Public Utilities Commission asks licensees for regulatory accounts

Tuesday, 31 May 2016 00:22 - - {{hitsCtrl.values.hits}}

The Public Utilities Commission has issued a set of accountancy guidelines to licensees who are in the business of electricity generation, transmission and distribution, in order to gain more information for the process of regulatory decisions making.

According to the tariff methodology designed by the Commission, the determination of allowed revenue requires information at the generation unit level, in the case of generation and sub functional level, in the case of transmission and distribution.

Therefore, it is required to prepare separate accounts for each of the licensed business which will allow the Commission to obtain financial and non-financial information of the licensees.

The Ceylon Electricity Board (CEB) and the Lanka Electricity Company (Private) Limited (LECO) are the main electricity utilities in Sri Lanka. The existing accounting system of the CEB is structured under nine divisions which has no accounting segregation for regulated and non – regulated business activities such as air conditioning, refrigeration and lift installation business.

Therefore, a regulatory accounting system is required to bridge the gap between accounting information currently available and information that required by the Commission for making decisions.

However separate books of accounts need not to be maintained as most of the information required for regulatory accounts can be extracted from the records maintained for statutory accounts with certain modification to the chart of accounts.

The proposed guideline for preparation of regulatory accounts establish a mechanism for licensees to prepare and submit regulatory accounts, and includes a set of accounting policies and principals, uniform system of accounts, disclosure requirements, principal for cost attribution, allocation and transfer pricing, audit process, principals for reconciliation of regulatory accounts with statutory accounts, templates for the preparation of regulatory accounts etc.

The Commission said the first set of annual regulatory accounts will commence from 1st of January 2017.