What is the FERC XBRL mandate all about and who does it apply to?
The Federal Energy Regulatory Commission (FERC) announced in June 2019 that it would require energy companies in the US to submit their quarterly and annual reports in the XBRL format. This replaces the PDF forms that they are submitting currently. The FERC XBRL mandate applies to the following:
- Electricity companies
- Natural gas companies
- Oil pipeline companies
- Centralized service companies
When does the mandate kick in?
Compliance with the FERC XBRL mandate will kick off later this year, with the companies mentioned above submitting their third-quarter filings in XBRL format on December 31, 2021. This is as per a recent extension of the deadline for quarterly filings, taking into consideration the additional time that companies might need to transition to an XBRL-based system.
What forms must energy companies submit in XBRL?
Where are we now in the FERC XBRL implementation timeline?
Energy companies currently use a Microsoft Visual FoxPro-based system for their FERC reporting. This system will be phased out after the September 2021 filings as Microsoft no longer supports the program.
The time is ripe, therefore, for energy companies to pick software that supports XBRL report creation and helps them comfortably meet the compliance deadline.
What exactly is XBRL?
XBRL or eXtensible Business Reporting Language is an open standard that is used globally to report, transfer, and compare business data. The main benefit of the XBRL standard is the machine-readability it lends to a document. An XBRL document is created by placing machine-readable tags against the data or disclosure in a document from the backend. The list of all the machine-readable tags is called taxonomy. A taxonomy can also be described as a list of elements that provide the basis or starting point for complying with an XBRL mandate.
XBRL provides extensive benefits at all stages of business reporting and analysis. Information shared in the XBRL format can be considered more accurate and can facilitate improved analysis.
The FERC taxonomy: The FERC issued a taxonomy in July 2020, which companies were required to use as a starting point. A fresh update of the FERC taxonomy, validation rules, and rendering files is due on April 15, 2021.
How will the XBRL mandate help the FERC?
The FERC currently receives various forms from energy companies in PDF format. All the information that the companies submit is locked in PDF files that FERC supervisors must manually sift through.
Since under the XBRL mandate the FERC will be receiving data from numerous filers in a standard, machine-readable format, the regulator can promptly validate, analyze, and process the data. Investors and the public at large can be fully assured of the quality of this data and the resulting analysis.
How will the FERC XBRL mandate help energy companies?
The XBRL mandate brings energy companies much ease around the FERC form preparation exercise. Reams and reams of financial and operational data can be transferred to an XBRL filing software at the click of a button. This contrasts with the current filing system, where every number needs to be keyed in individually.
Also, with the data being gathered and tagged with appropriate XBRL tags, filers can validate the data before filing, thus eliminating any errors during the process.
Having the data in XBRL smoothens both the filing process as well as and the analysis of the data submitted. This can assist in bringing automation to regulatory filings. Over time, an XBRL-based filing system is bound to reduce the cost of compliance for energy companies.