Utility Accounting Education Update
Here are insights to help keep you current in the business!
utilityeducation.com
May, 2022
Here's a focus on electric rates, financing for co-ops, and the "right" amount to set aside for cash reserves. The core of the power and utilities business.
Electric Co-op Capital Credits and Cash Reserves
Co-op financing with capital credits and cash reserves (utilities should check this out too)
Electric cooperative financial strategies include operating cash flows, cash reserves, debt, and customer investments, which are called capital credits. A key financing component for an electric cooperative operations and projects are customer (aka owner) "capital credits". What are capital credits, and how can your cooperative establish a capital credit policy that maintains proper cash balances and cash flows while eventually refunding credits or paying to your owners? Here are some insights.
FERC Accounting Report - Allowable Items in Electric Rate Filings
While your utility may not be regulated by the Federal Energy Regulatory Commission {FERC), it’s always interesting and valuable to read what’s on the radar for the regulators. This article discusses a recent FERC compliance audit report on issues from auditors that it deems to be not in the interest of good ratemaking or reporting for regulated electric utilities and gas utilities. It can be helpful to consider this FERC view when considering items to include in electric rates or accounting approaches to take on various transactions.
The UAES article library covers introductory and advanced co-op, FERC, and utility accounting, developing electric rates, and financial management. We include practical examples you can use now in your electric cooperative or utility!
Your monthly electric customer charge for a residential customer should be at least $75 per month
The monthly residential customer electric bill consists of a customer charge and a kWh charge. The monthly electric bill for a large power user consists of a kW charge and a kWh charge. Would it surprise you it costs two-four times more to serve a customer with kW and customer services than is included in the customer’s monthly customer flat charge? The undercharged kW and customer cost amounts ends up in the kWh charge. Why is this, why does it matter, and what might you do about it? Let’s explore some areas.
New to the electric business? Here’s a course on industry basics - finance, operations, and regulation!
Welcome to the Electric Business
Are you new to the electric business and need to get up to speed quickly? This course gives a high level overview of the business - operations, finance, and governance. Be an expert!
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Thank you for your support and interest in best practices in accounting, developing electric rates, and financial management. The Power and Utilities Industry is the foundation for a vibrant economy and an integral part of our society!
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See you next month, or check us out anytime at:
Final thoughts for this issue - setting and achieving goals is a continuous process:
“It isn’t rocket science, it’s the discipline of doing the right things when you may not feel like it. ”
“Don’t live the same year 75 times and call it a life.”