Blog · Territory, capacity and quota planning · Finance and FP&A teams
Build a plant operating budget from net generation, settlement prices, fuel expense and fixed costs. Follow the spreadsheet formulas, a price scenario and the reconciliation from operating surplus to cash.
A power plant financial model turns net generation, selling prices and operating costs into a monthly cash view. Start with the plant's generation record, customer settlement statements and expense ledger, then reconcile each operating assumption to those records. Keep the calculation focused on plant operating economics and supplied scenarios.
Keep one row per plant, month and scenario. Preserve the generation unit, settlement volume, realized energy revenue, fuel expense, variable operating expense and fixed operating expense. Use megawatt-hours throughout the energy schedule and USD throughout the financial schedule.
Net output matters. EIA defines net generation as gross generation less electricity consumed at the station for service or auxiliaries. If gross generation is 22,500 MWh and station use is 900 MWh, the net quantity is 21,600 MWh. Deducting station use again from that net record understates saleable output.
Match net output to the settlement quantity. If the contract settles on a different boundary, show an explicit volume reconciliation before multiplying by price. Keep additional contractual receipts or charges on their own documented lines. This example assumes net generation equals settled energy volume and includes only energy revenue.
The financial reporting software guide explains how this operating worksheet fits alongside the accounting ledger rather than replacing it.
An illustrative US plant budgets a 720-hour month. EIA defines capacity factor as actual period output divided by output possible at continuous full power. Here the operator supplies a planning capacity and output factor on a consistent net basis; finance does not determine plant performance.
Put these assumptions in columns A and B, with headers in row 1. Fuel and variable operating rates are budget expenses per net MWh, supported by the operator's cost schedule.
| Row | Input | Value |
|---|---|---|
| 2 | Net planning capacity, MW | 50 |
| 3 | Hours in period | 720 |
| 4 | Net output factor | 60% |
| 5 | Realized energy price, USD/MWh | 60 |
| 6 | Fuel expense, USD/net MWh | 25 |
| 7 | Variable operating expense, USD/net MWh | 4 |
| 8 | Fixed operating expense, USD | 200,000 |
Enter the expressions below in the stated cells. B11 is net generation, B12 revenue, B13 fuel, B14 variable expense, B15 total operating expense and B16 operating surplus.
B11 = B2*B3*B4
B12 = B11*B5
B13 = B11*B6
B14 = B11*B7
B15 = SUM(B13:B14)+B8
B16 = B12-B15
Use separate fuel-cost assumptions for each scenario when the cost per MWh changes with the operating plan. Treating the rate as fixed here is a stated budgeting assumption, not a technical claim about plant behavior.
Change only realized energy price from $60 to $55 per MWh. The generation and expense assumptions stay the same.
| Measure | Base | Lower price |
|---|---|---|
| Net generation, MWh | 21,600 | 21,600 |
| Realized energy price, USD/MWh | 60 | 55 |
| Energy revenue, USD | 1,296,000 | 1,188,000 |
| Fuel expense, USD | 540,000 | 540,000 |
| Variable operating expense, USD | 86,400 | 86,400 |
| Fixed operating expense, USD | 200,000 | 200,000 |
| Total operating expense, USD | 826,400 | 826,400 |
| Operating surplus, USD | 469,600 | 361,600 |
Base generation is 50 × 720 × 60% = 21,600 MWh. Revenue is 21,600 × $60 = $1,296,000. Total expense is $540,000 + $86,400 + $200,000 = $826,400, leaving $469,600 before depreciation, interest and income taxes.
The scenario bridge is equally direct: 21,600 × ($55 − $60) = −$108,000. Therefore $469,600 − $108,000 = $361,600. No fuel saving belongs in this price-only comparison.
For related production budgeting, the manufacturing financial model covers output and operating expenses in a different business setting. Keep the power schedule's generation and settlement definitions intact.
Tie generation to the operator's approved monthly report, revenue to settlements and expenses to budget accounts. Where prices vary across settlement rows, total revenue must use each row's volume and price. Microsoft's SUMPRODUCT documentation supports multiplying matching ranges and summing their products.
With settlement MWh in column B and corresponding net prices in column C, use:
=SUMPRODUCT(Settlements!B2:B50,Settlements!C2:C50)
Do not multiply total generation by an unweighted average price. Covirage is not affiliated with Microsoft.
The following cash bridge uses the base operating result and assumes no other cash movements. Increases in receivables and fuel inventory consume cash; an increase in operating payables preserves it. Read the working capital guide for the balance reconciliation.
| Cash bridge | Amount (USD) |
|---|---|
| Opening cash | 500,000 |
| Operating surplus | 469,600 |
| Less receivables increase | 80,000 |
| Less fuel inventory increase | 10,000 |
| Add operating payables increase | 30,000 |
| Operating cash before interest and tax | 409,600 |
| Less capital spending | 100,000 |
| Ending cash before interest and tax | 809,600 |
Put opening cash, receivables increase, inventory increase, payables increase, capital spending and ending cash in B19:B24. The reconciliation is:
=B19+B16-B20-B21+B22-B23-B24
It must return zero. The capital versus operating budget guide explains why capital purchases belong below this operating result.
Upload your completed scenario outputs, generation register and settlement export to Covirage. Covirage maps the columns, its tools compute and check the supplied figures, and the external AI model explains the differences with every figure traced to its rows. Create a free Covirage account, which takes about a minute, then set up your business and bring a sample of your own data.
See Covirage for project cost control for the supporting workflow.
Use the quantity that matches the revenue settlement. Net generation subtracts electricity used at the station from gross generation. Reconcile the gross and net records, then account separately for any further difference between net output and the volume billed to the customer.
Capacity factor connects a supplied capacity assumption and period hours to expected generation. Lower output reduces energy revenue and output-linked costs, while fixed costs may stay unchanged. Use a consistent gross or net basis across capacity, generation and unit-cost assumptions.
No. The operating surplus must be adjusted for receivables, inventory and payables before it represents operating cash. Capital spending, interest, income taxes and other cash movements then need separate lines to explain the change in the bank balance.