SAP FERC Clearing: Just Get Rid of It

Among a number of challenges that utilities on SAP face, the process of FERC clearing comes up in our conversations with customers from time to time.

Clearing in the FERC post program is an abbreviated form of tracing that our CEO, Jerry Cavalieri, originally created in 1994, when he was an accounting principal at Pacific Gas & Electric leading the development of the SAP FERC module with HPC America. At that time, computing power was not adequate to handle the millions of records PG&E had to process, so FERC clearing was intended to gain much-needed process efficiency.

A great deal has changed since then, and for the last decade HPC has advocated an SAP FERC configuration that does not use clearing. In fact, we urge utilities to get rid of it.

Two years ago, one Fortune 500 utility used clearing groups for Service Company cost allocations and payroll overhead distributions as a means of speeding up the FERC trace. As a result, this utility sacrificed FERC trace accuracy and data granularity—and still had to endure lengthy FERC runs each month.

To eliminate the problems associated with FERC clearing, HPC updated this customer’s regulatory accounting model to support FERC balances with primary and secondary cost data. This modern design not only removed clearing, but also mapped costs across FERC accounts more accurately, increased the transparency of costs from FERC to source objects and accounts, and cut FERC processing time by 50% or more each month.

If you're facing challenges around FERC clearing or other aspects of SAP Financials for utilities, contact HPC to discuss pragmatic, meaningful improvements to your ERP.

SAP FERC Offset Accounts: Four Reasons for Differences

When utilities on SAP implement the SAP FERC module correctly, their FERC offset account balances for the FERC post program should be zero. Utilities that see differences in their FERC offset accounts may have such a problem for one or more reasons:

1. FERC offset accounts on the Income Statement and Balance Sheet do not have the same account number, as they must in order to achieve a zero dollar balance. When set up correctly, the Balance Sheet and Income Statement for FERC and GAAP will be equal.
2. Some FERC processes, such as the direct or trace posts, may not be completing properly.
3. Users may be posting directly to FERC accounts, instead of to GAAP (natural) accounts, which disrupts the derivation model. Posting directly to the FERC accounts will give you an incomplete result in your drill down.
4. Cross-company postings can cause differences if configured and mapped incorrectly; look carefully at non-FERC-relevant companies for possible root causes.

HPC America has 20+ years of experience configuring the FERC module the right way, and can identify the source of and eliminate FERC offset account differences very easily. Contact us to learn more.

Utility Case Study: SAP Financial Reporting Improvements

Navajo Tribal Utility Authority (NTUA) provides electric, gas, water, wastewater, photovoltaic, and

telecommunication services to 50,000 customers across Arizona and New Mexico. The utility went live on the SAP ERP more than a decade ago, and recently identified an opportunity to improve the efficiency of its financial reporting processes in SAP, which typically required several days to prepare each month's board package.

NTUA engaged longtime consulting partner HPC America to automate manual steps, eliminate the need for extensive data verification and reconciliation, and enable authorized users to generate reports directly from their SAP desktops.

Read the full case study about HPC's financial reporting solution on SAP that cut NTUA's monthly process from three days down to 15 minutes, boosted staff productivity, and created more time for analysis instead of data preparation.