Berkeley Lab releases new user-friendly publicly-available pro-forma utility financial model tool

March 3, 2021

The scope of activities that have the potential to impact the finances of island utilities and its ratepayers is substantial. Most of these utilities are making substantial investments in grid infrastructure to rebuild after a major disruptive event (e.g., hurricane, earthquake), to improve resiliency and reliability in anticipation of the next major disruptive event, and/or to modernize their grid. At the same time, they are experiencing substantial increases in the deployment of both grid-scale and customer-scale variable renewable energy resources, which is causing operational challenges, as well as financial concerns for the utility. With costs increasing and sales potentially decreasing, utilities may need to seek ever larger increases in retail rates to sufficiently cover their fixed costs. However, for regulators, policymakers, and utilities to understand how to manage and mitigate this possibility, they must first understand the full scope of what they are facing from a financial standpoint.

Berkeley Lab, with funding support from the U.S. Department of Energy’s Energy Transitions Initiative (ETI), developed a user-friendly Microsoft Excel-based pro-forma electric utility financial model. The Standardized Utility Pro-forma Financial Analysis (SUPRA) tool provides regulators, policymakers, utilities, and third-party development organizations in island and remote communities with a relatively simple and publicly accessible financial analysis tool to better assess island utility opportunities to manage, mitigate, and/or improve its financial situation, and quantify the financial impacts from pursuing changes to its regulatory and business model. SUPRA’s functionality includes the following:

  • Up to ten (10) different characterizations representing municipal and/or investor-owned utilities;
  • Development of an annual revenue requirement for a ten (10) year analysis period based on a variety of different operating, maintenance, and capital cost categories, each characterized by a first year value and an independent compound annual growth rate;
  • Identification of major capital asset additions and retirements;
  • Feedback effects between certain utility costs and changes in retail sales or peak demand due to customer adoption of distributed energy resource (i.e., energy efficiency, demand response, solar photovoltaic systems, electric vehicles);
  • Rate setting for up to four (4) customer classes during user-identified scheduled general rate cases that incorporate current/historic test year data as well as regulatory lag;
  • Application of utility surcharges, revenue adjustment mechanisms, and other types of balancing accounts to ensure more timely recovery of utility incurred costs (e.g., fuel adjustment clauses, revenue decoupling mechanisms);
  • Implementation of utility or third-party incentive programs to promote customer adoption of distributed energy resources;
  • Implications from catastrophic events (e.g., hurricanes) on utility costs and collected revenues;
  • Quantification of the utility’s financial health including cash position, debt service coverage, and days liquidity, as well as earnings and return-on-equity for investor-owned utilities; and
  • Ability to directly compare the 10-year present-value of key utility physical and financial metrics for any two (2) of the developed utility characterizations.

SUPRA is a simplified version of a much more complex pro-forma electric utility financial model (FINDER) developed by Berkeley Lab which has been used privately in a number of research projects over the past several years and in support of several technical assistance activities with various state regulatory agencies and energy offices (e.g., AZ, NV, MA, MI, MN).


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