UTILITY FINANCE & ACCOUNTING FOR THE NON-FINANCIAL PROFESSIONAL

Further detail on each topic is shown by the subtopics within each of the outline topics.

 DAY ONE 8:00-4:00

                                             Subtopic

Introduction                            

Basic Accounting Concepts

     Balance Sheet                     Regulatory Assets and when to
     Income Statement                remove them
     Regulatory Assets                Stranded Costs and methods of
     Stranded Costs                     recovery

Plant Impairment & write downs
needed

Financial Statement Analysis

     Return on Equity                  Measuring Shareholder Value
     Return to Common                 created
                                                  Why Book Value & Market Value
                                                     diverge more in a non-regulated
                                                     companies
                                                   Difference between Shareholder
                                                     Value and ROE
 

The Utility’s Four Sets of  “Books”

      Financial Reporting-GAAP      Reg vs nonregulated accounting
      Income Tax Accounting          under GAAP, FAS 71 and FAS 101
      Managerial Accounting           Financial implications of alternative
      Rate Regulation                       forms of regulation

 

DAY TWO 8:00-4:00

Accounting for Utility Plant

     Straight Line Depreciation          Capitalization & Expense Policy                 
     Accelerated Depreciation                  implications for ratemaking

    Capitalization Versus Expense
         Methods of Capitalizing         Going off of FAS 71 – examples
         more or less
    Which is better for the utility                                                      

 Taxes

     Timing Differences                    Regulatory Asset for Flow
     Deferred Taxes (Normalization)  Through of tax/book temporary
                                                      differences-a stranded cost

Cost of Capital

      Weighted Average Cost of          How to measure cost of money
          Capital                             
       Discounted Cash Flow Method    
       Risk Premium Approach

Cost of Capital Case 

                                

 DAY THREE 8:00-3:00

Present Value 

Present Value Exercise                       Example of Decommissioning
                                        
 

Shareholder Value

     Free Cash Flow                            How to make decisions from
     Income vs Shareholder                    Shareholder viewpoint not
         value maximization                       ratepayer
     Risk Considerations                     Why Present Value of revenue
     How to Make Decisions                   requirements is not to be used
                                                            for competitive products
                                                           Risk & Return in a competitive
                                                                world 

Capital Budgeting

     Cash Flow Analysis                      How shareholders’ & ratepayers’
     Which Discount Rate to Use           interest may diverge in capital
     Creating Shareholder Value            budgeting
                                                                                             

Capital Budgeting Case

Conclusions                             

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