COMMISSION FINALIZES NEW ACCOUNTING RULES

DESIGNED TO INCREASE ACCOUNTING TRANSPARENCY

 

          The Federal Energy Regulatory Commission today adopted new
accounting rules for service companies and holding companies to allow
for greater accounting transparency and to protect ratepayers from
paying for improper service company costs.  

          

          "This final rule will help the Commission implement its
responsibilities under the Public Utility Holding Company Act of 2005 by
providing greater accounting transparency for service company operations
and uniform records retention by holding companies and service
companies," Commission Chairman Joseph T. Kelliher observed.

 

            The Commission initiated the rulemaking having determined
that separate requirements for these entities, rather than modifying
similar requirements applicable to other jurisdictional entities, would
make it simpler and easier for holding and service companies to comply
with the Public Utility Holding Company Act of 2005.       

 

          The final rule adds a new Uniform System of Accounts (USofA)
for centralized service companies and modifies related financial
reporting requirements contained in FERC Form No. 60, Annual Report of
Centralized Service Companies.  A holding company's centralized service
company provides centralized, headquarters-type services including
legal, financial, accounting, recordkeeping and engineering services for
their associated public utilities.  

 

          The rule also establishes the record-retention requirements
for both holding companies and service companies and incorporates them
in the Commission's regulations.  In some cases, record-retention
periods will be reduced from what was initially proposed.  In other
cases, where the Commission's retention requirements differ from other
regulatory agencies' requirements, the final rule requires holding
companies and service companies to retain their records for the longest
required retention period.  

 

          The Commission modified its initial proposal in a number of
areas to reduce the compliance burden on industry, stating: "Throughout
we have attempted to strike a balance between the Commission's need for
information to carry out its regulatory responsibilities and the burden
that gathering and reporting information imposes on industry."  The
modifications include deleting and modifying certain accounts and
instructions in the originally proposed USofA, providing flexibility in
the work order system requirements, streamlining and eliminating certain
schedules in the FERC Form No. 60, and postponing the implementation
date of the Final Rule until January 1, 2008. 

 

          In addition, the final rule requires the revised FERC Form No.
60, Annual Report for Centralized Service Companies, applicable to the
2008 and subsequent reporting years, to be filed electronically.  The
Commission said that the electronic filing of FERC Form No. 60 "will
yield significant benefits, including reduced costs of data entry and
retrieval, overall reduction of reporting burden, more timely analysis
and publication of data, and increased data analysis capability."

 

          In a related order, the Commission issued a final rule (Docket
No. RM06-25) requiring the electronic filing of currently effective FERC
Form No. 60, adopted in Order No. 667, for the 2006 and 2007 reporting
years to be filed by May 1, 2007, and May 1, 2008, respectively. 

          

          Both final rules take effect 60 days after publication in the
Federal Register. 

 

R-06-63

 

 

Chuck Piotrowski

CVPS

www.cvps.com <http://www.cvps.com/> 

This computer runs on Cow Power!

 

 


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