Regulatory Accounting: A Primer for Utility Regulators

March 2020 – With the support of the United States Agency for International Development (USAID) – Energy Division, Office of Energy & Infrastructure, the National Association of Regulatory Utility Commissioners (NARUC) has undertaken the task of developing a Cost Reflective Tariff Toolkit. The toolkit is intended to constitute several short practical primers that can be used by utility service regulators in countries with emerging economies to design rates that are based on actual cost of service and to effectively engage the public and key stakeholders in the decision-making process.

The second component of our Tariff Toolkit, "Regulatory Accounting: A Primer for Utility Regulators" is a guide to the structure and function of a system of accounts that regulated utilities can use to ensure they are accurately recording and categorizing financial transactions and presenting coherent data to the regulator.

Published in December 2019 and written by NARUC's project adviser Thomas L Welch, the primer describes the characteristics and value of a sound accounting system, presents in broad outline and detailed examples the Uniform System of Accounts, and offers suggestions for how to implement a sound utility system where, as may be the case, the existing system is incomplete, inaccurate, or otherwise inadequate to serve the regulator’s needs.

"Regulatory Accounting: A Primer for Utility Regulators" can be found here.