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FASB issues final ASU that applies to electricity contracts in nodal energy markets

  • FASB (US Financial Accounting Standards Board) Image

Aug 10, 2015

The FASB has issued Accounting Standards Update (ASU) No. 2015-13, “Application of the Normal Purchases and Normal Sales Scope Exception to Certain Electricity Contracts Within Nodal Energy Markets,” in response to the EITF’s final consensus on Issue 15-A.

The ASU specifies that a forward purchase or sale of electricity in which electricity must be physically delivered through a nodal energy market operated by an independent system operator, and in which an entity incurs transmission costs on the basis of locational marginal pricing charges, would meet the physical-delivery requirement under the normal purchases and normal sales scope exception.

The guidance in this standard is effective upon issuance; entities must adopt the guidance prospectively for any qualifying new or existing contract.

For more information, see the ASU on the FASB’s Web site as well as Deloitte’s June 2015 EITF Snapshot.

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