News Release: May 7, 2020
Docket No. AI20-2-000
FERC Provides Accounting Guidance to Ease Administrative Burdens; Shortens Comment Period for Federal Power Act Section 204 Filings The Federal Energy Regulatory Commission’s (FERC) Division of Audits and Accounting today issued an accounting guidance letter to help reduce the regulatory burden and support the regulated energy industry’s COVID-19 pandemic response efforts.
The guidance addresses the method by which Commission-jurisdictional public utilities and licensees, natural gas companies, oil pipeline companies and centralized service companies recognize expected credit losses on accounts receivable. Based on FERC Regulatory Accounting staff’s outreach with the industry groups, this accounting guidance will provide clarity and alleviate administrative burden.
Financial Accounting Standard Board’s Accounting Standards Update (ASU) No. 2016-13 requires companies to change the method of measuring credit losses, including uncollectible accounts receivable, from an incurred loss basis to a current expected credit loss basis. Today’s guidance letter finds this is a reasonable methodology and is acceptable for Commission financial accounting and reporting purposes.
Moreover, to the extent a jurisdictional entity has determined that a cumulative adjustment to its beginning retained earnings account is necessary related to the implementation of ASU No. 2016-13, the entity is authorized to do so without seeking Commission approval.
Separately, the FERC Office of the Secretary issued a notice earlier this week shortening the comment period for Federal Power Act section 204 filings from 21 days to five business days. This will help expedite the Commission’s review of section 204 filings that may be necessary to ensure regulated entities’ liquidity in the face of the COVID-19 pandemic.