract, using their own personnel or through an independent party such as an accounting firm. Regular audits are beneficial to all owners - we’ll discuss the areas why.
Electric Cost of Service Rates and Rates for New Technology - One Utility’s Approach
An electric utility recognized that it needed to increase electric rates after developing its budget for the coming year (also known as a revenue requirement). The utility had not increased rates in 5 years and wanted to take the opportunity to move customer rates towards their cost of service and to incorporate distributed energy resources (DER) and electric vehicle charging into their rate structure.
Here are the steps they took to move to cost of service rates and implement innovative rates for residential, DER, and EV customers.
Electric Rates for Solar Power and DERs
Distributed energy resources (DERs) are taking on a greater role in the energy planning process for co-ops and utilities. FERC Order 2222 and the NARUC Distributed Energy Resources Rate Design and Compensation publication discuss this trend and the recommended rate structures that are becoming industry best practices.