Regulated utilities are subject to the guidance on accounting changes for entities in general (see FSP 30). If a regulated utility adopts an accounting change that does not affect allowable costs for ratemaking purposes, ASC 980-250-55-3 requires that the change be applied in the same manner as an unregulated entity.

In some cases, a new US GAAP requirement results in recording a balance that is being collected through rates and would be eligible for regulatory accounting. For example, in 2007, reporting entities were required to apply new guidance that resulted in recording the unfunded or underfunded pension and OPEB liability. Under the prior accounting model, these amounts had not been recorded on the balance sheet. In that situation, many regulated utilities were able to conclude that it was appropriate to offset the new liability with a regulatory asset instead of a charge to other comprehensive income (see UP 17.3.3.2 for further information).

When adopting a new accounting standard, regulated utilities should evaluate the specific facts and circumstances, including the cost recovery model and applicability of regulatory accounting, in determining whether it is appropriate to record new regulatory assets or liabilities.