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Technology, Regulations, and the Evolving Role of Finance in the Utilities Industry

Utilities are changing at an accelerated rate not only with shifts in the types of energy use, but also shifts in requirements from regulatory agencies and approaches to energy distribution models. There are multiple factors driving this, including technology advancements (smart cities), increased renewable energy commitments (city and state), and regulatory changes (Clean Power Plan). With so many moving parts, organizations need to make data driven decisions around where to invest and which investments will make the biggest impact.

The Changing Role of Finance

As a finance professional in the utility industry, you need to contribute insights to the company from an investment and strategy perspective to help your organization effectively embrace industry changes. Let’s look at each area of change to see what role finance can play in moving things forward:

  • Track commodity charges, consumption rates, wholesale sales of electricity, and other financial metrics on an hourly or daily basis for budget planning. This requires modeling both supply and demand forecasts and feeding these into a traditional financial plan to support more integrated and accurate planning. However, doing this in real time is a significant challenge.
  • Create planning models to assess the potential value of technology investments such as infrastructure improvements (e.g. transformer upgrades) or changes from shifts in the Clean Power Plan.
  • Assess the financial viability of proposed utility consolidation and infrastructure updates resulting from updated FERC or state and local regulatory requirements. Model the impact of change and track actual performance against plan highlighting variance, all while keeping costs under control.
  • Generate custom reports to support evolving business needs and provide rapid answers, without dependency on IT.

Changes to Make to Survive and Thrive in an Evolving Industry

The pace of change doesn’t leave room for time-consuming, manual processes. CFOs in utility companies are being asked to own and analyze vast amounts of data and make recommendations to the C-suite. In fact, 92 percent of CFOs in utilities believe they will be focused on leading efforts to make the entire enterprise more efficient through adoption of digital technology across the business.

Taking Control with Finance-Owned Reporting

A significant step forward is to manage your own reporting. This will give you the freedom and agility to create standard or custom reports in response to changing business requirements, without relying on IT. Developing integrated, driver-based plans enables collaboration across departments to produce more accurate planning models. Access to accurate, real-time data on operations, maintenance costs, and capital improvement costs makes cost control easier.

This allows you to be more agile in driving the business and responding to critical concerns without relying on IT intervention. ERP tools provide less than optimal reporting capabilities, and consequent manual data dumps into static spreadsheet reports cannot provide the agility needed to keep up with market changes.

As you look for financial reporting and planning software to modernize your processes, assess the following capabilities:

  • Automatic data capture through access to real-time ERP data, eliminating the need for manual data pulls to track commodity charges, consumption rates, and other financial metrics
  • Ability to pull data from multiple ERP sources to provide insight into utility consolidation through M&A activity and major infrastructure repairs and upgrades
  • Real-time actuals and budgets with bottom-up/top-down planning to enable better cost projections and forecasts on assets and maintenance
  • Ability to create custom reports as needed to comply with regulatory requirements from the FERC, as well as state and local agencies
  • Easy to use, real-time reporting capabilities that do not require IT involvement, facilitating rapid responses to regulatory changes such as the Clean Power Plan
  • Security that leverages protocols built into your ERP to automatically comply with your organization’s data access policy

In order to effectively move your organization forward and make sound recommendations to upper management, you need to track and report on KPIs. A robust financial reporting solution will allow you to more easily measure and analyze industry KPIs such as:

  • Average cost per job megawatt produced
  • Average revenue per megawatt produced
  • Percentage of possible power revenue billed
  • Profit redistribution
  • Total shareholder returns

insightsoftware solutions empower finance to create comprehensive reports from base rates to infrastructure depreciation, independent of IT resources. Own your reporting with real-time data and easy to use reporting capabilities to keep pace with the ongoing changes in the utility industry. Not sure where to start? Take a look at our infographic, How to Power Digital Transformation in the Power and Utility Industry.

Already know what you want? Request a free demo now.

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insightsoftware

Global provider of enterprise software solutions for the Office of the CFO to connect to & make sense of data in real time, driving financial intelligence across the organization.