FERC Proposes New Accounting And Reporting Rules For Energy Storage

Recent and anticipated technological developments in energy storage have made it an area of increasing interest for the energy industry and particularly for public utilities. It is increasingly acknowledged that energy storage assets are unique in that they can serve multiple purposes—production, transmission, or distribution—whereas traditional electric plant assets serve only one of those purposes. As energy storage technologies mature and this area of the industry grows, both industry and regulators will have an active role to play in facilitating increased use of energy storage assets by utilities and other energy industry participants.

On June 22, 2012, the U.S. Federal Energy Regulatory Commission issued a Notice of Proposed Rulemaking ( 139 FERC ¶ 61,245) that formally recognized the uniqueness of energy storage assets, services, and operations, and proposed a number of new accounting and reporting requirements under FERC's Uniform System of Accounts for public utilities and licensees, based on comments received in response to a June 16, 2011 Notice of Inquiry. FERC's goals in proposing new accounting and reporting rules for energy storage assets are to ensure that both it and state utility commissions can reliably obtain information about a utility's financing condition and results of operations, and to ensure that U.S. accounting and reporting requirements keep pace with the evolution of the electric industry. FERC's focus is to ensure that inclusion of a utility's energy storage asset in its cost-based rates and market-based rates is accounted for in a transparent and traceable manner. With these goals in mind, FERC has proposed for public comment the following changes to its accounting and reporting rules in relation to energy storage assets: Electric Plant Accounts. Three new accounts were proposed for recording the installed cost of energy storage equipment, based on whether the function of the asset is production, transmission, or distribution. Where an asset is used to perform more than one function, the cost is allocated among those functions based on the services provided by the asset or, where the cost was included in developing cost-based rates, the cost is allocated based on the allocation used by the rate-setting body for the rate development. Public utilities will also be required to maintain records identifying the types of functions each individual energy storage asset supports and performs. Power Purchased and Fuel...