Accounting in Power Industry

Double-entry bookkeeping experts dominate every sector, including power. You will see them in top positions. They grabbed strategic positions and influenced every power industry decision. 

The most significant difference between the power industry and the rest of the industries is that the power industry product -- electricity -- has zero shelf life. It cannot be stored. (It can be stored in a small quantity. However, if you see the quantum of electricity managed in the electric grid, this amount is negligible.) 

If electricity cannot be stored, it cannot be traded. If you want to buy and sell electricity with zero shelf life, the rules must be different compared to other products such as apples, cars, milk etc.

Electricity is treated as Apples, Cars and Milk by double-entry bookkeeping experts. Hence there is a Power Purchase Agreement (PPA) between the generating company and the distribution company. That too PPA is signed before electricity is produced.   

A distribution company signs PPAs with more than one generation company. When a distribution company's customers start demanding electricity, it claims that it is purchasing electricity from generation companies and selling it to end consumers. In reality, electricity passes through distribution company assets such as transformers, cables etc. There is no purchase-store-sell cycle. It is a direct purchase-sell cycle. 

With the same logic, a power transformer can claim that I am buying electricity at primary winding and selling it at secondary winding. I want a 30% margin on this transaction. It makes no sense.

I don't know at this stage how a supply chain accounting model would look for electricity with zero shelf life. A model must be different from products that have shelf lives. 

A possible solution would be to create a national holding company that buys electricity from all generation companies. This company will decide the nation's tariff.  It will issue electricity bills to end users. Distribution companies would help this holding company collect the bill payments. On a cost-recovery basis, the holding company pays transmission and distribution companies part of its revenue.