CPE CREDIT for CPAs available for all States and CLE CREDIT for lawyers: available in most states
LEARNING OBJECTIVE:
To provide a working understanding of finance and accounting as applied to both the regulated utility and non-regulated companies (competitors, customers and the future utility company).
Upon completion of the seminar, participants will be able to:
Understand accrual accounting
“Read” an annual report of the company or its customers
Calculate key financial ratios
See the link between finance and accounting and the strategic plans of the company
Understand how a utility makes money now and what needs to be done for the future
Analyze whether shareholder value is being created as opposed to net income
Do a capital budgeting analysis (engineering economics)
APPROACH:
Lecture and discussion with a note-taking outline provided to each participant. Extensive use of:
A non-debit and credit approach
Problem solving sessions
Homework assignment
Actual utility financial statements
Interaction with other participants
Group case work
OUTLINE OF THE WEBINAR TOPICS
Introduction
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Basic Accounting Concepts
– Balance Sheet
– Income Statement
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Financial Statement Analysis
– Return on Equity
– Total Shareholder Return
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The Utility’s Four Sets of “Books”
– GAAP, Tax, Rates, Managerial
– Cost of Service Regulation
– Rate Base, Operating Expenses, Allowed Return
– Above-the-line versus and Below-the-Line Expenses
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Mock Rate Case
– Advertising
– Take or Pay Contracts
Ethics Considerations
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Modifications to Rate of Return Regulation
– Adjustment Clauses, Trackers, Riders, Deferrals
– Rate Freezes, Decoupling
– Pre-approvals
– Formula Ratemaking
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Present Value Analysis
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Shareholder Value
– Theory
– Income versus Shareholder Value Maximization
– Risk Considerations
– How to Make Decisions
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Accounting for Utility Plant
– Straight Line Depreciation
– Accelerated Depreciation
– Capitalization Versus Expense
– Methods of Capitalizing More or Less
– Which is Better for the Utility
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Income Taxes
– Temporary Differences
– Deferred Taxes (Normalization)
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Cost of Capital
– Weighted Average Cost of Capital
– Risk Premium Approach
– Discounted Cash Flow (DCF) Method
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Capital Project Analysis Review Case
– Cash Flow as affected by Taxes & Rate Regulation
– Which Discount Rate to Use
– Creating Shareholder Value
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Conclusions
For a list of organizations who have sent people to our classes, look at our previous participant list.
