posted on Wednesday, June 29, 2005 3:44 PM by Gunnar Birgisson

FERC Proposes Changes to Accounting and Financial Reporting Rules to Gain Further Insight into RTO Operations

Responding to the increasingly controversial issue of escalating RTO and ISO operating costs, FERC has proposed a new rule that would change its accounting and financial reporting requirements for public utilities, including independent system operators and regional transmission organizations (collectively "RTOs") that file financial reports with FERC.  Specifically, FERC is seeking more detailed information about regional transmission and RTO market operation assets, RTO revenues, and other market-related expenses.

FERC states it is proposing the rulemaking to accommodate the industry restructuring that has resulted from introduction of open-access transmission service and increased competition in wholesale bulk power markets.  Currently, financial reporting requirements cover only traditional functional utility plant classifications - generation, transmission and distribution of electric energy, but do not cover RTO-related costs.  According to the proposed rule, this is because many of the current asset and associated expense accounts are not applicable to RTOs.

FERC intends for the new regulations to provide information regarding activities specifically reserved to RTOs, such as overseeing markets and conducting long-term system planning.  The proposed rule would also create accounting and financial reporting requirements that will illuminate expenses incurred in providing service and the revenues collected from RTO members.  In addition, a unified reporting format for RTOs will provide FERC and the market with a better understanding of RTO expenses and whether they are legitimate and reasonable.  [Accounting and Financial Reporting for Public Utilities Including RTOs, 111 FERC ¶ 61,352 (2005)] [NEW MATTER]