On January 19, 2021, FERC issued a Notice of Inquiry (“NOI”) seeking comments on the appropriate accounting and reporting treatment for certain renewable energy assets and for the purchase, generation and use of renewable energy credits (“REC”). Specifically, FERC requested input on the potential creation of new, non-hydro renewable technology accounts within the Uniform System of Accounts (“USofA”), the potential reporting requirements for such accounts, and how the creation of such accounts may impact formula rates. FERC also asked for comments on whether to codify the accounting treatment of the purchase, generation, and use of RECs. Initial comments are due March 27, 2021, with reply comments due April 26, 2021.
Concurrently with its issuance of the NOI, FERC issued an order denying a request for confirmation as to the appropriateness of booking certain wind and solar generating equipment costs to specific accounts in the USofA (“Order”). In the Order, FERC found that such guidance was not appropriate in the proceeding due to the contentious subject matter, potential implications beyond the proceeding, and lack of specific details in the request. However, FERC acknowledged that there was interest in and potential benefits for FERC’s guidance on the issue, and stated that it was concurrently issuing the NOI to address the need for such guidance and the potential creation of separate renewable-specific accounts in the USofA.
In the NOI, FERC detailed that there are no accounts in the USofA designed specifically for solar, wind, or other non-hydro renewable generating assets and that, based on statements from commenters, at present, companies are exercising “reasonable judgment” in determining which accounts to book such assets. FERC requested input on whether it should establish separate expense accounts for each major type of renewable plant and what potential burdens could be created through the creation and reclassification of such assets into the new accounts. Stating that adding new renewable plant expenses to the USofA may require changes to FERC Form No. 1, FERC asked commenters to provide proposed solutions and comments on whether such changes would be required. Finally, FERC requested any additional input from commenters as to how the creation of USofA accounts may impact rates for electric utilities.
With respect to RECs, FERC explained that while the USofA does not provide instructions for recording the purchase, generation or use of RECs, it has previously found that RECs should be treated the same as sulfur dioxide emission allowances, which FERC determined in Order No. 552 should be classified as inventoriable items. FERC seeks comments on its proposal to modify the emission allowances accounts to include revenues from the sales of RECs.
FERC encouraged commenters to respond to the provided questions in detail and, where appropriate, provide specific examples supporting each comment and recommendation. Commenters are not required to answer each question.