THE FERC’s ADOPTION OF XBRL
Change is the law of life. And those who look only to the past or present are certain to miss the future.
Following an announcement from Microsoft regarding the withdrawal of support for Visual FoxPro, Federal Energy Regulatory Commission (FERC) has adopted XBRL as the electronic format for filing financial statements, starting from 2021.
FERC is an independent agency that regulates the interstate transmission of electricity, natural gas, and oil. It also administers accounting and financial reporting regulations and conduct of regulated companies. The commission’s role is to maintain records about inter-state commerce of energy & energy products.
To bring consistency in the financial data submitted by the energy companies in the US, FERC initiated this transition. By restructuring data collection and making them more accessible, regulatory filings and business information processing is expected to become more efficient.
XBRL will enhance system compatibility security and allow efficient sharing of data across different information systems. It is a non-proprietary tool used across the globe for data encoding standards. All companies under the regulatory regime are required to submit their Quarterly and Annual statements.
XBRL should make the information in these forms easier for filers and data users to analyze and assist in automating regulatory filings and business information processing. Also, FERC strongly believes that transitioning to XBRL will decrease the costs, over time, of preparing the necessary data for submission and complying with future changes to filing requirements.
The commission must collect data from filers easily and interpret the results through a human-readable version of the financial report. Hence the upgrade to XBRL has been mandated for the following forms.
|Electric||Form No. 1||Annual Report of Major Electric Utilities, Licensees, and others|
|Form No. 1-F||Annual Report of Non-major Public Utilities and Licensees|
|Form No. 3-Q||Quarterly Financial Report of Electric Utilities, Licensees|
|Form No. 714||Annual Electric Balancing Authority Area and Planning Area Report|
|Gas||Form No. 2||Annual Report for Major Natural Gas Companies|
|Form No. 2A||Annual Report for Non-major Natural Gas Companies|
|Form No. 3-Q||Quarterly Financial Report of Natural Gas Companies|
|Oil||Form No. 6||Annual Report of Oil Pipeline Companies|
|Form No. 6-Q||Quarterly Report of Oil Pipeline Companies.|
|Service||Form No. 60||Annual Report of Centralized Service Companies.|
When is this transition?
In June 2019, FERC decided to adopt XBRL for energy companies. Test filings are now open in the FERC website.
The first quarterly filing is in November 2021 and the first annual filing is in April 2022.
What are the benefits?
Through this change, regulatory compliance officers and financial accountants are expected spend more time in analyzing data as they will not do much of data clean up or sorting. The new reporting language will enable filers to stay connected with a single source of data from multiple sources with more consistency and efficiency.
Through the adoption of XBRL, energy companies can automate the processes of data collection. For example, data from different company divisions can be put together quickly, in a cost-efficient manner, and efficiently once the sources of these inputs are upgraded to XBRL.
Finance officers can save time on generating internal management reports, financial statements for publication, tax, and other regulatory filings, as well as credit reports for lenders.
By and large, all participants in the financial information supply chain benefit by using of XBRL for regulatory compliance reporting, whether they are preparers, transmitters or users of business data.