[BETA] Fortnightly

NextEra Energy sells interest in gas-fired generating portfolio; Direct Energy acquires Texas retailer First Choice Power; Pattern Energy teams with Samsung to buy Ontario wind farm; plus bond offerings from Progress Energy, PG&E, LG&E, and others totaling $1.9 billion. The public policy rationale for the regulatory compact is more compelling than ever, as governments look to utilities to serve as instruments of public policy in such areas as renewable resources, conservation and efficiency, and environmental regulation. But utilities can't perform these functions if they can't recover their costs and maintain access to capital. The industry needs to restore balance to the regulatory compact in order for utilities to continue providing superior value for customers.

(January 2011) Gold Mine or Fool’s Gold?: Debt is recorded on the right side of the balance sheet in recognition that it’s a source of capital, but users of financial statements recognize that it isn’t cash. Likewise, users of financial statements would recognize that moving the book reserve to the right side would not cause it to suddenly become cash.

Over the next year (or years), companies in Canada and the U.S. will make the transition towards adopting International Financial Reporting Standards (IFRS). These standards will have a substantial effect on the reporting requirements and financial disclosures of regulated companies. Utilities are preparing their accounting processes to meet a new regulatory standard.

The industry might be overlooking a source of capital for smart-grid and similar investments. Funds collected in depreciation accounts for cost-of-removal liabilities could finance capital spending projects.

The SEC is taking steps toward substituting International Financial Reporting Standards for U.S. Generally Accepted Accounting Principles. Having certainty surrounding existing utility asset and depreciation accounting practices enhances the ability to use financial statements to accurately depict the results of operations and financial status of reporting entities.

Adoption of IFRS (International Financial Reporting Standards) in the United States undoubtedly will mark a significant change for many U.S. companies. But this change should not be feared. Moving to an entirely new accounting structure ultimately might enable companies to streamline reporting processes and reduce compliance costs.