Chapter 36 Auditing Gas Electric and Telecommunications Companies.docx
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Chapter 36 Auditing Gas Electric and Telecommunications Companies.docx
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Chapter36AuditingGasElectricandTelecommunicationsCompanies
窗体底部
36
AuditingGas,Electric,andTelecommunicationsCompanies
36.1OVERVIEWOFTHEINDUSTRY
(a)ElectricUtilities,
(b)GasUtilities,
(c)TelecommunicationsCompanies,
36.2REGULATORYENVIRONMENT
(a)Rate-MakingProcess,
(b)Rate-MakingFormula,
(i)CostofService,
(ii)ReturnonInvestment,
(1)RateBase,
(2)RateofReturn,
(iii)Performance-BasedRegulation,
(c)ElectricUtilities,
(d)GasUtilities,
(e)TelecommunicationsCompanies,
36.3ACCOUNTINGPRINCIPLESFORRATE-REGULATEDENTITIES
(a)InterrelationshipofRateMakingandAccounting,
(b)AbandonedPlantLossesandDisallowances,
(c)Phase-inPlans,
(d)GroupMethodDepreciation,
(e)AllowanceforFundsUsedDuringConstruction,
(f)EmbeddedRegulatoryAssets,
(g)AlternativeRevenuePrograms,
(h)OPEBCosts,
(i)RevenueSubjecttoRefund,
(j)UnbilledRevenues,
(k)DeferredEnergyCosts,
(l)Leases,
(m)PurchasedPowerContracts,
(n)Long-TermPowerSalesContracts,
(o)DeferralsofGainsandLosses,
(p)IncomeTaxes,
(q)NuclearDecommissioningDisclosures,
(r)FinancialStatementPresentation,
(s)EnergyTradingContracts
(t)WeatherDerivatives
(u)InternalUseComputerSoftware
36.4RISKFACTORSandAUDITstrategy
36.5TYPICALTRANSACTIONS,CONTROLS,ANDTESTSOFCONTROLS
(a)RevenueCycle,
(b)PurchasingCycle,
(i)PurchasesorConstructionofUtilityPlant,
(ii)FuelPurchases,
(iii)PurchasesorSalesofPower,
(iv)IncurringandAccountingforCostsThroughaWork-OrderSystem,
36.6SUBSTANTIVETESTS
(a)AllowanceforFundsUsedDuringConstruction,
(b)RegulatoryAssets,
(c)UnbilledRevenues,
(d)DeferredCosts,
(e)AnalyticalProcedures,
36.1OVERVIEWOFTHEINDUSTRY
Historically,electric,gas,andtelephonecompaniesweregrantedmonopolystatuswithinadesignatedserviceareabecausethoseserviceswereconsideredessentialtothepublicwelfareandanexclusivefranchiseachievedtheeconomiesofscalethatcharacterizedmonopolyoperations.Withthismonopolystatuscamegovernmentalregulationoftheoperationsandrateschargedfortheseservices.Withadvancesintechnologyintheelectricindustry,comparablethird-partyaccesstogastransportation,andtheopeningofelectrictransmissionsystems,electricandgasutilitieshaveseentheirmonopolystatuschangeandareendeavoringtooperatesuccessfullyinamorecompetitive,lessregulatedenvironment.Comparableforcesalsohavebeenatworkinthetelecommunicationsindustry. Thelongdistancemarkethasbeenopentocompetitionformorethan15years.SincethepassageoftheTelecommunicationsActof1996,hundredsofnewcompanieshaveenteredthelocaltelecommunicationsmarketincompetitionwiththeformermonopolyproviders.
Publicutilities1arecapital-intensivebusinesses.Inthepast,forexample,itwasnotunusualforanelectricutilitytospendseveralbilliondollarsconstructingalargegeneratingstation.Morerecently,however,duetothechangingregulatoryenvironment,utilitieshavebeenbuildingsmallerunitswithconstructioncostsinthe$500millionrange.Theinvestmentbyelectric,gas,andtelecommunicationsutilitiesinplantfacilitiesnecessarytotransmitanddistributetheirservicesisalsosignificant.Asaresultofthesecapitalrequirements,theplantaccounttypicallyisthemostsignificantassetofautilityandusuallyapproximatesthelong-termdebtandequitycapitalonthebalancesheet.
Electricandgasutilitiesmaybeeitherinvestorownedorpubliclyowned(byeithergovernmentalagenciesorcustomers).Ownershipbystockholdersisthepredominantformofbusiness.Incertainareas,thefederal,state,orlocalgovernmentprovidesutilityservices.Cooperativesystemsusuallyserveruralareasandareownedbytheircustomers(members).
ThedivestitureofAmericanTelephoneandTelegraphCompany(AT&T)in1983begananeweraintelecommunications,acceleratingthepenetrationofcompetitionintothelongdistancemarket.ThedivestiturecreatedsevenRegionalBellOperatingCompanies(RBOCs),whichprovidelocalexchangeservicestomostareasoftheUnitedStates;AT&Tandtheotherinterexchangecarriersprimarilyprovidelongdistanceservice.Since1983,AT&T'smarketsharehasdeclinedto60percentorlessofthetotallongdistancemarket.ThelocaltelecommunicationsmarketcontinuestobeservedprimarilybytheRBOCs.Thisischanging,however,asaresultoftheTelecommunicationsActof1996(theAct),whichiscontributingtothedissolutionoftheRBOCs'monopolystatus.TheActrecognizedmultiplesourcesofsupply,rapidlyevolvingtechnologies,andgrowingdemandforneworimprovedtelecommunicationservices,andplacedrelianceonmarketforcestoachievereasonablepricesandeconomicefficiency.Thatisexpectedtobeachievedascompetitivelocalexchangecarriersandtraditionallongdistanceprovidersexpandtheirpresenceintolocalmarkets.
(a)ElectricUtilities
Electricityisproducedbylargegeneratingplants,althoughrecenttechnologyismakingitpossibletooperatesmallerplantseconomically.Typically,exceptforhydroelectricplants,aheatsourcesuchascoal,oil,gas,ornuclearfuelisconsumedtoproduceelectricpower.Thepowerisdeliveredthroughouttheutility'sserviceareabyitstransmissionsystemandismadeavailabletoindividualcustomersviatheutility'sdistributionsystem.
Electricpowercannotbestored;itmustbeproducedasitisneeded.Thisplacesunusualcapitalrequirementsontheutility,whichmusthavesufficientgeneratingcapacitytomeetpeakloadrequirementseventhoughthoserequirementsmightexistonlyforshortperiodsduringadayorduringcertaintimesoftheyear.Toalleviatethissituation,utilitieshaveengagedindemand-sidemanagementactivitiestoinfluencecustomeruseofelectricityinordertoaffectelectricitydemand.Theseactivitiesincludeloadmanagement(whichinvolvesshiftingdemandfrompeaktooff-peakperiods),energyconservation,newusesofelectricity,andinnovativeratestructures.Someutilitycommissionsallowutilitiestoearnareturnontheirdemand-sidemanagementinvestmentsbecauseoftheirreportedcostsavingsandenvironmentalbenefits.
Anelectricutilityalsomusthavesufficientexcessorreservecapacitytooperateevenifoneormoreofitslargestgeneratingunitsareunavailable.Utilitiescanreducetheneedtobuildreserveplantcapacity,however,byjoiningpowerpools,integratingtheirsystemswiththoseofneighboringutilities,andcontractingwithotherutilities,independentpowerproducers,andcogeneratorstopurchaseneededcapacity.Cogeneratorsareoftenmajorcommercialorindustrialcustomerswhoinstallgeneratingfacilitiesfortheirownuse.Thesefacilitiesgenerateelectricityandaby-product,suchassteam,whichthecogeneratorusesinitsoperationsorproduction.
Currentfederalregulationsprovideanincentivetocommercialandindustrialcustomerstobuildtheirowngeneratingfacilities,sincesurpluselectricitygeneratedmaybepurchasedbythelocalutilityattheutility'savoidedcost.Avoidedcostisdetermineddifferentlyineachjurisdiction,butthegoalistodeterminethecosttheutilitywouldhaveincurredtogeneratetheelectricityorpurchaseitelsewhere.Eventhoughtheutilityhastheobligationtopurchaseelectricitygeneratedbycogeneratorswhenoffered,italsomustbuildcapacitysufficienttosatisfytheneedsofitsentireserviceterritory,whichincludesthecogenerator.
Totheextentthatelectricutilitiesarestillmonopoliesandregulatedentities,theyareoneofthelastremainingindustriestobeso.Asaresult,pressurehasbeenplacedontheindustrytodrivethecostofitsservicedowntoamarket-basedlevelratherthanaregulatory-determinedrate.Theabilitytocompeteinacompetitivemarketrequiresadetailedunderstandingofthecostofprovidingallformsofservice.Regulatorycommissionsinthepastoftenfounditpoliticallyexpedienttoallowutilitiestoearnagreaterrateofreturnfromtheirindustrialcustomerssothatresidentialratescouldbekeptlower.Giventhiscross-subsidy,itisnotsurprisingthatitistheindustrialcustomerswhoareleadingthechargetopushcompetitionfromthewholesaletotheretaillevel.Manyelectricutilitiesarenotpositionedtocompeteinanopenmarketand,therefore,areinthemidstofarestructuring,primarilyalongfunctionallines,namely,powergeneration,transmission,anddistribution.
Thegeneratingsectoroftheelectricutilityindustryinparticularhasbecomeincreasinglycompetitive,withindependentandaffiliatednonutilitypowerdevelopersprovidingagrowingpercentageofthenation'snewcapacity.Thepricesthatutilitiespayfornonutility-generatedpowerundernewerpowerpurchasecontractsareusuallymarket-based,determinedthroughacompetitivebiddingprocessorsetadministrativelybystateregulators.Becausethemarginalcostofpowerhasdroppedsubstantiallyoverthepastfivetotenyears,someoftheoldercontractshavelocked-inpricesthatareconsiderablyabovethecurrentmarketpriceofelectricity.Utilitiesburdenedwiththesehigh-costpowerpurchasecontractsarecaughtbetweentryingtohonorthesecontractsandreducingcostsinordertostaycompetitive.
Regulatorsandlegislatorsinmanystateshaveevaluatedandconsideredsignificantrestructuringsoftheutilityregulatoryprocesses,includingmarket-basedratesforutilityservicesandotherdramaticchanges,suchasretailchoice,divestitureofgenerationassets,an
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