The Federal Energy Regulatory Commission (FERC) is an independent body that oversees several aspects of the U.S. energy industry including natural gas and oil projects. Among the projects FERC oversees are proposals for natural gas pipelines crossing state lines; hydropower licensing; and other aspects of interstate electricity, gas and oil transmissions.
FERC is also involved in oversight for the energy industry. In this capacity, FERC monitors:
- Power plants
- Transmission lines
- Pipelines
- Energy infrastructure
- Energy markets
- Mergers and acquisitions within the energy industries
FERC has the capacity to punish companies if they manipulate energy prices.
As part of the oversight project, energy companies are required to report to FERC on certain key areas.
FERC Financial Reporting & Accounting
FERC uses its own system for filing annual FERC reports, known as Uniform System of Accounts (USofA). FERC's system will be familiar for businesses that use GAAP accounting standards, since USofA derived from GAAP standards.
Companies are required to file quarterly and annual reports, although specific FERC filing and FERC reporting requirements vary by the type of energy company:
- Electric
- Gas
- Oil
- Centralized Service
There is overlap between financial reporting and FERC. Companies that have their data organized for necessary SEC filings, such as the Form 10-K, will easily be able to comply with these reporting requirements since the same data is needed.
FERC maintains a detailed list on its website, for energy companies to do their due diligence and understand the types of data required for filing.
In 2019, FERC released a new mandate requiring XBRL tagging and the first XBRL-tagged reports were due in Q3 of 2021. The XBRL mandate applies to these specific FERC forms:
- 1
- 1-F
- 2
- 2-A
- 3-Q electric
- 3-Q natural gas
- 6
- 6-Q
- 60
- 714
As a reminder, XBRL is a markup language that standardizes business financial reporting. Adoption of XBRL tagging will ultimately help FERC evaluate reports more easily, so it can uphold its duties.
While the required XBRL formatting represents additional work for companies, there is some good news: Financial reporting software can automate much of the necessary data collection with a greater degree of accuracy than the average human employee assigned to the task. AI-enabled reporting software can do the necessary due diligence required to assemble reports and even accommodate the required XBRL integration.
How to File With FERC
FERC accepts general communication electronically or by mail. However, all required reports must be filed electronically. New companies will need to create an account in their system to file for the person in charge of filing.
Once the account is created, reports can be transmitted electronically through its website by selecting the eTariff format. FERC provides a helpful walkthrough on its website for companies needing help with FERC reporting requirements.
Not only are FERC standards related to good financial reporting, there is a connection to ESG as well.
ESG mandates apply to energy industries in several key ways, not least of which is the transition toward renewable energy sources for electricity. Major investment companies have signaled a new shift in alignment with ESG priorities by declaring to vote against companies that are not meeting minimum ESG commitments. Accordingly, energy companies should be prepared to document their performance via ESG reporting.
Whether it's ESG, FERC or SEC reporting, the choice of software can significantly streamline the process. Make it a priority to invest in the right software to support necessary filing requirements.
