Generative Artificial Intelligence and Its Impact on the Utility Accounting Department
How can generative AI make for a more efficient accounting department?
We continue our journey of exploring uses of generative artificial intelligence in areas throughout the utility - in operations and finance. The AI revolution is transforming the way we look at basic tasks and expanding our horizons when it comes to how the utility business is managed.
What is generative artificial intelligence?
Generative Artificial Intelligence (AI) refers to AI systems that can create new content, such as text, images, audio, and more, by learning from existing data. These systems use complex algorithms, particularly machine learning models like Generative Adversarial Networks (GANs) or transformer-based models like GPT (Generative Pre-trained Transformer), to generate outputs that are remarkably similar to human-created content.
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How is generative artificial intelligence being used in the utility accounting department?
In a utility accounting department, generative AI can revolutionize various aspects of operations and decision-making processes. Here's how:
1. Automated Report Generation: Generative AI can produce detailed financial reports by analyzing accounting data. This not only saves time but also ensures accuracy in reporting. For instance, AI can generate monthly financial summaries, variance analyses, and forecasts without manual intervention.
2. Predictive Analytics: By using historical data, AI can predict future trends in utility consumption and revenue. This helps in budgeting and financial planning, allowing the utility to better manage resources and anticipate financial needs.
3. Anomaly Detection and Uses for Internal Auditors: AI can identify unusual patterns or anomalies in financial data that might indicate errors or fraudulent activities. This ensures the integrity of financial records and helps in maintaining compliance with regulatory standards.
4. Rate Analysis and Design: Generative AI can assist in designing and analyzing utility rates by simulating various scenarios and their financial impacts. This helps in creating fair and sustainable rate structures. Add-ons like CoPilot for Excel, can analyze tables of data, determining trends, areas for analysis, and customer usage scenarios.
5. Customer Service Enhancement: AI can generate personalized responses to customer inquiries related to billing and account management, improving customer satisfaction and reducing the workload on human staff.
6. Search: One immediate application of AI tools is in enhancing internet search. Traditional search engines like Google, Bing, and DuckDuckGo, in their current forms, can feel outdated (although Google and Microsoft do offer AI-powered search tools). Utilizing AI for search purposes, such as ChatGPT and Copilot, allows users to pose natural language questions and receive more focused results, rather than having to sift through pages of links.
7. Writing Reports: Microsoft Word and Apple Pages now have incorporated Copilot and Apple AI for proofing and rewriting documents. These AI tools can enhance the user's written content by correcting spelling and grammar errors and rewriting content more clearly while preserving the original idea. Although it may not transform the writer into a Pulitzer Prize winner, it significantly improves the clarity of the content for readers.
AI will enhance the accounting functions and move it towards more of a management tool vs. a “look back” on prior performance.
One main area of immediate use can be in using AI tools for internet search. Google in its older form is antiquated (although Google does have an AI search tool). Search using AI means applying natural language questions and getting more focused results, rather than a page of sites that need to be assessed and sifted.
Some factions look at AI as taking jobs. But, a closer look reveals that the accounting function will be more efficient and a greater decision making tool of the utility. This may require some training of current staff for differing roles that are less repetitive and more analytical. Benefits to the accounting functions will include:
- Efficiency: Automation of routine tasks allows employees to focus on more strategic activities.
- Accuracy: Reduced human error in financial data management.
- Scalability: AI systems can handle large volumes of data effortlessly.
- Cost Savings: Reduced labor costs and improved resource allocation.
Neglecting to adopt AI technology puts a utility at a competitive disadvantage compared to its peers. While no panacea, integrating generative AI into their operations, utility accounting departments can achieve greater efficiency, accuracy, and foresight, ultimately leading to enhanced financial health and customer satisfaction.
This is just a sampling of tools that can have an immediate impact in a cooperative or utility. The integration of AI tools into the finance and accounting function will significantly impact efficiency, staffing, and decision-making. As your cooperative or utility develops annual budgets, make room for acquiring and integrating some of these tools.
About Russ Hissom - Article Author
Russ Hissom, CPA is a principal of Utility Accounting & Rates Specialists a firm that provides power and utilities rate, expert witness, and consulting services, and online/on-demand courses on accounting, rates, FERC/RUS construction accounting, financial analysis, and business process improvement services. Russ was a partner in a national accounting and consulting firm for 20 years. He works with electric investor-owned and public power utilities, electric cooperatives, broadband providers, and gas, water, and wastewater utilities. His goal is to share industry best practices to help your business perform effectively and efficiently and meet the challenges of the changing power and utilities industry.
Find out more about Utility Accounting & Rates Specialists here, or you can reach Russ at russ.hissom@utilityeducation.com.
The material in this article is for informational purposes only and should not be taken as legal or accounting advice provided by Utility Accounting & Rates Specialists. You should seek formal advice on this topic from your accounting or legal advisor.