Oct 3 -- The Federal Energy Regulatory Commission is issuing a notice of proposed rulemaking proposing reforms to the Uniform System of Accounts (USofA) for public utilities and licensees to include new accounts for wind, solar, and other non-hydro renewable assets; create a new functional class for energy storage accounts; codify the accounting treatment of renewable energy credits; and create new accounts within existing functions for hardware, software, and communication equipment. We propose revisions to the relevant FERC forms to accommodate these changes. We also seek comment on whether the Chief Accountant should issue guidance on the accounting for hydrogen. The Commission invites all interested persons to submit comments on the proposed reforms and in response to specific questions. Comments are due November 17, 2022.
The Federal Energy Regulatory Commission (Commission or FERC) is proposing reforms to modernize the Uniform System of Accounts (USofA) to account for the rapid changes in technology and resource mix over the last few decades. These reforms are intended to add to the USofA functional detail needed to inform the Commission's responsibilities under the Federal Power Act (FPA) to ensure that rates remain just and reasonable.
Specifically, we propose to: (1) create new accounts for wind, solar, and other non-hydro renewable assets; (2) establish a new functional class for energy storage accounts; (3) codify the accounting treatment of renewable energy credits (REC); and (4) create new accounts within existing functions for hardware, software, and communication equipment. These changes would also require corresponding changes to FERC Form Nos. 1, 1-F, 3-Q (electric), and 60. We seek comment on these proposed reforms. We also seek comment on whether the Chief Accountant should issue guidance on the accounting for hydrogen that would apply to both public utilities and licensees and to natural gas companies.
These proposed changes would account for new technologies, provide transparency to inform meaningful ratemaking, and provide useful information to stakeholders. Additionally, improving the accounting instructions so that they specifically describe the relevant equipment may result in fewer disputes about which accounts to use for which equipment and improve regulatory certainty. The use of these new discrete accounts based on functional use would also enable more reasonable estimates for plant service lives and their recorded depreciation, which in turn would result in more meaningful rate base, return, and cost of service measures.