PwC is pleased to offer this Utilities and power companies guide. This guide was fully updated in March 2016. Since then, certain sections have been updated to reflect new guidance or interpretations. See Appendix D, Summary of significant changes, for more information.
We have organized this guide by topical area into 20 chapters. The chapters address a variety of accounting issues relevant for utilities and power companies and should be used as a supplement to US GAAP and to the general accounting guidance provided by other PwC guides. The chapters include accounting and financial reporting considerations in the following areas:
• Commodity contract accounting, including leasing and derivatives. Chapters relating to natural gas, emission allowances, and renewable energy credits are also included.
• Accounting for power-related investments including business combinations, investments in power plant entities, and consolidation of variable interest entities.
• Accounting for nonfinancial assets and liabilities including inventory, property, plant, and equipment, asset retirement obligations, and nuclear power plants. The accounting for government grants is also included.
• Accounting for regulated operations, including considerations relating to utility plant, income taxes, and business combinations.
Each chapter discusses the relevant accounting literature and includes specific questions and examples to illustrate application.
Locating guidance on particular topics
Guidance on particular topics can be located as follows:
• Table of contents—The table of contents provides a detailed listing of the various sections in each chapter. The titles of each section are intentionally descriptive to enable users to easily find a particular topic.
• Table of questions—The table of questions includes a listing of questions and PwC responses in numerical order, by chapter.
• Table of examples—The table of examples includes a listing of examples in numerical order, by chapter.
The guide also includes a detailed index of key topics.
References to US GAAP and International Financial Reporting Standards
Definitions, full paragraphs, and excerpts from the Financial Accounting Standards Board’s Accounting Standards Codification and standards issued by the International Accounting Standards Board are clearly designated, either within quotes in the regular text or enclosed within a shaded box. In some instances, guidance was cited with minor editorial modification to flow in the context of the PwC Guide. The remaining text is PwC’s original content.
References to other chapters and sections in this guide
Where relevant, the discussion includes general and specific references to other chapters of the guide that provide additional information. References to another chapter or particular section within a chapter are indicated by the abbreviation “UP” followed by the specific section number (e.g., UP 2.3.2 refers to section 2.3.2 in chapter 2 of this guide).
References to other PwC guidance
This guide focuses on the accounting and financial reporting considerations for utilities and power companies. It supplements information provided by the authoritative accounting literature and other PwC guidance. This guide provides general and specific references to chapters in other PwC guides to assist users in finding other relevant information. References to other guides are indicated by the applicable guide abbreviation followed by the specific section number. The other PwC guides referred to in this guide, including their abbreviations, are:
• Business combinations and noncontrolling interests (BCG)
• Consolidation and equity method of accounting (CG)
• Derivative instruments and hedging activities (DH)
• Fair value measurements (FV)
• Financial statement presentation (FSP)
• Financing transactions: debt, equity and the instruments in between (FG)
• Foreign currency (FG)
• Leases (LG)
• Income taxes (TX)
• Revenue from contracts with customers (RR)
• Stock-based compensation (SC)
• Transfers and servicing of financial assets (TS)
In addition, PwC’s Accounting and reporting manual (the ARM) provides information about various accounting matters in US GAAP.
PwC guides may be obtained through CFOdirect (www.cfodirect.com), PwC’s comprehensive online resource for financial executives, a subscription to Viewpoint
, PwC’s online accounting and financial reporting reference tool, or by contacting a PwC representative.
This guide considers existing guidance as of March 31, 2016. Since then, section 20.4 has been updated to reflect new interpretations. See Appendix D, Summary of significant changes, for more information. Additional updates may be made to keep pace with significant developments. Users should ensure they are using the most recent edition available on CFOdirect (www.cfodirect.com) or Inform (www.pwcinform.com).
The appendices to this guide include a listing of technical references and abbreviations and a summary of significant changes from the previous edition.
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This guide has been prepared to support you as you consider the accounting for transactions and address the accounting, financial reporting, and related regulatory relevant to the industry. It should be used in combination with a thorough analysis of the relevant facts and circumstances, review of the authoritative accounting literature, and appropriate professional and technical advice.
We hope you find the information and insights in this guide useful.
US Chief Accountant