FERC and RUS Accounting for Electric Construction
Great Fixed Asset Records - Developing Electric Standard Units Following FERC and RUS
Using FERC and RUS "standard units" in utility construction and accounting for construction cost processes is the foundation of electric rate recovery. This is Step 1 in the electric construction accounting process and this article walks you through the process.
AFUDC is a Key Construction Cost in the Power and Utilities Industry
The FERC defined allowance for funds used during construction (AFUDC) should be part of the cost of every electric project. This cost of capital, represents the investment the utility or electric cooperative is making in providing service to customers. The impact of not including all costs will be felt in future years when it is time for asset replacement. A utility could find itself in the position of not having recovered the total cost of assets in customer rates, thus not generating sufficient funds to pay for the replacement of the related assets. This article discusses the rate impact of including AFUDC.
How to “Shrink” Electric Fixed Asset Records to Build a Better Accounting Process
Using FERC and RUS accounting and best practices can provide a firm foundation for infrastructure costing and historical fixed asset reporting. Electric fixed asset records that are not accurate can have a negative impact on customer rates. This post discusses that linkage and how the issue may be resolved.
FERC and RUS Construction Overhead Methods - Best Practices
In FERC work order accounting, overhead costs are part of the universe of costs that should also be charged to construction projects - along with the direct costs of utility construction - direct labor and materials. These costs fall under the umbrella of "overheads" and can sometimes be close to or above a project's direct labor and inventory costs.
This article is a high-level discussion of utility construction overheads, i.e. their make-up, calculation, and application.
Better Project Accounting Using FERC and RUS Accounting Standards
Electric work orders are the not-so-secret sauce that drives electric rates. Using work orders for projects is the industry best practice. Still, if all costs are not recorded, the customers will not fully reimburse your electric utility or cooperative for the total costs of capital replacement. Cash flow will suffer, directly impacting customer service and system reliability.