Utility Finance Basics

Live Streaming Online June 27-28, 2023

An EUCI Program

If you are unable to attend at the scheduled date and time, we make recordings available to all registrants for three business days after the event

Utilities are natural monopoly service providers; however, they are subject to distinctive economic and regulatory requirements. Unique from competitive service providers, utility tariff rates and cost recovery mechanisms are subject to specific principles and differing levels of regulatory oversight. This introductory class introduces the underlying financial concepts for both gas and electric power utilities (some elements will not apply to municipalities and cooperatives).

The goal of EUCI’s Utility Finance Basics course is to provide a working knowledge of the fundamentals of finance in a regulated utility environment that can be applied in the real world. The content will help to understand the concepts of:

Capital recovery
Strategic planning
Regulatory environment
Cost recovery mechanisms

Learning Objectives

Identify and describe utility financial basic concepts like types of ownership, regulation, and the fundamentals of both Electric and Gas Power Markets
Discuss financial strategies for utility business success
Analyze the utility ratemaking process, including cost of service and rate design
Examine utility investment strategies and cost recovery mechanisms in practice
Define the key financial components of the electric utility business
Introduce important utility financial policies and reporting requirements
Assess Capital Planning Considerations
Study special circumstance situations in utility finance like weather events and the impact of major liabilities

Agenda

TUESDAY, JUNE 27, 2023

9:00 a.m. – 4:00 p.m. Central Time

Short breaks will be taken throughout the course

Course Introduction: Background and Overview of Utility Finance

Public Utility Concept Development
Industry Organization and Participants
Types of Ownership
Introduction to Regulations
Trends in Regulation (and Deregulation)
Regulatory Oversight by Sector and Participant
Price Regulation of a Monopolistic Enterprise

Essential Financial Strategies of the Utility Business

Strategic Investment
Investment Prudency
Timely Recovery

Utility Finance and Ratemaking

Ratemaking Process
Recovery Mechanisms

Utility Investment and Cost Recovery

Base Rates
Formula Rates
Adjustment Clauses
Trackers
Riders
Deferrals
Decoupling
Demand Response

Financial Components of the Utility Business

The Key Financial Elements
- Rate Base
- Income Statement
- Working Capital
- Regulatory Asset/Liabilities
- Revenue Requirement
- Return on Equity
GAAP for Utility
FERC Uniform System of Accounts
Utility Reporting Requirements

Major Utility Financial Policies and Reporting

Utility PP&E Cycle
Capitalization Policy
Continuing Property Records
Depreciation/Retirement/Regulatory Assets
Tax and Deferred
ITCs and PTCs
RECs
Costs of Using and Maintaining the Utility Plant
Salaries and Wages
Property and Other Taxes
Regulatory Asset/Liability Accounting
Other Expenses
Disallowance of Certain Expenses
Inflation Reduction Act

WEDNESDAY, JUNE 28, 2023

9:00 a.m. – 12:00 p.m. Central Time

Short breaks will be taken throughout the course

Cost of Service and Rate Design

Rate Base
Income Statement
Cash Working Capital
ROE
Capital Structure
Test Period and Methodology
Cost of Service and Revenue Requirement
Principles of Rate Design

Electric and Gas Power Markets

PPAs with Power Providers
Day-Ahead and Real-Time Markets
Hedging & Weather
Case Study: Texas 2021 Winter Storm

Capital Planning Considerations

Joint Ownership
LCOE & NPV
Price Impact

A Year in the Utility Finance Department

Monthly, Quarterly, and Yearly Accounting Cycle
Budgeting & Forecasting
Strategic Planning
Rate Case?
Supply Chain and AP/AR
Treasury
SEC Reporting

Major Events and Special Situations in Utility Finance

Major Weather Events
Impact of Major Liabilities
Case Study: PG&E Bankruptcy
Case Study: Enron

Recap and Course Conclusion

Instructor

Ben Rosenberg, Solutions Architect – Financial Forecasting Programs, NextEra Energy Transmission and Florida Power & Light

Ben Rosenberg has worked with over a dozen US electric and gas utilities during his career. He currently serves as a solutions architect with NextEra Energy Resources, supporting the financial forecasting programs at NextEra Energy Transmission and Florida Power & Light. Prior to working at NextEra, Ben was the Senior Financial Forecast Analyst at Portland General Electric. Previously he worked as a consultant at Utilities International, leading projects implementing various financial forecasting programs and solutions.

Prior to working in the utilities industry, Ben held positions at the medical record software company Epic as an implementation consultant and the alternative investment fund Aurora Investment Management in the investment research team. He holds an MBA in Finance from the University of Notre Dame and a Bachelor’s of Science in Economics from DePaul University.