New FERC NOPR

On July 28, 2022, in Docket No. RM22-11, FERC initiated a notice of proposed rulemaking (NOPR) to (1) include new accounts for wind, solar, and other non-hydro renewable assets; (2) create a new functional class for energy storage accounts; (3) codify the accounting treatment of renewable energy credits; and (4) create new accounts within existing functions for hardware, software, and communication equipment, as well as inquire as to whether the Chief Accountant should issue guidance on the accounting for hydrogen. FERC also plans to amend FERC Form 1 et al and Form 60 to accommodate these changes. Comments are due to FERC on or about September 12, 2022. FERC states that these proposed changes would account for new technologies, provide transparency to inform meaningful ratemaking, and provide useful information to stakeholders. Additionally, improving the accounting instructions so that they specifically describe the relevant equipment may result in fewer disputes about which accounts to use for which equipment and improve regulatory certainty. The use of these new discrete accounts based on functional use would also enable more reasonable estimates for plant service lives and their recorded depreciation, which in turn would result in more meaningful rate base, return, and cost of service measures. The first fifty-three pages of the NOPR describe FERC’s proposed changes to the Uniform System of Accounts (USOA), while the remainder of the document (from page 53 to page 436) contain the proposed changes integrated into the USOAs and changes to forms.