Salt River Project Simplifies FERC on SAP ECC and Improves Readiness for SAP S/4HANA

Salt River Project (SRP) is a community-based not-for-profit utility that provides reliable, affordable water and power to more than two million people in central Arizona. SRP has provided these essential resources for more than a century to meet the needs of customers and help the region grow. SRP has been on SAP since 2013, and currently runs SAP ECC 6.0 on Suite on HANA and BW on HANA.

In anticipation of its migration to SAP S/4HANA in 2023, Salt River Project engaged HPC America in to evaluate its current SAP Financials processes and results, and to identify areas for improvement that would not only deliver immediate benefits, but also streamline the utility’s eventual transition to S/4HANA.

After the assessment, SRP engaged HPC to optimize its FERC model with HPC Utility Financials Accelerator (UFA) add-on software. HPC UFA eliminates the FERC module’s limitations, and runs on both SAP ECC and SAP S/4HANA.

Five months later, SRP was ready to go live with its new FERC design. The project achieved all intended objectives and more: SRP’s balances by FERC account now match exactly—to the penny—its reports by order number, WBS element, cost element, and cost center, thereby making functionalized data far more intuitive for users to analyze.

Download the full case study to read all the benefits SRP now enjoys.

HPC DECIPHER® 1.0 Achieves SAP-Certified Integration with SAP S/4HANA®

We’re pleased to announce that our software solution HPC DECIPHER® 1.0 has achieved SAP certification as integrated with SAP S/4HANA®. The integration helps utility companies to realize greater accounting transparency, speed up the monthly close and, ultimately, strengthen rate-case positions with the most defensible cost of service data.

HPC DECIPHER builds on HPC America’s nearly 25 years of experience advising utilities on SAP solutions. It leverages the Universal Journal in SAP S/4HANA for modern, line-item-based regulatory financials . HPC DECIPHER eliminates time consuming batch processes, and includes real-time translation, powerful allocations, insightful cost flow forensics, and other useful utility accounting functionality.

The SAP® Integration and Certification Center (SAP ICC) has certified that HPC DECIPHER version 1.0 integrates with SAP S/4HANA 1610 using standard integration technologies. SAP S/4HANA is the next-generation business suite, built for the SAP HANA® platform, with on-premise and cloud deployment options. It is designed to act as the digital core, helping customers drive digital transformation across their entire organizations, taking advantage of the award-winning, role-based user experience of SAP Fiori®.

“We are delighted that HPC DECIPHER has achieved certified integration with SAP S/4HANA,” said Jerry Cavalieri, CEO of HPC America. “The ability of DECIPHER to interoperate with SAP S/4HANA gives utility company controllers, rates, and IT professionals an even stronger business case to upgrade to SAP S/4HANA.”

Learn more about HPC DECIPHER at the 2018 SAP for Utilities conference in San Antonio, Texas from October 15-17, 2018.

###

HPC DECIPHER is a registered trademark of HPC America.

SAP, SAP S/4HANA, SAP HANA, SAP Fiori and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other countries. See http://www.sap.com/corporate-en/legal/copyright/index.epx for additional trademark information and notices. All other product and service names mentioned are the trademarks of their respective companies.

2017 SAP SAPPHIRE - FERC on SAP S/4HANA

Utilities considering SAP^® S/4HANA can discuss SAP FERC reporting on S/4HANA with HPC America at the 2017 SAP SAPPHIRE NOW conference in Orlando, Florida from May 16-17, 2017. 
HPC will be available to answer questions about regulatory accounting on S/4; explain what HANA can (and can't) do as delivered with respect to FERC reporting; and, more broadly, outline S/4HANA upgrade strategies and best practices for financials, cost flows, and rate case support in an HANA-based system.

CO-Centric FERC for Utilities on SAP

In today's stringent regulatory environment for utilities, the SAP FERC module and its traditional "FI-centric" design are no longer adequate to meet internal and external reporting requirements. That's one of the reasons why HPC America advocates a “CO-centric” model of regulatory accounting for utilities on SAP.

The “CO” refers to the SAP Controlling module, which contains valuable cost data that our customers use to support their FERC balances in SAP (both ECC 6.0 and S/4HANA). This delivers numerous benefits that, ultimately, improve a utility’s responsiveness to regulatory inquiries and strengthen its rate case position. Learn more about CO-centric FERC reporting for utilities on SAP.

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.

#SAP4UTL Take-Aways About FERC Reporting on SAP S/4HANA

Like some of you attending the 2016 SAP for Utilities conference earlier this week, we had the opportunity to learn and talk about different approaches to regulatory accounting on SAP S/4HANA. FERC reporting has historically been an obscure topic, but it’s getting more airtime as utilities consider carefully the business case for, and impact of, moving to S/4HANA or S/4HANA Finance ("Simple Finance").

In the course of discussing FERC processes and results with #SAP4UTL conference attendees, we validated that HPC’s new design for real-time reporting on S/4HANA will in fact meet the needs of utilities adopting SAP’s in-memory platform. The software solution we introduced at the conference, HPC DECIPHER, has a light architecture: it runs natively on the Universal Journal, and doesn’t entail the use of a second HANA system running in parallel (or any additional hardware for that matter). As well, HPC DECIPHER does not require SLT replication of master data or coding block changes.

Bigger picture, we determined that HPC DECIPHER reinforces — even clinches — the business case for SAP S/4HANA in several ways. 

By making the most of SAP’s new technology, HPC DECIPHER translates GAAP to Regulatory accounts in real-time, directly in your S/4HANA server; eliminates GAAP-FERC reconciliation issues; functionalizes operational costs with the most granular level of detail; allocates common costs by utility code or line of business; generates full Financial Statements with drill down to all regulatory line items; enables easy, controlled reversal and reposting of regulatory data; identifies all cost flows traced from start to finish—and in reverse—with drill-down to details; and translates the fixed asset sub-ledger to regulatory accounts (e.g., the 300 series for FERC) directly in S/4HANA, thereby creating the potential to reduce the use of some costly third-party fixed asset solutions. And HPC DECIPHER does all of this, and more, without the legacy FERC module.

So, if you, too, discussed real-time FERC reporting on S/4HANA at the SAP for Utilities conference, and are now asking questions about regulatory reporting on S/4HANA, please contact HPC to chat about HPC DECIPHER — or to simply pick our brains. As you may already know, we’ve specialized in FERC reporting for utilities on SAP for a long time, since the very beginning, and our unmatched expertise will benefit most utilities transitioning to SAP S/4HANA.

Top Seven Things Your SAP FERC Reporting Solution Should Do

After spending a couple days at the SAP Controlling conference, we're reminded that utility accounting professionals are often unaware that regulatory reporting on SAP does not have to be opaque, error-prone, slow, or otherwise painful. Utilities that are relatively new to SAP may not have exposure to alternative ways of generating and managing FERC data; all they know are their own systems, which may not be configured to their full potential.

One way to test this is to see if your own SAP FERC reporting solution delivers key benefits of modern regulatory accounting systems.

Does Your SAP FERC Reporting Solution Do This?

1. Deliver all the data that Accounting and Rates need without Field Operations having to know anything about FERC
2. Assign regulatory indicators to work orders automatically
3. Translate natural to regulatory accounts automatically
4. Eliminate reconciling differences between FI, CO, and FERC
5. Help Accounting allocate common costs very easily and flexibly
6. Run fast without errors
7. Let Accounting reverse and rerun FERC quickly, anytime they want

If your current SAP FERC system doesn’t deliver these benefits, talk to HPC about it.

Electric utility increases FERC reporting flexibility and labor burden transparency in SAP

"Regional Utilities" is an electric utility company serving 60,000 delivery points in the United States.

In anticipation of its 2016 rate case, RU saw an opportunity to improve its SAP Financials foundation before beginning the significant effort of prep and filing.

To that end, RU engaged HPC America to move regulatory accounting (SAP FERC) into its SAP ERP, and to implement a new fixed overhead design for greater labor cost transparency and efficiency. "HPC's understanding of both SAP and the business of a utility was exactly what we needed to start this project with confidence," said RU's Controller. Read the complete case study.

Video: Utility FICO/FERC panel discussion at SAP Controlling 2015

At last month's SAP Controlling conference, HPC moderated a panel discussion of four utility company controllers and FICO/FERC experts from RPU, NTUA, FirstEnergy, and Sharyland Utilities, covering a range of topics around modern cost accounting and regulatory reporting strategies for utilities on SAP.

Panelists Bryan Blom, Gerard Curley, Steve Law, and Armando Bustamante were joined in an engaging discussion by utility FICO/FERC professionals from PSEG, Salt River Project, CPS Energy, and EDF Renewable Energy.

Watch the SAP Controlling video online:

Utility FICO/FERC Topics at SAP Controlling 2015 - Part 2/2

Following up on last week's post, the utility company panel discussion at the 2015 SAP Controlling conference will give utility company controllers, utility accounting and finance managers, and Rates department managers a chance to learn from several highly experienced utility FICO/FERC subject matter experts.

Steve Law, Business Analyst at FirstEnergy Corporation, will discuss FirstEnergy's steps to eliminate clearing groups and resolve negative flow errors. Steve has more than 35 years of experience in utility accounting, and has worked in General Accounting, Financial Reporting, Internal Controls, and Business Services. Most recently, Steve has been a project lead on FirstEnergy's upgrade to a "CO-centric" FERC model that enhances external reporting with Controlling module data.

Armando Bustamante, Controller of Sharyland Utilities, will speak about streamlining Sharyland's regulatory reporting and creating a hybrid functional Income Statement. Armando has more than 20 years of experience in accounting, including Financial Reporting and External Audit. He began his professional career with PriceWaterhouseCoopers in Venezuela and Dallas, before joining the Hunt Family of Companies in 2011. Armando is also a CPA.

Contact HPC to learn more about modern SAP FICO/FERC strategies for utilities at the 2015 SAP Controlling conference, and to request group discount registration passes.

Utility FICO/FERC Topics at SAP Controlling 2015 - Part 1/2

At next month's SAP Controlling conference in San Diego, the utility company panel discussion will cover a number of SAP cost accounting and regulatory reporting topics relevant to utility controllers, utility finance and accounting managers, and Rates department experts.

Bryan Blom, Controller of Rochester Public Utilities, will speak about RPU's steps to improve SAP FERC reporting clarity, and their process for eliminating offline cost calculations. Bryan is a CPA and has more than 16 years of SAP Financials experience. Today, he is responsible for general ledger accounting and reporting; treasury management; accounts payable, budgeting and forecasting; financial regulatory reporting; utility billing, credit and collections; and financial, cost, and rate analysis.

Gerard Curley, Controller of Navajo Tribal Utility Authority, will speak about improving NTUA's assessment process, and minimizing month-end reconciliations in SAP. Gerard has more than 10 years of SAP Financials experience, and focuses on optimizing NTUA's ERP functionality to streamline operations of the utility's electric, gas, water, wastewater, photovoltaic, and communication services.

Contact HPC to learn more about modern SAP FICO/FERC strategies for utilities at the 2015 SAP Controlling conference, and to request group discount registration passes.

Sharyland Utilities to Join SAP Controlling 2015 Customer Panel

HPC America is pleased to announce that Sharyland Utilities will be joining the SAP Controlling customer panel discussion on modern cost accounting and regulatory reporting on September 22.

Armando Bustamante is the Controller of Sharyland Utilities, which serves over 50,000 electric delivery points in 29 counties throughout Texas. Armando is responsible for many aspects of SAP Financials at Sharyland, including general ledger accounting and reporting, accounts payable, financial regulatory reporting, and project accounting. Armando is currently leading Sharyland's implementation of the SAP FERC module, and he is a contributor on the implementation of a new hosted CIS module. Armando has more than 20 years of experience in accounting, including Financial Reporting and External Audit. He began his professional career with PriceWaterhouseCoopers in Venezuela and the Dallas offices before joining the Hunt Family of Companies in 2011. Armando is a CPA and earned an MBA from the University of Dallas.

Learn more about the utility company SAP FICO/FERC panel discussion at Controlling 2015.

FirstEnergy to join Utility Panel Discussion at SAP Controlling 2015

Back in January we announced that the 2015 SAP Controlling conference in San Diego would include for the first time some utility-specific content: a panel discussion of utility company accounting experts sharing their latest solutions to SAP cost accounting, regulatory reporting, and other SAP FICO/FERC challenges. (Plus, a networking session for utility industry professionals.)

We're very pleased to announce that Bryan Blom and Gerard Curley, Controllers from RPU and NTUA, respectively, will be joined on the utility industry panel by Steve Law, a business analyst and FICO/FERC subject matter expert from FirstEnergy Corporation, a diversified energy company headquartered in Akron, OH that serves 6 million customers across Ohio, Pennsylvania, West Virginia, New Jersey, Maryland, and New York.

Steve has more than 35 years of experience in utility accounting, and has worked in General Accounting, Financial Reporting, Internal Controls, and Business Services. Since 1998, Steve's primary responsibility has been Regulatory Reporting; he led the SAP FERC module implementations at General Public Utilities Corp. in 1999, and at FirstEnergy in 2003. Today, he is a project lead on FirstEnergy's upgrade to a "CO-centric" FERC model that enhances external reporting with Controlling module data.

Learn more about the utility industry panel discussion at Controlling 2015, and contact HPC to share any questions or discussion topics that you would like the panelists to address.

New Software for Utilities on SAP: HPC Cost Flow Forensics (CFF)

Total visibility into complex cost flows—to the penny

HPC Cost Flow Forensics (CFF) is software for utility companies on SAP® that provides total visibility into lengthy or complex cost flows. It enables Rates and Finance professionals to identify the dollars and descriptions associated with every single cost object by FERC account, even those typically obscured from view in between the final (receiver) and source (sender) objects. As a result, HPC CFF improves responsiveness to regulatory inquiries and reduces audit risk, with zero disruption to current operations practices.

Complex Cost Flows Hinder Transparent Regulatory Reporting in SAP

As utilities have grown through acquisition over the last decade, their cost flows have become increasingly lengthy and complex. Key elements in the flow are often obscured from view, challenging Rates and Finance to answer questions about actual costs from regulators and management. The traditional cost model and legacy SAP FERC solution are simply not sufficient to expose the rich detail typically found in internal orders and WBS elements:

HPC Cost Flow Forensics (CFF) Delivers Complete Transparency

In combination with the IS-U/FERC Module and HPC Utility Financials Accelerator, HPC CFF exposes all of the cost objects in between the cost flow's sender and receiver. In doing so, it improves responsiveness and accuracy to regulatory inquiries; reduces audit risk and strengthens rate case positions; and, ultimately, provides one version of the truth between FI, CO, and FERC.

Learn more about HPC Cost Flow Forensics and how it can benefit regulated utilities on SAP.

SAP FERC Implementation with HPC UFA

Another utility company has selected HPC America to implement a best practices FERC regulatory accounting solution in its SAP system. This latest project will strengthen the utility's preparation for and position in rate cases; reduce reliance on processes outside the ERP; and optimize the use of internal and PM orders—all while minimizing disruption to field operations.

To modernize its regulatory accounting configuration and support future growth, the utility has selected HPC Utility Financials Accelerator (UFA), which is certified by SAP as powered by the NetWeaver® technology platform. HPC UFA improves the trace functionality and reporting capabilities of the legacy SAP FERC solution—which HPC had originally created for Pacific Gas & Electric and then sold to SAP in the mid-nineties—and also provides advanced recasting and budgeting features for regulatory reporting on SAP. HPC UFA will allow the utility to go live with its new FERC solution in time for 2015 reporting.

In addition, the project includes replacement of an extensive assessment process with an overhead-centric model that will improve transparency of labor burdens for benefits, payroll taxes, PTO, supervision, engineering, A&G transfer to construction, and store expense burdens on material issues. HPC advocates this design to minimize reliance on difficult-to-understand assessments, improve the predictability of estimating job costs, ensure that shared costs are applied as fairly as possible across WBS elements, and increase the efficiency of the month-end close.

SAP FICO/FERC Expert Duane Fritz Joins HPC America

HPC America is pleased to announce that SAP FICO/FERC expert Duane Fritz has joined HPC as a Senior SAP Consultant. Reinforcing our team's longstanding expertise in utility financials, regulatory accounting, and work management, Duane brings twenty years of experience in the Utilities and Oil & Gas industries, and more than 17 years of SAP experience. 

While at Oklahoma Gas & Electric, Anadarko Petroleum, KBR, Inc., and Enron, Duane configured and supported SAP ERP applications; held team lead and managerial responsibilities; contributed to three full life-cycle SAP R/3 implementations; fulfilled internal and external reporting and audit requirements; and developed SAP redesign and upgrade strategies. Duane has deep expertise in SAP FI, CO, FERC, and FSCM, and additional experience with JVA, AR, AP, HR-Payroll & Time, MM, PP, PS, SD, BCS, and BW. He holds a B.S. in Accounting.

Duane's relationship with HPC extends back to the late-1990s, when HPC assisted OG&E with the implementation of the FERC module, which HPC had originally built for Pacific Gas & Electric and then sold to SAP for distribution to other utilities on SAP. "I'm thrilled that Duane has joined HPC's team of utility finance experts," commented Jerry Cavalieri, CEO of HPC. "I've known him since the early days of SAP FERC reporting and our FERC group in ASUG, and am confident that his experience will benefit HPC's customers as they seek to modernize SAP Financials for utilities." 

Multi-state electric utility to optimize SAP FERC with HPC America

We're starting 2015 with a terrific long-term project to modernize the SAP Regulatory Reporting (FERC) design of a multi-jurisdictional utility company, including SAP FICO and FERC consulting and the implementation of HPC Utility Financials Accelerator software, which extends the capability of the original FERC module and is certified by SAP as powered by the NetWeaver® technology platform.

Our client is one of the largest electric distribution utilities in the United States, serving six million customers across five states. After having revamped its SAP Financials system in recent years, the utility determined that optimizing SAP Regulatory Reporting is the next step in modernizing its SAP ERP.

Late last year, a joint team of HPC's SAP consultants and the client's subject matter experts identified a number of key regulatory reporting challenges the utility faces. The Rates Department does not have easy, independent access to complete SAP FERC data; cost flows are unusually long and complex; the allocation model is not currently visible to the SAP FERC process; and SAP FERC run times are unusually long and error-prone.

To address these issues, HPC will replace the utility's legacy FI-centric (GL-based) cost model with a modern CO-centric model that traces all primary and secondary costs, eliminates reconciling differences between SAP FI, CO, and FERC, and simplifies cost flow complexity with little disruption to current business processes. Through HPC's system design and Utility Financials Accelerator software, the utility will benefit from a faster monthly FERC close, improved rate case support, and greater end-user self-sufficiency for regulatory reporting activities. The new system is slated to go live in January 2016.

Five SAP FICO/FERC Take-Aways from Our Customers

While 2014 isn't quite over, we thought it would be useful to share a few things we've learned from our utility company customers this year.

1. Cost flow models are the real culprits.
When we're engaged to audit SAP FERC processes, we sometimes find that a utility's core challenge is not regulatory accounting itself, but rather its larger cost flow model. Utilities that have been on SAP Financials for a decade or more often have cost flows that are too complex, too long, or otherwise ill-suited to support both the fine details required for rate cases, and the high-level summarization required for effective budgeting. Simplifying those legacy cost flow models to support modern internal and external reporting is usually Step One for these customers.

2. Payroll burdens aren't as transparent as they could be.
Utilities that charge "bundled" labor rates to orders — i.e., fully loaded with labor, allocated costs of employee benefits, and the employer portion of payroll taxes — lose the identity of the burdens when combined with long and complex cost flows. This makes compliance with FERC accounting regulations far more difficult, because the more secondary cost movements in a cost flow model, the less transparent the labor burdens become. The traditional FI-centric FERC solution and its flow of costs trace program attempts to keep track of those burdens as they move from senders to receivers, but this approach has a price: FERC and CO results of operations don't match. And that leads us to take-away #3...

3. FERC and CO don't match, and that's a problem.
We've talked about this many times before, and it's worth repeating: FI-based FERC models just don't work as well as CO-centric approaches in today's environment. Twenty years ago, when we thought that regulation would be phased out, it was entirely reasonable for FERC accounts to be based on FI documents alone. But in today's world, in which CO has such rich cost detail, there is no reason to tolerate painful FERC-CO reconciling differences any longer. More utilities are recognizing that "one version of the truth" can be more than just a marketing catch-phrase by adopting a CO-centric model in which both primary and secondary costs support FERC balances.

4. Regulatory accounting is under-appreciated.
This is a sensitive topic, but we've got to call it out: few people within utilities truly understand how important regulatory accounting is to their own business. Compliance with FERC, cost recovery, and rate case support are the ways in which regulated utilities make money, but this fact is often lost on staff outside the Rates department. We are starting to see more of the Finance and IT professionals who support Rates reevaluate their perspectives, recognizing that a modern FICO/FERC design must be prioritized in order to gain efficiencies, reduce costs, and take full advantage of their SAP ERP.

5. Few see value in high-speed databases — yet.
For all of the recent hoopla about in-memory databases, we're not seeing that much interest from utility Finance teams. We believe that will change in the coming year or three, when management recognizes the benefits of line item-level reporting. The sheer volume of detail that will continue to grow will mandate adoption of high-speed infrastructure. We predict that Finance won't pursue speed itself, but rather the granularity that enables "closing every day" — which will require speed.

SAP for Utilities 2014

It's that time of year again, and HPC is looking forward to learning and sharing at the annual SAP for Utilities conference in Hollywood, Florida. While our own HANA-based regulatory accounting solution for FERC reporting is in development, we'll be interested to see how others are leveraging in-memory to deliver tangible, practical benefits. In this regard, Vikki Pope and Dave Campbell's presentation for National Grid is definitely on our short list of speaking engagements to attend. And since we do quite a bit of work optimizing the integration of Financials and Work Management, we're also keen to listen to SCE's talk about fleet management, and SAP's Rory Shafer's thoughts on EAM solutions.

If you're roaming the show and want to chat about SAP FERC for the modern utility, as well as broader Financials and Asset Lifecycle Accounting issues, let us know at (510) 542-9558.