January 28, 2021
XBRL Tagging and Beyond: Are You Ready for FERC’s New Filing Mandate?
Eighteen months ago, the Federal Energy Regulatory Commission (FERC) announced its adoption of the Extensible Business Reporting Language (XBRL) standard for energy company submissions of Forms 1-F, 2, 2-A, 3-Q electric, 3-Q natural gas, 6, 6-Q, 60, and 714.
XBRL is an open, international standard XML-based language for digital business reporting, managed by a non-profit consortium, XBRL International. FERC’s new rule for utilities was driven in part by the imminent end of support for the industry’s longstanding reporting solution, Visual FoxPro. In its communication about the new rule, the FERC noted that, “The use of XBRL will make the information in these forms easier for filers to submit and data users to analyze and assist in automating regulatory filings. The Commission believes that transitioning from the current Visual FoxPro system to XBRL will decrease the costs, over time, of preparing the necessary data for submission and complying with future changes to filing requirements set forth by the Commission.”
As part of its new rule, the FERC developed an XBRL taxonomy, or system of classification, to ensure that energy companies apply XBRL tags in the same way to all of the applicable regulatory forms. The final taxonomy was issued in July of 2020, and an update will be released in April of 2021. The first regulatory filings to use the XBRL standard will be Form 3-Q by November 29, 2021, Form 1 (Electric) and Form 2 (Gas) by April 18, 2022, and Form 60 (Service Company) by May 1, 2022.
Three XBRL Options and Our Recommendation
Utilities running SAP have a choice between building their own tool, outsourcing the tagging to an external vendor or using a third-party XBRL software solution.
When Utegration explored these alternatives last year, we concluded that the third option provides the richest features, most proven market performance and best long-term support. We have chosen to partner with Workiva to help our customers comply with the XBRL mandate. Workiva is an XBRL expert and SaaS solution developer with more than 3,500 customers worldwide. Whether your utility is running SAP ECC or S/4HANA, Workiva’s XBRL solution for FERC will enable real-time collaboration and link shared information from internal financial reports or SEC filings to your FERC report. Learn more about Workiva and Utegration partnership.
Utegration’s Value Add
While New Year’s celebrations weren’t that long ago, November 2021 will be here before we know it. Utilities are now ramping up to establish their XBRL systems and processes well in advance of that Form 3-Q filing. Given Utegration’s decades of experience implementing and optimizing FERC solutions in the SAP ERP, we are uniquely qualified to help our customers with guidance on XBRL.
The replacement of Visual FoxPro with XBRL is certainly newsworthy. Applying the new reporting standard will, however, only account for a small portion of the effort involved in filing with the FERC. Most of the workload utilities will face will be around gathering the right financial data to be tagged and preparing all of the non-financial data to be included in each FERC form, such as footnotes. For utilities with multiple financial data sources, the challenge can be even greater.
Utegration will ease the burden of financial data prep by integrating SAP and other data sources with Workiva’s XBRL solution for FERC, which otherwise entails manual uploads for every form and every filing. Our “Core Compliance” service extracts FERC account balances from SAP and ensures that trial balance data matches FERC financial statements exactly; we then push the data from SAP to Workiva’s SaaS solution, then map the trial balance FERC accounts to the FERC form page numbers. This one-time, upfront integration automates every subsequent filing.
For utilities that want to leverage their investment in Workiva’s XBRL solution even more, Utegration will: enhance the integration to deliver an “Intelligent Form 1” that enriches XBRL data with final cost object detail; clean up financial data to make it more valuable; and create a drill-down from the taxonomy financial statement to cost object in Workiva. This will establish an “intelligent” Form 1 in Workiva with the cost objects supporting each FERC account balance.
Lean on Our FERC Expertise
Whether your XBRL plan is already underway or you’re still trying to get the acronym correct, you can contact Utegration to learn more about making the most of this new regulatory requirement. Because we know utility accounting in SAP so well—from plain vanilla FERC module designs to custom, homegrown solutions to optimized add-on solutions certified by SAP—there’s no better partner to help you meet FERC’s XBRL mandate with enduring, meaningful benefits.
To view all of our resources on regulatory reporting click here.