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How can one be compliant with FERC’s XBRL mandate? What are the procedures to be followed?

The Federal Energy Regulatory Commission – FERC XBRL mandate is responsible for regulating the natural gas, electricity, oil, and hydropower industries. As detailed in our previous blog, the commission introduced a mandate requiring FERC-regulated energy companies to submit their annual accounts in XBRL format. 2021 is when the energy companies must submit their first forms with XBRL tagging according to the mandate in Q4.

How to be compliant with FERC’s XBRL mandate?

Naturally, questions and concerns are probably making you reel. Not to worry, we can sort it out for you! Here is all you need to know about FERC’s mandate and how you can ensure compliance.

The Forms

The XBRL requirement specifically impacts certain forms of annual and quarterly forms of electric and public utilities, natural gas, oil companies, and centralised service companies. The forms are:

  • 1
  • 1-F
  • 2
  • 2-A
  • 3-Q electric
  • 3-Q natural gas
  • 6
  • 6-Q
  • 60
  • 714

The Planning

Although the time investment is likely to be high initially, almost 90% of the burden will quickly reduce after one year. The only task that will remain is collecting, compiling, and assembling data that goes into each report. The process is made even more comfortable with the help of software from an experienced service provider. Depending on the route you are to take, planning out resources, time, and budget allocation now can help in a big way for the future.

The Transition

The move from Visual FoxPro to XBRL is going to be unsettling. However, with the reduction in work quantum, the only concept that needs familiarization is the XBRL tagging. We can help break it down for you.

Recent Updates:

Revisions to the Filing Process for Commission Forms; Notice of eForms Updates (FERC XBRL Mandate)

Notice is given that on March 28, 2024, the eXtensible Business Reporting Language (XBRL) taxonomies, validation rules, and rendering files required for filing FERC Form Nos. 1, 1-F, 2, 2-A, 3-Q electric, 3-Q natural gas, 6, 60, and 714 will be updated to Version 2024-04-01. This version will be effective for first quarter 2024 forms.

The draft updated taxonomies, validation rules, and rendering files (Version 2024-01-01) are currently available for download on the eForms portal (https://ecollection.ferc.gov) and for testing. Suggestions on the draft Version 2024-01-01 taxonomies can be provided by March 1, 2024, through https://XBRLview.ferc.gov.

FERC Form filings due after March 28, 2024, must use the Version 2024-04-01 taxonomies, validation rules, and rendering files, including the 2023 FERC Form Nos. 60 and 714 and the 2024 FERC Form Nos. 1, 1-F, 2, 2-A, 3-Q electric, 3-Q natural gas, and 6. Detailed version information organized by form can be found on the Taxonomy History page (https://ecollection.ferc.gov/taxonomyHistory).

Why Did FERC Choose to Adopt XBRL?

Global Standard: XBRL is a widely recognized global data-encoding standard, particularly tailored for business and financial reporting purposes.

Taxonomy Creation: It allows for the creation of a taxonomy, essentially a data dictionary that establishes a classification hierarchy, defining the content of a report.

Enhanced Clarity: Terms within the taxonomy can be linked to authoritative definitions, reducing ambiguity. Additionally, the data dictionary can enforce rules on data quality, such as total calculations and acceptable value ranges. This facilitates data validation before submission.

Contextual Information: Each reported value is captured with contextual details, including the date of measurement, unit of measurement, and precision or rounding specifications.

Interoperability: Reports produced in XBRL format are interoperable data, facilitating easy sharing across various information systems and platforms.

Human Standards in Computer Encoding: XBRL enables the encoding of human standards into a computer-readable format. Importantly, this transition does not alter the quantity or nature of the data reported to FERC but rather changes the method of data delivery, utilizing the XBRL data-encoding format.

How the FERC XBRL Mandate Benefits Energy Companies

The FERC XBRL mandate promises substantial advantages for energy companies, streamlining the preparation of FERC forms and enhancing operational efficiency.

Efficient Data Transfer

The XBRL mandate simplifies the arduous task of FERC form preparation by enabling seamless transfer of vast amounts of financial and operational data to XBRL filing software with just a click. This contrasts sharply with the manual input required in the current filing system, where each number must be entered individually.

Data Validation

With data gathered and tagged using appropriate XBRL tags, filers can validate the accuracy and integrity of the data before submission. This proactive validation process helps eliminate errors and discrepancies during the filing process, ensuring greater data reliability.

Smoothened Filing and Analysis

 The adoption of XBRL not only streamlines the filing process but also facilitates easier analysis of the submitted data. The structured nature of XBRL-tagged data enhances data accessibility and usability, enabling more efficient regulatory compliance and analysis.

Automation Potential

 By embracing XBRL-based filing systems, energy companies can pave the way for automation in regulatory filings. Over time, automation can significantly reduce the administrative burden associated with compliance activities, leading to cost savings and operational efficiencies.

In essence, the FERC XBRL mandate offers energy companies a pathway to enhanced efficiency, accuracy, and cost-effectiveness in regulatory compliance efforts. Through standardized data formats and streamlined processes, XBRL empowers energy companies to navigate regulatory requirements more effectively, fostering a more agile and competitive industry landscape.

How does xbrl tagging work, and who will do it?

Tagging is the process of adopting your unique financial data to an element within a set of pre-defined terms called a taxonomy. This is what gives XBRL its extensibility, as it can be widely adopted and used. Energy companies in the US are already preparing to file their annual returns in this new format. How can you ensure you are not falling behind?

A few routes you can consider:

  1. Build an in-house XBRL tool: With the potential to turn into a herculean task, this needs ample time and resources to develop and test. With existing projects to complete and deliver and working remotely due to the pandemic, you may want to take a rain-check on this option.
  2. Partner with an expert: Outsourcing the task of report generation to a company that can supply the resources you may not be able to muster to meet your XBRL requirements may work well. Experience, expertise, and availability during need are some of the critical factors you will need to ensure before choosing your ideal partner.
  3. Decide to invest in a software solution: When it comes to software, the company behind it is equally important. Their XBRL expertise defines the robustness of their technology solution. Can it help with the entire gamut of data collection, preparation, and reporting? How easy is it to use the software and what is the learning curve with respect to XBRL domain? How effective is the collaborative preparation and review of reports? Understand the ability of the software to automate data collection. Since you will be inputting sensitive data, their safety and security also play a significant role.

Meeting Deadlines

XBRL was introduced to cut down on time spent compiling and filing regulatory reports. Nevertheless, it never hurts to have a transparent process and ensure that you are ahead of the game. You can take a call on having one dedicated team doing all the work or call on SMEs to enter their area of reporting using our ferc reporting software platform. Several people can also enter data into the draft at once, saving even more time.

Building enough and more cushion into a process flow chart can ensure that all deadlines are met.

Today, we need flexibility like never before. The pandemic has made it imperative for us to plan and be prepared. Collecting data, creating and editing reports, and approvals; has to be done remotely, and facilitating that has to be the principal business decision that you will need to take.

Empowering Your FERC Reporting with Modern Solutions

In the ever-evolving landscape of regulatory compliance, it’s crucial to stay ahead of the curve. While many companies in the US already rely on reputable FERC reporting software, there’s always room for improvement. At DataTracks, our prime mission is to empower your organization with the latest tools and technologies to streamline your reporting processes and elevate your compliance efforts.

Our team understands the challenges you face in navigating complex regulatory requirements. That’s why we’ve developed a comprehensive FERC reporting software solution that combines cutting-edge technology with intuitive design. With seamless XBRL integration and robust data validation capabilities, our software ensures accuracy and efficiency every step of the way.

By making the shift to our modern FERC reporting software, you’re not just investing in compliance – you’re investing in the future of your business. Let us help you unlock new levels of efficiency and productivity while mitigating risk and reducing costs.

Ready to take the next step? Reach out to our team today to schedule a consultation and discover how our solutions can empower your organization to thrive in today’s regulatory landscape.

DataTracks, with a presence in 26 countries, has had over 19+ years of experience in the field of compliance reporting. Having generated close to 400,000 reports, we have ensured the quality and assurance of proper reporting support at competitive prices. Our data confidentiality and efficient work has earned us 28,000 happy clients.

We have a flagship Data Point Model (DPM) based product, which is extensively used by Insurance companies and Banks in the European Union for preparing their regulatory compliance reports in XBRL. To learn more, and start your compliance journey, send an email to enquiry@datatracks.com