training report _introduction of usoa_final - Hydropower Investment ...

Hydropower InvestmentPromotion Project (HIPP)TRAINING SUMMARYREPORTWORKSHOP ON UNIFORM SYSTEM OF ACCOUNTSNovember 1, 2012This publication was produced for review by the United States Agency for InternationalDevelopment. It was prepared by Deloitte Consulting

TRAINING SUMMARYREPORTWORKSHOP ON INTRODUCTION OF UNIFORM SYSTEM OFACCOUNTS (USOA), November 1, 2012USAID HYDROPOWER INVESTMENT PROMOTION PROJECT(HIPP)CONTRACT NUMBER: EEM-I-00-07-00005-0DELOITTE CONSULTING LLPUSAID/CAUCASUS OFFICE OF ENERGY AND ENVIRONMENTTHURSDAY, NOVEMBER 1, 2012DISCLAIMER:The author’s views expressed in this publication do not necessarily reflect the views ofthe United States Agency for International Development or the United States Government.

TABLE OF CONTENTS1.0 EXECUTIVE SUMMARY………………………………………………. 41.1 INTRODUCTION………...…………………………………………41.2 GOALS………………………………………………………………41.3 TRAINING CONTETNT…………..……..……………………….41.4 RESULTS…………………………………………………………...41.5 ANNEXES…….……………………………………………….….42.0 ANNEX I: ATTENDEE LISTING……………………………………………53.0 ANNEX II: HAND-OUT MATERIAL………………………………………….64.0 ANNEX III: POWER POINT PRESENTATION ON UNIFORM SYSTEM OFACOUNTS……………………...…………………………………………………...105.0 ANNEX IV: QUESTIONS FROM THE WORKSHOP……………………..… 181

LIST OF ACRONYMSGNERCGeorgian National Energy And Water Supply Regulatory CommissionGSEGeorgian State Electro SystemHIPPHydropower Investment Promotion ProjectUSOAUniform System of AccountsPBRPerformance Based RegulationsUSAIDUnited State Agency for International DevelopmentFCOFrequency of transmission Circuit OutagesFTOFrequency of Transformer OutagesATIAverage Interruption Time2

1.0 EXECUTIVE SUMMARYIntroductionThis report summarizes the training on Uniform System of Accounts provided byHIPP to the Georgian National Energy and Water Supply Regulatory Commission.The seminar was conducted by Neka Danelia, HIPP Power Market Advisor, on November1, 2012.GoalsThe primary goal of the seminar was capacity building of the Georgian Energy andWater Supply Regulatory Commission as well as HIPP staff in Uniform System accountsissues as a necessary tool for cost reduction in the development of HPP infrastructureprojects in Georgia.Training ContentThe focus of the presentation was on the critical task that lies before them: i.e. howeach party/counterparty to a project must be identified and their roles/obligations definedand due diligence undertaken to ascertain whether they can effectively assumethose obligated tasks for the duration of the project, and what standard recoursemechanisms are available to the counterparties if a party fails to perform. Thepresentation was also focused on the question as to whether these recourse mechanismsare available / enforceable in Georgia.ResultsThe participants were very interested in the topic and actively participated in discussionsabout implementation of USOA in other countries mainly in South Eastern Europeand USA. GNERC representatives noted that it was the first time they looked atthe USOA process critically that would help them to perform their regulatory tasks ofthe measures for eliminating existing discrepancies in the tariff making process inGeorgia.The participants obtained a basic knowledge of the concepts of Uniform System ofAccounts, the need for implementation it in Georgia and It was agreed that licensees3

should provide such information to GNERC further, that it would be preferable for licenseesto utilize the information, given the lack of information available to supportimplementation of USOA in Georgia and the difficulties in GNERC’s to obtain suchinformation from the Utilities. It was further agreed that some legislative amendmentsare required for giving the GNERC responsibilities to implement USOA andadditional trainings of the GNERC and energy companies’ staff. The participantswere pleased with the workshop, with many stating they had learned concepts andinformation they had not been previously aware of or had not adequately considered.The commissioner attending the seminar stated that the GNERC should receivedeeper knowledge of the concepts of USOA and asked that Deloitte follow up on seriesof such presentations.Annexes1. List of Attendants2. Hand-out Material3. Power Point Presentation (English)4. Questions from the workshop4

ANNEX IHydropower Investment Promotion ProjectUSAID/Deloitte ConsultingSeminar on Introduction of Uniform System of AccountsList of AttendantsNo. Name Department Organization1 Gocha Shonia Commissioner GNEWRC2 Nugzar Beridze Head of Electricity dep. GNEWRC3Tedore GabidzashviliHead of Financial DepGNEWRC4 Giorgi Didebashvili Senior Specialist GNEWRC5 Ivlan Zarnadze Senior Specialist GNEWRC6 Mamuka Chitanava Senior Specialist GNEWRC7 Tamar Jandieri Head of Methodology Dep GNEWRC8Tinatin SakhelashviliSpecialistGNEWRC9Mari SomkhishviliChief AccountantGNEWRC10 AleksandreChokhonelidzeSenior SpecialistGNEWRC11 MamukaChikhladzeSenior SpecialistGNEWRC12 Levan GendzekhadzeHead of Tariff divisionGNEWRC13Nato JaparidzeSenior SpecialistGNEWRC5

No. Name Department Organization14Givi SanikidzeHead of Financial DivisionGNEWRC15 AleksandrePirtskhalaishviliHead of *** DivisionGNEWRC16Ilia NakashidzeHead of *** DivisionGNEWRC17Gulnara BedoshviliHead of Tariff DivisionGNEWRC18Zoia GurielidzeSenior SpecialistGNEWRC19 Aleksandre KobuladzeHead of DepartmentGNEWRC6

ANNEX IIPRESENTATION ON INTRODUCTION OF UNIFORM SYSTEM OF ACCOUNTSg7

ANNEX IIIQUESTIONS FROM THE WORKSHOPWhat does “Annual PBR Adjustments” mean and how is it provided?Should regulated firms prepare 2 balances, one for financial purposes andanother for regulated purposes?What software should companies use in this process?How should be the assets of regulated companies divided, which factorsshould be used, and in what proportions?How should administrative costs of licensees be divided?We do not have Regulated Audit in Georgia. If there is a difference betweenthe costs provided by companies in different years, we ask additional informationand then we examine if it is logical or not.Can we add “Technical Auditors” in this list? (Financial auditors, Tax auditors,Regulatory auditors)Who is setting Depreciation standards? Are there any practices where regulatoris setting the depreciation rates in electricity system?If an asset is still useful after depreciation is fully recovered, who is doing therevaluation? Technical Auditors?Question about Moral Depreciation: Existing meters in our electricity systemare not modern, and does not provide us information about daily and hourlyconsumption on Electricity. Because of this we cannot develop modern tariffsetting methods, such as “Time-differentiated pricing” or “Seasonal Pricing”.The costs of existing meters are not fully recovered. If we oblige licensees toinstall new type of meters, it will increase present tariffAre there any courses in Regulated Audit?Is there any Software which will find mistakes and make filtration in the dataprovided by licensees?Signature (required if any action is being requested)________________________________________________Please submit your comments to the Instructor at course end, or if you prefer, youcan mail this form either directly to HIPP Office at ______________________, c/oCommunications Specialist.Thank you for your participation!16

PBRUSAID Hydropower Investment Promotion Project (USAID-HIPP)Deloitte Consulting Overseas Projects - HIPP8, Akuri Street, Tiflis Business Center, 13 th floor, Suite 5Tbilisi 0171, GeorgiaUSAID Hydropower Investment Promotion Project (USAID-HIPP)Deloitte Consulting Overseas Projects - HIPP11 Apakidze Street, Tiflis Business Center,Tbilisi 0171, Georgia17