In Reply
Refer To:
OED-DRAP
Docket
No. AI01-2-000
August
30, 2001
TO
ALL JURISDICTIONAL PUBLIC UTILITIES
In recent
years, the Commission has approved new jurisdictional entities
that operate and administer power exchanges and perform related
market monitoring. These are new functions for public utilities.
As a result, there are no specific instructions on how to account
for performing these activities under the Commission's Uniform
System of Accounts (USofA) for Public Utilities and Licensees.
The enclosed
Accounting Release No. 16 provides clarification on the correct
accounting for revenues received from operating and administering
an electric power exchange. In addition, it clarifies the correct
accounting for operation and maintenance expenses incurred in
operating and administering the exchange and monitoring the market.
The accounting guidance provided here will allow consistency and
uniformity in accounting on an interim basis until changes to
the USofA can be made. This Accounting Release is effective October
1, 2001.
Authority
to act on this matter is delegated to the Chief Accountant pursuant
to 375.303 of the Commission's regulations. This Accounting Release
constitutes final agency action. Requests for rehearing by the
Commission may be filed within 30 days of the date of issuance
of this letter order, pursuant to 18 C.F.R. 385.713.
John
Delaware
Deputy Executive Director and
Chief Accountant
Enclosure
FEDERAL
ENERGY REGULATORY COMMISSION
ACCOUNTING RELEASE NUMBER AR-16
Question
In recent years,
new jurisdictional entities have come into existence that operate
and administer an electric power exchange. The direct functions
of a power exchange include, among other things, aggregating supply
bids from generators and demand bids from utilities and power
marketers, determining market clearing prices and notifying bidders
of market results. These new entities also monitor their energy
markets for identification of market design flaws and improvements,
manipulation and abuses by participants and the need for initiation
of mitigation actions.
What is the proper accounting treatment for revenues received
from operating and administering an electric power exchange?
Additionally, how should entities account for operation and
maintenance expenses incurred in operating and administering
the power exchange and related market monitoring activity expenses?
Answer
Revenues
received from operating and administering an electric power exchange
are to be recorded in a separate subaccount of Account, 456, Other
Electric Revenues. These revenues are properly includible in Account
456 since they are derived from an electric operating activity
and not properly included in any other accounts.
Operation and maintenance expenses incurred
in operating and administering the exchange and monitoring the
market are to be recorded in separate subaccounts of Account
557, Other Expenses. These expenses are properly includible
in Account 557 since they are incurred directly in connection
with the purchase of electricity and not properly included in
any other accounts.
John Delaware
Deputy Executive Director and
Chief Accountant
Effective
October 1, 2001