EnergyNewswatch

Derivative Instruments and Hedge Accounting for Energy Transactions

September 9-10, 2024 | Online

Click Here to register $1795 (Includes Workshop - see below. Seminar alone $1395)

If you are unable to attend at the scheduled date and time, we make recordings available to all registrants for seven days after the event

Properly Documenting & Reporting Commodities Fair Value Transactions in Accounting Statements & Disclosures

“Presenters were very knowledgeable and willing to answer all questions — very helpful.” Financial Services Coordinator, City of Garland (TX)

“I’m new to this industry, and the course was an excellent opportunity to accelerate my transition.” Accounting Manager, Liberty Power

“This course is a must-have for all areas of derivative accounting and risk.” Senior Accountant, First Choice Power

“The course exceeded my initial expectations.” Energy Commodity Risk Administrator, Tri-State G&T

Dive into the complexities of derivatives, fair value, and hedge accounting tailored for the energy and power sectors. Conducted by top experts in tax accounting and advisory, this course provides both foundational knowledge and in-depth insights.

Program materials and discussion will include a summary of the standard, changes from existing accounting practices and a discussion of how these standards impact energy companies.  There will be an optional workshop that focuses specifically on renewable energy products and the associated accounting considerations.

What You’ll Learn:

  • ASC Topic 815: Derivatives and Hedging
    Understand the nuanced application and disclosures
  • ASC Topic 820: Fair Value Measurements
    Learn strategies for valuing challenging energy contracts
  • IFRS 9: Financial Instruments
    Key differences from U.S. GAAP and their impact on energy companies
  • Power Markets and Energy Trading
    Specific considerations for applying these accounting standards

Join us for a comprehensive learning experience that will enhance your accounting practices and decision-making in the dynamic energy industry.

Learning Outcomes

Attendees will receive instruction and cover materials that will allow them to:

  • Apply the understanding of ASC 815 and 820 requirements and its application to the energy industry
  • Demonstrate key accounting concepts and the related key controls and processes for application to derivative and hedging activities in operations
  • Explain and apply the latest disclosure requirements for derivatives and hedging activities
  • Evaluate and address the current developments in the power and energy trading markets
  • Compare some of the key differences between U.S. GAAP and IFRS in relation to the aforementioned main topics

Agenda

MONDAY, SEPTEMBER 9, 2024

9:00 a.m. – 4:45 p.m. Central Time

9:00 – 9:15 a.m. :: Overview and Introductions

9:15 – 10:45 a.m. :: Overview of ASC 815 Requirements for Energy and Power Companies

  • Commodity Contract Assessment Framework
    • Overview
    • IFRS/GAAP differences
    • Variable interest entities (VIE) considerations
    • Lease accounting overview
  • Scope & Definition of a derivative
    • Underlying
    • Notional – including “full requirements” contracts
    • Net settlement criteria
    • IFRS/GAAP differences

10:45 – 11:00 a.m. :: Morning Break

11:00 a.m. – 12:00 p.m. :: Overview of ASC 815 Requirements for Energy and Power Companies (continued)

  • Derivative accounting basics
    • Overview
    • Case studies – forward/swap contracts
  • ASC 815 Disclosure Requirements
    • Overview
    • Public vs. private application
    • IFRS/GAAP differences
    • Illustrative examples
  • Q&A

12:00 – 1:00 p.m. :: Lunch Break

1:00 – 1:45 p.m. :: Embedded Derivatives

  • Definition
  • Examples
  • IFRS/GAAP differences

1:45 – 3:00 p.m. :: Overview of ASC 820 Fair Value

  • Fundamentals of ASC 820 as it relates to energy transacting and application
    • Definition
    • Fair value at inception (day 1 gains)
  • Illustrative examples of hierarchy levels (1, 2, 3)
  • Consideration of counterparty risk in valuation
  • Disclosure requirements
    • Overview
    • Public vs. private application
    • IFRS/GAAP differences
    • Illustrative examples
  • Commodity pricing and forecasting models for level 2 or 3
  • Q&A

3:00 – 3:15 p.m. :: Afternoon Break        

3:15 – 4:30 p.m. :: Power and Energy Accounting Issues

  • Application of scope exceptions available to energy contracts (normal purchase, normal sale)
    • Overview
    • Capacity exception
    • Documentation requirements
    • Common pitfalls
  • Accounting for financial transmission and congestion revenue rights (FTRs and CRRs)
  • Accounting for bundled contracts
  • Internal controls, compliance, and best practices

4:30 – 4:45 p.m. :: Q&A

4:45 p.m. :: Course Adjourns for Day

4:45 – 6:00 p.m. :: Reception (in person attendees)

 

TUESDAY, SEPTEMBER 10, 2024

9:00 a.m. – 12:00 p.m. Central Time

9:00 – 10:15 a.m. :: Hedge Accounting Overview

  • Hedge accounting introduction
  • Types of hedges and hedge criteria
  • Documentation requirements and timeline
  • Effectiveness testing requirements

10:15 – 10:30 a.m. :: Morning Break

10:30 – 11:45 a.m. :: Hedge Accounting Overview (continued)

  • Application of hedge accounting
  • Example journal entries
  • Disclosure requirements
  • Public vs. private application
  • IFRS/GAAP differences

11:45 a.m. – 12:00 p.m. :: Q&A

12:00 p.m. :: Course Adjournment

Workshop

Renewable Energy Instruments and Their Associated Accounting Considerations

TUESDAY, SEPTEMBER 10, 2024 : CENTRAL TIME

Transactions involving the generation, trading, and consumption of renewable energy – as well as the buying and selling of related environmental attributes including renewable energy credits (RECs) – are now commonplace in the power industry with increasing states’ renewable portfolio standards and as more corporate organizations and governments pursue net-zero carbon emissions goals.  Such transactions are often complex in structure and require special accounting treatment, which often depend on the entity’s role(s) in the transaction. 

This workshop will provide an overview of accounting considerations around these renewable energy instruments, including a deep dive into contract assessments for renewable energy power purchase agreements (PPAs) – both physical and financial (virtual) and an overview of renewable natural gas processes including the related environmental attributes.

Learning Outcomes

Attendees will receive instruction and cover materials that will allow them to:

  • Examine emerging types of renewable energy products in the marketplace
  • Evaluate the accounting considerations related to different renewable energy products
  • Assess renewable energy contracts under the appropriate accounting framework

Agenda

1:00 – 4:45 p.m. Central Time

1:00 – 1:15 p.m. :: Introduction and Overview

1:15 – 2:15 p.m. :: Renewable Energy Overview

  • Renewable energy consumption
  • Overview of renewable natural gas and related environmental attributes
  • Overview of other carbon credits
  • Accounting considerations for carbon credits

2:15 – 3:00 p.m. :: Contract Assessment – Renewables

  • Power Purchase Agreements
  • VIE accounting considerations (ASC 810)
  • Derivative accounting considerations (ASC 815)

3:00 – 3:15 p.m. :: Afternoon Break

3:15 – 4:30 p.m. :: Contract Assessment (continued)

  • Lease accounting considerations (ASC 842)
  • Battery storage lease accounting considerations (ASC 842)
  • Conditions precedent
  • IFRS Considerations – Hedge Accounting & Own-Use
  • Physical PPA example
  • Virtual PPA differences

4:30 – 4:45 p.m. :: Q&A

5:00 p.m. :: Workshop Adjournment