Redesigning Utility Accounting Construction Processes
Don’t underestimate the value of sound fixed asset systems in power and utilities organizations. Fixed asset depreciation is a component of customer rates and the return on rate base, which can make up to 10% of a customer’s rate. Fixed assets that were accurate can become inaccurate and a problem area due to a lack of attention to changing business processes, workforce training and succession, and lagging technology.
A large electric and water utility found that its continuing property records (fixed asset records) did not accurately reflect the actual value of the utility plant in service that served its customers.
The impact of this was to make customer rates higher than they should be due to higher depreciation expenses and return on rate base included in customer rates.
We worked with the client to review all business processes involved with the work order system in operations, engineering, and accounting. We flowcharted each major process, identified bottlenecks, and designed a solution to make the process more efficient.
The utility selected ERP software, and we helped them implement the new business processes into the flow of information in the ERP system. Our project scope included follow-up analysis and testing of the efficiency of the new processes after a 6-month implementation period. We made recommendations for some business process changes and led training classes for the utility’s personnel on the modified process.
We also assisted the utility with oversight of a complete fixed asset system inventory and modifications to its financial records to reflect the revised plant in service amounts.
Management points to the disappearance of side systems and side records and more reliance on the new software platform’s data and reporting tools as signs of a successful project. They also point to the increased accuracy in project inputs and outputs and better confidence in the balance of plant in service used in cost of service studies.
