What Is the FERC XBRL Mandate, and What Do I Need to Do?
Energy companies are due to submit their first forms with XBRL® tagging in 2021 under the Federal Energy Regulatory Commission's XBRL mandate.
Naturally, you might have some questions.
FERC's updated electronic filing format for collecting financial data should make it much easier to share, analyze, and submit the data going forward. But there are some unknowns. Companies are still waiting for the commission to adopt a final taxonomy to incorporate into XBRL tagging solutions. (We've already started our prep work based on the draft taxonomy.)
Based on announcements by the Federal Energy Regulatory Commission, here's a projected timeline of what's ahead:
- 2019: FERC adopts XBRL requirement
- Spring/summer 2020: Explore how you will tag and who will tag
- Summer 2020: FERC expected to finalize taxonomy
- Second half 2020: Develop a process for reporting with time built in to tag
- Early 2021: Prepare year-end financial reports/10-K
- Spring 2021: Compile your year-end report for FERC
- December 31, 2021: Third quarter 3-Q (electric and natural gas) and 6-Q due with XBRL tags
"There are still steps you can take now while we wait for the final taxonomy, which is expected this summer," says David Winn, XBRL Product Manager at Workiva.
What you need to know about the FERC XBRL rule
The XBRL requirement will apply to quarterly and annual reports of public utilities, electric utilities, natural gas companies, oil pipeline companies, and centralized service companies. It specifically impacts these forms:
- 3-Q electric
- 3-Q natural gas
The XBRL requirement is only a fraction of the reporting burden
While the new requirement could add several hours of work for each report, more than 90% of the reporting burden after Year One will lie in simply collecting, compiling, and assembling the data going into each report, based on previous FERC estimates.
What is my estimated ongoing reporting burden?
Here's a look at the time on average that FERC estimates it will take companies to complete two selected forms.
How to prep now for an easy transition later
Visual FoxPro is going away, and FERC reporting teams will need to start filing in XBRL format. But as I mentioned before, the bulk of the reporting burden remains in compiling and preparing information for the report. So, get ready for XBRL tagging, but don't stop there. Let's break it down.
1. Explore how you will tag and who will do the work
Many energy companies are already setting the foundation now for year-end reporting in the new electronic filing format. If your team hasn't started yet, now is the time.
You have a few options:
- Build an in-house XBRL tool: Make sure developers have time to build it and your team has time to test it. Given that some departments may be stretched by other projects focused on supporting remote employees right now, you may want to consider one of the next two options.
- Outsource: Find someone who meets your XBRL needs, and make sure they'll be ready for you when you need to tag your reports.
- Choose a software solution: Vet your options for their XBRL expertise. But don't stop there. Can their technology also help with the entire data collection, preparation, and reporting process? Ask about real-time collaboration and linking shared information from internal financial reports or SEC filings to your FERC report. Check out whether some data collection can be automated using APIs or data connectors. You'll also want to make sure the solution meets IT security protocols. Public companies may want to choose a single XBRL solution that helps you meet filing requirements of both the SEC and FERC.
2. Agree on the new process you will use to complete reports
One important question is deciding whether a single core team will collect, compile, and assemble data for the reports, as well as manage approvals, signoffs, and filing.
The other option is using a divided team approach. For SEC filings, we find some companies use our connected reporting platform to empower subject matter experts to enter data directly into their specific areas of reports. That eliminates the duplicative work of sending information to the reporting team to enter. Because the Workiva platform is in the cloud, several people can also enter data into the draft at once, saving even more time.
Since SEC reports and FERC reports share some information in common, you may want to link data between reports for consistency, another benefit of connected reporting.
This could be a good time to step back and map your process as a whole. As a team, use a process flowchart to identify areas of risk in your current reporting process, opportunities for improvement, and solutions for each.
3. Adjust deadlines to leave time for tagging
FERC does not expect XBRL hours to be overly burdensome when considering the overall hours spent compiling your reports, but no one wants to be working late into the night to meet the mandate. For the first few reporting cycles, get ahead of the game. Build a cushion into your schedule to ensure you can meet deadlines.
A final word: if the COVID-19 pandemic taught us anything, it's that you need to have the flexibility to collect data, create and edit reports, and get approvals from anywhere, at any time. There's no telling whether we'll all be back at the office in early 2021, or staying healthy at home when companies finish 2020 year-end reports. It doesn't hurt to be prepared.
Explore these resources for building an agile foundation for future success. And, as always, we're here if you want stories of how others are saving time, money, and headaches with connected reporting.
XBRL® is a trademark of XBRL International, Inc. All rights reserved. The XBRL™/® standards are open and freely licensed by way of the XBRL International License Agreement.