Revolutionising data consumption: how XBRL can help energy companies understand rate cases
The transition to XBRL by the US Federal Energy Regulatory Commission (FERC), for regulatory reporting by energy utilities, is one of the many interesting frontiers in digital reporting right now. We are delighted to see the successful use of XBRL for energy data, illustrating that the standard can be used to boost the value of a wide range of information beyond its financial origins – and a post by HData earlier this year on ‘Understanding rate cases using FERC data’ provides a clear example of that enhanced decision-usefulness for reporting entities themselves.
Rate cases, unique to the heavily-regulated world of energy, are proceedings where a regulator and a utility negotiate the rates the utility company – or midstream supplier – may charge. “Rate cases are one of the most complex and contentious regulatory exercises an energy company can go through,” says HData. “Collecting data for this can be complicated by itself for a single company, but what about collecting it from other companies such as your peers and competitors? It seems impossible, until now!”
“The XBRL mandate by the FERC opened new opportunities for data; not just in filing it, but revolutionizing its consumption like never before.” As discussed in detail in the article, energy companies can use the digital data collected in standard FERC forms, now filed in XBRL, to calculate the key metrics used in rate cases. “This means rate case simulations can be done not just on your own company, but every single FERC-regulated company in the United States.” These insights can help companies to prepare for upcoming rate cases, understand completed rate cases more deeply, and compare their own performance to that of peers.
Rate cases are complex and varied, influenced by a complicated patchwork of regulatory environments. “Even so, it is becoming easier to navigate these as clean, legible, and greater amounts of data become available for regulators and companies to use.” {Ed — Given today’s energy costs, this sounds critically important!}
Read more here.
