Many active government programs provide assistance and different forms of incentives to develop power and utility projects. The assistance may be in the form of investment or production tax credits, cash grants, or grants of other assets. Figure UP 16-1 highlights some of the current government programs available to utilities and power companies, as well as related accounting, auditing, and compliance considerations.

Figure UP 16-1
Summary of current energy-related government incentives

Government grants may include significant compliance requirements, including the potential for independent audits and audits by various government agencies. Assessing the probability that the reporting entity will be able to comply with all grant requirements is a key consideration in the recognition process. Therefore, reporting entities should have compliance programs and monitoring procedures that are sufficient to ensure ongoing compliance with the applicable requirements.

Figure UP 16-2 provides a high-level summary of government grant compliance requirements.

Figure UP 16-2
Compliance, reporting, and audit requirements for government grants

In addition to the requirements noted in Figure UP 16-2, there may also be requirements under the Internal Revenue Code, such as for specific tax credits.

Reporting entities receiving government grants may be subject to one or more audits by government agencies, such as the DOE Inspector General, defense contract auditors, or external independent accountants. In general, the grant agreement will specify its audit requirements. However, it is possible the grant agreement will be silent on the topic and an audit still may be required under the Code of Federal Regulations 10 CFR 600.316.

Reporting entities should refer to the grant agreement, other related agreements, and information on the DOE website for specific information about the grant being evaluated.