[Code of Federal Regulations]
[Title 7 Volume 11]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1767]
[Page 807-998]
TITLE 7--AGRICULTURE
CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
PART 1767_ACCOUNTING REQUIREMENTS FOR RUS ELECTRIC BORROWERS--Table of
Contents
Subpart A_General [Reserved]
Sec.
1767.1-1767.9 [Reserved]
Subpart B_Uniform System of Accounts
1767.10 Definitions.
1767.11 Purpose.
1767.12 Accounting system requirements.
1767.13 Departures from the prescribed RUS Uniform System of Accounts.
1767.14 Interpretations of the RUS Uniform System of Accounts.
1767.15 General instructions.
1767.16 Electric plant instructions.
1767.17 Operating expense instructions.
1767.18 Assets and other debits.
1767.19 Liabilities and other credits.
1767.20 Plant accounts.
1767.21 Operating income.
1767.22 Other income and deductions.
1767.23 Interest charges.
1767.24 Extraordinary items.
1767.25 Retained earnings.
1767.26 Operating revenue.
1767.27 Operation and maintenance expenses.
1767.28 Customer accounts expenses.
1767.29 Customer service and informational expenses.
1767.30 Sales expenses.
1767.31 Administrative and general expenses.
1767.32-1767.40 [Reserved]
1767.41 Accounting methods and procedures required of all RUS borrowers.
1767.42-1767.45 [Reserved]
Subpart C_Depreciation Rates and Procedures [Reserved]
1767.46-1767.65 [Reserved]
Subpart D_Preservation of Records [Reserved]
1767.66-1767.85 [Reserved]
Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.
Source: 58 FR 59825, Nov. 10, 1993, unless otherwise noted.
Subpart A--General [Reserved]
Sec. Sec. 1767.1-1767.9 [Reserved]
Subpart B_Uniform System of Accounts
Sec. 1767.10 Definitions.
As used in this part:
Accounting borrower is an RUS borrower.
Accounts are the accounts prescribed in this system of accounts.
Actually issued as applied to securities issued or assumed by the
utility, are those which have been sold to bona fide purchasers for a
valuable consideration, those issued as dividends on stock, and those
which have been issued in accordance with contractual requirements
direct to trustees of sinking funds.
Actually outstanding as applied to securities issued or assumed by
the utility, are those which have been actually issued and are neither
retired nor held by or for the utility; provided, however, that
securities held by trustees shall be considered as actually outstanding.
Amortization is the gradual extinguishment of an amount in an
account by distributing such amount over a fixed period, over the life
of the asset or liability to which it applies, or over the period during
which it is anticipated the benefit will be realized.
Associated (affiliated) companies are companies or persons that
directly, or indirectly through one or more intermediaries, control, or
are controlled by, or under common control with, the accounting company.
Book Cost means the amount at which property is recorded in these
accounts without deduction of related provisions for accrued
depreciation, amortization, or for other purposes.
Capital lease is a lease of property used in utility or nonutility
operations, which meets one or more of the criteria stated in Sec.
1767.15 (s).
CFC is the National Rural Utilities Cooperative Finance Corporation.
Continuing Property Records are company plant records for retirement
units and mass property that provide, as either a single record, or in
separate records readily obtainable by references made in a single
record, the following information:
[[Page 808]]
(1) For each retirement unit:
(i) The name or description of the unit, or both;
(ii) The location of the unit;
(iii) The date the unit was placed in service;
(iv) The cost of the unit as set forth in Sec. 1767.16 (b) and (c);
and
(v) The plant control account to which the cost of the unit is
charged.
(2) For each category of mass property:
(i) A general description of the property and quantity;
(ii) The quantity placed in service by vintage year;
(iii) The average cost as set forth in Sec. 1767.16 (b) and (c);
and
(iv) The plant control account to which the costs are charged.
Control (including the terms controlling, controlled by, and under
common control with) is the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of
a company, whether such power is exercised through one or more
intermediary companies, or alone, or in conjunction with, or pursuant to
an agreement, and whether such power is established through a majority
or minority ownership or through voting of securities; common directors,
officers, or stockholders; voting trusts; holding trusts; associated
companies; contracts; or any other direct or indirect means.
Cost is the amount of money actually paid for property or services.
When the consideration given is other than cash in a purchase and sale
transaction, as distinguished from a transaction involving the issuance
of common stock in a merger or a pooling of interest, the value of such
consideration shall be determined on a cash basis.
Cost of removal is the cost of demolishing, dismantling, tearing
down or otherwise removing electric plant, including the cost of
transportation and handling incidental thereto.
Customer is a consumer or patron.
Debt expense includes all expenses incurred in connection with the
issuance and initial sale of evidence of debt, such as fees for drafting
mortgages and trust deeds; fees and taxes for issuing or recording
evidences of debt; costs of engraving and printing bonds and
certificates of indebtedness; fees paid to trustees; specific costs of
obtaining governmental authority; fees for legal services; fees and
commissions paid underwriters, brokers, and salesmen for marketing such
evidences of debt; fees and expenses of listing on exchanges; and other
like costs.
Depreciation, as applied to depreciable electric plant, is the loss
in service value, not restored by current maintenance, incurred in
connection with the consumption or prospective retirement of electric
plant in the course of service from causes which are known to be in
current operation and against which the utility is not protected by
insurance. Among the causes to be given consideration are wear and tear,
decay, action of the elements, inadequacy, obsolescence, changes in the
art, changes in demand and requirements of public authorities.
Discount, as applied to the securities issued or assumed by the
utility, is the excess of the par (stated value of no-par stocks) or
face value of the securities plus interest or dividends accrued at the
date of the sale over the cash value of the consideration received from
their sale.
FASB is the Financial Accounting Standards Board.
G&T is a generation and transmission cooperative.
Investment advances are advances, represented by notes or by book
accounts only, with respect to which it is mutually agreed or intended
between the creditor and debtor that they shall be settled by the
issuance of securities or shall not be subject to current settlement.
Minor items of property are the associated parts or items of which
retirement units are composed.
Net salvage value is the salvage value of property retired less the
cost of removal.
Nominally issued, as applied to securities issued or assumed by the
utility, are those which have been signed, certified, or otherwise
executed, and placed with the proper officer for sale and delivery, or
pledged, or otherwise placed in some special funds of the utility, but
which have not been sold, or issued direct to trustees of sinking
[[Page 809]]
funds in accordance with contractual requirements.
Nominally outstanding, as applied to securities issued or assumed by
the utility, are those which, after being actually issued, have been
reacquired by or for the utility under circumstances which require them
to be considered as held alive and not retired, provided, however, that
securities held by trustees shall be considered as actually outstanding.
NRECA is the National Rural Electric Cooperative Association.
Operating lease is a lease of property used in utility or nonutility
operations, which does not meet any of the criteria stated in Sec.
1767.15 (s).
Original cost, as applied to electric plant, is the cost of such
property to the person first devoting it to public service.
Person is an individual, a corporation, a partnership, an
association, a joint stock company, a business trust, or any organized
group of persons, whether incorporated or not, or any receiver or
trustee.
Premium, as applied to securities issued or assumed by the utility,
is the excess of the cash value of the consideration received from their
sale over the sum of their par (stated value of no-par stocks) or face
value and interest or dividends accrued at the date of sale.
Project is a complete unit of improvement or development, consisting
of a power house, all water conduits, all dams and appurtenant works and
structures (including navigation structures) which are a part of said
unit, and all storage, diverting, or forebay reservoirs directly
connected therewith, the primary line or lines transmitting power
therefrom to the point of junction with the distribution system or with
the interconnected primary transmission system, all miscellaneous
structures used and useful in connection with said unit or any part
thereof, and all water rights, rights of way, ditches, dams, reservoirs,
lands, or interest in lands the use and occupancy of which are necessary
or appropriate in the maintenance and operation of such unit.
Property retired, as applied to electric plant, is property which
has been removed, sold, abandoned, destroyed, or which for any cause has
been withdrawn from service.
REA means the Rural Electrification Administration formerly an
agency of the United States Department of Agriculture and predecessor
agency to RUS with respect to administering certain electric and
telephone loan programs.
Regulatory Assets and Liabilities are assets and liabilities that
result from rate actions of regulatory agencies. Regulatory assets and
liabilities arise from specific revenues, expenses, gains, or losses
that would have been included in net income determinations in one period
under the general requirements of the Uniform System of Accounts but for
it being probable:
(1) That such items will be included in a different period(s) for
purposes of developing the rates the utility is authorized to charge for
its utility services; or
(2) In the case of regulatory liabilities, that refunds to
customers, not provided for in the other accounts, will be required.
Replacing (including replacement) when not otherwise indicated in
the context, is the construction or installation of electric plant in
place of property retired, together with the removal of the property
retired.
Research, Development, and Demonstration (RD&D) includes all
expenditures incurred by borrowers either directly or through another
person or organization (such as a research institute, industry
association, foundation, university, engineering company or similar
contractor) in pursuing research, development, and demonstration
activities including experiment, design, installation, construction, or
operation. This definition includes expenditures for the implementation
or development of new and/or existing concepts until technically
feasible and commercially feasible operations are verified. Such
research, development, and demonstration costs should be reasonably
related to the existing or future utility business, broadly defined, of
the borrower or in the environment in which it operates or expects to
operate. The term includes, but is not limited to, all such costs
incidental to the
[[Page 810]]
design, development or implementation of an experimental facility, a
plant process, a product, a formula, an invention, a system or similar
items, and the improvement of already existing items of a like nature;
amounts expended in connection with the proposed development and/or
proposed delivery of alternate sources of electricity; and the costs of
obtaining its own patent, such as attorney's fees expended in making and
perfecting a patent application. The term includes preliminary
investigations and detailed planning of specific projects for securing
for customers non-conventional electric power supplies that rely on
technology that has not been verified previously to be feasible. The
term does not include expenditures for efficiency surveys; studies of
management, management techniques, and organization; or consumer
surveys, advertising, promotions, or items of a like nature.
Retirement units are those items of electric plant which, when
retired with or without replacement, are accounted for by crediting the
book cost thereof to the electric plant accounts in which included.
RUS means the Rural Utilities Service, an agency of the United
States Department of Agriculture established pursuant to Section 232 of
the Federal Crop Insurance Reform and Department of Agriculture
Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat. 3178), successor
to REA with respect to administering certain electric and telephone
programs. See 7 CFR 1700.1.
RUS Form 7 is the August 1988 revision (or the revision of any other
date which may be specified) of such RUS Form 7, Financial and
Statistical Report, or any later revision which shall have been at the
time prescribed for use by RUS.
RUS Form 12 is the November 1979 revision (or the revision of any
other date which may be specified) of such RUS Form 12, Operating
Report--Financial, or any later revision which shall have been at the
time prescribed for use by RUS.
RUS USoA is the USoA prescribed in this subpart.
Salvage value is the amount received for property retired, less any
expenses incurred in connection with the sale or in preparing the
property for sale; or, if retained, the amount at which the material
recovered is chargeable to materials and supplies, or other appropriate
accounts.
Service life is the time between the date electric plant is
includible in electric plant in service, or electric plant leased to
others, and the date of its retirement. If depreciation is accounted for
on a production basis rather than on a time basis, service life should
be measured in terms of the appropriate unit of production.
Service value is the difference between original cost and net
salvage value of electric plant.
State is a State admitted to the Union, the District of Columbia,
and any organized Territory of the United States.
Subsidiary company is a company which is controlled by the utility
through ownership of voting stock. (See the definition of control in
Sec. 1767.10.) A corporate joint venture in which a corporation is
owned by a small group of businesses as a separate and specific business
or project for the mutual benefit of the members of the group is a
subsidiary company for the purposes of this system of accounts.
Utility is an RUS borrower.
Work order is an order authorizing the construction of utility
plant. It serves as the basis for the accounts or subaccounts in which
costs are recorded.
[58 FR 59825, Nov. 10, 1993, as amended at 59 FR 66440, Dec. 27, 1994]
Sec. 1767.11 Purpose.
(a) The standard form of RUS loan documents for electric borrowers
requires that the borrower keep books, records, and accounts in which
full and true entries will be made of all of the dealings, business and
affairs of the borrower in accordance with the methods and principles of
accounting of this part.
(b) This subpart implements these provisions of the RUS loan
documents by prescribing the RUS USoA for electric borrowers and by
providing accounting methodologies and procedures which are applicable
to particular situations.
[[Page 811]]
Sec. 1767.12 Accounting system requirements.
(a) Each RUS electric borrower must maintain and keep its books of
accounts and all other books and records that support the entries in
such books of accounts in accordance with Sec. Sec. 1767.18-1767.31.
(b) Each RUS electric borrower shall maintain and keep its books of
accounts and all other books and records which support the entries in
such books of accounts in accordance with Sec. 1767.41, Accounting
Methods and Procedures Required of All RUS Borrowers, herein, which
prescribes accounting principles to be applied to specific factual
circumstances.
Sec. 1767.13 Departures from the prescribed RUS Uniform System of Accounts.
(a) No departures are to be made to the prescribed RUS USoA without
the prior written approval of RUS. RUS grants a departure to any
borrower electing to delay implementation of the functional (activity-
based) accounting requirements of this part through December 31, 1997.
Requests for departures from the RUS USoA shall be addressed, in
writing, to the Director, Program Accounting Services Division (PASD).
(b) RUS borrowers subject to the jurisdiction of a state regulatory
authority with jurisdiction over rates and/or accounting for electric
utilities will not:
(1) Request approval of such authority to use accounting
methodologies and principles that depart from the provisions herein; or
(2) File with such authority, any documents or information,
including without limitation, any filings associated with the borrower's
rates, based upon accounting methods and principles inconsistent with
the provisions of this part.
(c) If any state regulatory authority with jurisdiction over an RUS
borrower prescribes accounting methods or principles for the borrower
that are inconsistent with the provisions of this part, the borrower
must immediately notify the Director, BAD, and provide such documents,
information, and reports as RUS may request to evaluate the impact that
such accounting methods or principles may have on the interests of RUS.
(1) If RUS determines that the accounting methods and principles do
not adversely impact RUS interests, RUS will permit the borrower to use
the accounting methods and principles as prescribed by the state
regulatory authority to comply with the provisions of the RUS loan
documents.
(2) If RUS determines that the accounting methods and principles may
adversely impact RUS's interests, RUS may require that, for the purposes
of complying with provisions of RUS loan documents, including, without
limitation, those provisions relating to financial coverage standards
(e.g. ``TIER''), the borrower continue to maintain books, records, and
accounts in accordance with this subpart.
(i) RUS may, however, approve requests by the borrower to maintain
such additional books, records, and accounts as necessary to comply with
the requirements of the state regulatory authority.
(ii) Such approval will not waive, modify or amend the requirements
of the RUS loan documents or of this subpart.
(d) RUS borrowers will not implement the provisions of Statement of
Financial Accounting Standards (SFAS) No. 71, Accounting for the Effects
of Certain Types of Regulation, SFAS No. 90, Regulated Enterprises--
Accounting for Abandonments and Disallowances of Plant Costs, SFAS No.
92, Regulated Enterprises--Accounting for Phase-in Plans, without the
prior written approval of RUS except as provided for in paragraphs
(d)(1) through (d)(5) of this section. Requests for approval shall be
addressed, in writing, to the Director, PASD. The specific deferrals set
forth in paragraphs (d)(1) through (d)(5) of this section may be
implemented without the prior written approval of RUS provided that the
deferrals comply with Statement No. 71 and that the RUS borrowers
implementing such deferrals continue to meet the requirements set forth
in Statement No. 71 for doing so:
(1) The deferral and amortization of prior service pension costs
(See
[[Page 812]]
Sec. 1767.41, Interpretation No. 606, Pension Costs), remapping
expenses (See Sec. 1767.41, Interpretation No. 613, Mapping Costs), and
preliminary survey and investigation charges (See Sec. 1767.17,
Interpretation No. 111, Engineering Contracts for System Planning);
(2) The deferral of any current period expense or expenses, on a
cumulative basis for the fiscal year, only if a borrower would have met
each of its financial tests or coverage ratios that it has covenanted
with RUS to meet for that fiscal year, had the deferral not been made;
(3) The deferral of any cost that will be fully amortized within the
next 12 succeeding months;
(4) The accelerated amortization of any previously deferred expense;
and
(5) The deferral of revenues coincident with a moratorium imposed by
the National Rural Electric Cooperative Association on its Retirement
and Security Program, provided, however, that the deferral is for the
sole purpose of offsetting future pension costs.
(e) RUS will consider approval of specific departures from this part
upon submission of:
(1) A detailed description of the proposed departure;
(2) The specific accounting journal entries that will be used
including the account number and title, and the dollar amounts where
appropriate;
(3) The total dollar amount of the departure and the impact on
margins during the time period of the departure; and
(4) Any additional information RUS may deem necessary to adequately
evaluate the borrower's request.
(f) RUS will, within 90 days of final receipt of this information,
render a decision on the borrower's request for a departure from the
prescribed RUS USoA.
(1) If, due to extenuating circumstances, RUS is unable to reach a
decision within the required time period, RUS will notify the borrower
of the delay within this same 90-day period, and provide a projected
decision date.
(2) The requested departure from the prescribed RUS USoA must not be
implemented until final approval is granted by RUS.
[58 FR 59825, Nov. 10, 1993, as amended at 60 FR 55429, Nov. 1, 1995; 62
FR 42289, Aug. 6, 1997]
Sec. 1767.14 Interpretations of the RUS Uniform System of Accounts.
To maintain uniformity in accounting, borrowers must submit
questions concerning interpretations of the RUS USoA, in writing, to the
Director, BAD, for consideration and decision.
(Approved by the Office of Management and Budget under control number
0572-0002)
[60 FR 55429, Nov. 1, 1995]
Sec. 1767.15 General instructions.
(a) Records. (1) Each utility shall keep its books of account, and
all other books, records, and memoranda which support the entries in
such books of account so as to be able to furnish readily full
information as to any item included in any account.
(2) Each entry shall be supported by such detailed information as
will permit ready identification, analysis, and verification of all
facts relevant thereto.
(3) The books and records referred to herein include not only
accounting records in a limited technical sense, but all other records,
such as minute books, stock books, reports, correspondence, memoranda,
etc., which may be useful in developing the history of or facts
regarding any transaction.
(4) No utility shall destroy any such books or records unless the
destruction thereof is permitted by the rules and regulations of RUS in
7 CFR chapter XVII.
(5) In addition to the prescribed accounts, clearing accounts,
temporary or experimental accounts, and subdivisions of any accounts,
may be kept, provided the integrity of the prescribed accounts is not
impaired.
(6) All amounts included in the accounts prescribed herein for
electric plant and operating expenses shall be just and reasonable and
any payments or accruals by the utility in excess of just and reasonable
charges shall be included in Account 426.5, Other Deductions.
[[Page 813]]
(7) The arrangement or sequence of the accounts prescribed herein
shall not be controlling as to the arrangement or sequence in report
forms which may be prescribed by RUS.
(b) Numbering system. (1) The account numbering plan used herein
consists of a system of three-digit whole numbers as follows:
100-199 Assets and other debits.
200-299 Liabilities and other credits.
300-399 Plant accounts.
400-432, 434-435 Income accounts.
433, 436-439 Retained earnings accounts.
440-459 Revenue accounts.
500-599 Production, transmission, and distribution expenses.
900-949 Customer accounts, customer service and informational, sales,
and general and administrative expenses.
(2) In certain instances, numbers have been skipped in order to
allow for possible later expansion or to permit better coordination with
the numbering system for other utility departments.
(3) The numbers prefixed to account titles are to be considered as
parts of the titles.
(i) Each utility, however, may adopt, for its own purposes, a
different system of account numbers provided that the numbers herein
prescribed shall appear in the descriptive headings of the ledger
accounts and in the various sources of original entry.
(ii) If a utility uses a different group of account numbers and it
is not practicable to show the prescribed account numbers in the various
sources of original entry, such reference to the prescribed account
numbers may be omitted from the various sources of original entry.
(iii) Each utility using different account numbers for its own
purposes shall keep readily available, a list of such account numbers
which it uses and a reconciliation of such account numbers with the
account numbers provided herein.
(iv) The utility's records shall be so kept as to permit ready
analysis by prescribed accounts (by direct reference to sources of
original entry to the extent practicable) and to permit preparation of
financial and operating statements directly from such records at the end
of each accounting period according to the prescribed accounts.
(c) Accounting period. (1) Each utility shall keep its books on a
monthly basis so that for each month, all transactions applicable
thereto, as nearly as may be ascertained, shall be entered in the books
of the utility.
(2) Amounts applicable or assignable to specific utility departments
shall be so segregated monthly.
(3) Each utility shall close its books at the end of each fiscal
year unless otherwise authorized by RUS.
(d) Submission of questions. To maintain uniformity of accounting,
utilities shall submit questions of doubtful interpretation to RUS for
consideration and decision.
(e) Item lists. (1) Lists of ``items'' appearing in the texts of the
accounts or elsewhere herein are for the purpose of more clearly
indicating the application of the prescribed accounting.
(2) The lists are intended to be representative, but not exhaustive.
(3) The appearance of an item in a list warrants the inclusion of
the item in the account mentioned only when the text of the account also
indicates inclusion inasmuch as the same item frequently appears in more
than one list.
(4) The proper entry in each instance must be determined by the
texts of the accounts.
(f) Extraordinary items. (1) Net income shall reflect all items of
profit and loss during the period with the exception of prior period
adjustments as described in Sec. 1767.15 (g) and long-term debt as
described in Sec. 1767.15 (q).
(2) Those items related to the effects of events and transactions
which have occurred during the current period and which are not typical
or customary business activities of the company shall be considered
extraordinary items.
(3) They will be events and transactions of significant effect which
would not be expected to recur frequently and which would not be
considered as recurring factors in any evaluation of the ordinary
operating processes of business.
(i) In determining significance, items of a similar nature should be
considered in the aggregate.
(ii) Dissimilar items should be considered individually; however, if
they
[[Page 814]]
are few in number, they may be considered in the aggregate.
(iii) To be considered as extraordinary under the above guidelines,
an item should be more than approximately 5 percent of income, computed
before extraordinary items.
(iv) RUS approval must be obtained to treat an item of less than 5
percent, as extraordinary. (See Accounts 434 and 435.)
(g) Prior period items. (1) Items of profit and loss related to the
following shall be accounted for as prior period adjustments and
excluded from the determination of net income for the current year:
(i) Correction of an error in the financial statements of a prior
year
(ii) Adjustments that result from realization of income tax benefits
of preacquisition operating loss carryforwards of purchased
subsidiaries.
(2) All other items of profit and loss recognized during the year
shall be included in the determination of net income for that year.
(h) Unaudited items. (1) Whenever a financial statement is required
by RUS, if it is known that a transaction has occurred which affects the
accounts but the amount involved in the transaction and its effect upon
the accounts cannot be determined with absolute accuracy, the amount
shall be estimated and such estimated amount included in the proper
accounts.
(2) The utility is not required to anticipate minor items which
would not appreciably affect the accounts.
(i) Distribution of pay and expenses of employees. Charges to
electric plant, operating expense, and other accounts for services and
expenses of employees engaged in activities chargeable to various
accounts, such as construction, maintenance, and operations, shall be
based upon the actual time engaged in the respective classes of work, or
in case that method is impracticable, upon the basis of a study of the
time actually engaged during a representative period.
(j) Payroll distribution. (1) Underlying accounting data shall be
maintained so that the distribution of the cost of labor charged direct
to the various accounts will be readily available.
(2) Such underlying data shall permit a reasonably accurate
distribution to be made of the cost of labor charged initially to
clearing accounts so that the total labor cost may be classified among
construction, cost of removal, electric operating functions (steam
generation, nuclear generation, hydraulic generation, transmission,
distribution, etc.) and nonutility operations.
(k) Accounting on an accrual basis. (1) The utility is required to
keep its accounts on the accrual basis.
(i) This requires the inclusion, in its accounts, of all known
transactions of appreciable amount which affect the accounts.
(ii) If bills covering such transactions have not been received or
rendered, the amounts shall be estimated and appropriate adjustments
made when the bills are received.
(2) When payments are made in advance for items such as insurance,
rents, taxes, or interest, the amount applicable to future periods shall
be charged to Account 165, Prepayments, and spread over the periods to
which applicable, by credits to Account 165, and charges to the accounts
appropriate for the expenditure.
(l) Records for each plant. (1) Separate records shall be maintained
by electric plant accounts of the book cost of each plant owned,
including additions by the utility to plant leased from others, and of
the cost of operating and maintaining each plant owned or operated.
(2) The term ``plant'' as used herein includes each generating
station and each transmission line or appropriate group of transmission
lines.
(m) Accounting for other departments. (1) If the utility also
operates other utility departments, such as gas or water, it shall keep
such accounts for the other departments as may be prescribed by proper
authority and in the absence of prescribed accounts, it shall keep such
accounts as are proper or necessary to reflect the results of operating
each such department.
(2) It is not intended that proprietary and similar accounts which
apply to the utility as a whole shall be departmentalized.
[[Page 815]]
(n) Transactions with associated companies. (1) Each utility shall
keep its accounts and records so as to be able to furnish accurately and
expeditiously statements of all transactions with associated companies.
(2) The statements may be required to show the general nature of the
transactions, the amounts involved therein and the amounts included in
each account prescribed herein with respect to such transactions.
Transactions with associated companies shall be recorded in the
appropriate accounts for transactions of the same nature. Nothing herein
contained, however, shall be construed as restraining the utility from
subdividing accounts for the purpose of recording separately
transactions with associated companies.
(o) Contingent assets and liabilities. (1) Contingent assets
represent a possible source of value to the utility contingent upon the
fulfillment of conditions regarded as uncertain.
(2) Contingent liabilities include items which may, under certain
conditions, become obligations of the utility but which are neither
direct nor assumed liabilities at the date of the balance sheet. The
utility shall be prepared to give a complete statement of significant
contingent assets and liabilities (including cumulative dividends on
preference stock) in its audited financial statements; its RUS Form 7,
Financial and Statistical Report, or its RUS Form 12, Operating Report--
Financial; and at such other times as may be requested by RUS.
(p) Separate accounts or records for each licensed project. The
accounts or records of each borrower shall be so kept as to show for
each project (including pumped storage) under license:
(1) The actual legitimate original cost of the project, including
the original cost of the original project, the original cost of
additions thereto and betterments thereof, and credits for property
retired from service, as determined under RUS's regulations in 7 CFR
chapter XVII;
(2) The charges for operation and maintenance of the project
property directly assignable to the project;
(3) The credits and debits to the depreciation and amortization
accounts, and the balances in such accounts; and
(4) The credits and debits to the operating revenue, income, and
retained earnings accounts that can be identified with and directly
assigned to the project.
Note: The purpose of this instruction is to insure that accounts or
records are currently maintained by each borrower from which reports may
be made to RUS for use in determining the net investment in each
licensed project. The instruction covers only the debit and credit items
appearing in the borrower's accounts which may be identified with and
assigned directly to any project. In the determination of the net
investment, allocations of items affecting the net investment may be
required where direct assignment is not practicable.
(q) Long-term debt: premium, discount and expense, and gain or loss
on reacquisition--(1) Premium, discount and expense. (i) A separate
premium, discount and expense account shall be maintained for each class
and series of long-term debt (including receivers' certificates) issued
or assumed by the utility.
(ii) The premium will be recorded in Account 225, Unamortized
Premium on Long-Term Debt, the discount will be recorded in Account 226,
Unamortized Discount on Long-Term Debt--Debit, and the expense of
issuance shall be recorded in Account 181, Unamortized Debt Expense.
(iii) The premium, discount and expense shall be amortized over the
life of the respective issues under a plan which will distribute the
amounts equitably over the life of the securities.
(A) The amortization shall be charged or credited on a monthly basis
with the amounts relating to discount and expense charged to Account
428, Amortization of Debt Discount and Expense.
(B) The amounts relating to premium shall be credited to Account
429, Amortization of Premium on Debt--Credit.
(2) Reacquisition, without refunding. (i) When long-term debt is
reacquired or redeemed without being converted into another form of
long-term debt and when the transaction is not in connection with a
refunding operation (primarily redemptions for sinking fund purposes),
the difference between the amount paid upon reacquisition and the face
value; plus any unamortized
[[Page 816]]
premium less any related unamortized debt expense and reacquisition
costs; or less any unamortized discount, related debt expense and
reacquisition costs applicable to the debt redeemed, retired and
cancelled, shall be included in Account 189, Unamortized Loss on
Reacquired Debt, or Account 257, Unamortized Gain on Reacquired Debt, as
appropriate.
(ii) The utility shall amortize the recorded amounts equally on a
monthly basis over the remaining life of the respective security issues
(old original debt).
(iii) The amount so amortized shall be charged to Account 428.1,
Amortization of Loss on Reacquired Debt, or credited to Account 429.1,
Amortization of Gain on Reacquired Debt--Credit, as appropriate.
(3) Reacquisition, with refunding. (i) When the redemption of one
issue or series of bonds or other long-term obligations is financed by
another issue or series before the maturity date of the first issue, the
difference between the amount paid upon refunding and the face value;
plus any unamortized premium less related debt expense or less any
unamortized discount and related debt expense, applicable to the debt
refunded, shall be included in Account 189, Unamortized Loss on
Reacquired Debt, or Account 257, Unamortized Gain on Reacquired Debt, as
appropriate.
(ii) The utility may elect to account for such amounts as follows:
(A) Write them off immediately when the amounts are insignificant;
(B) Amortize them by equal monthly amounts over the remainder of the
original life of the issue retired; or
(C) Amortize them by equal monthly amounts over the life of the new
issue.
(iii) Once an election is made, it shall be applied on a consistent
basis.
(iv) The amounts in paragraphs (q)(3)(ii)(A), (B), or (C) of this
section shall be charged to Account 428.1, Amortization of Loss on
Reacquired Debt, or credited to Account 429.1, Amortization of Gain on
Reacquired Debt--Credit, as appropriate.
(4) Under methods in paragraphs (q)(3)(ii)(B) and (C) of this
section, the increase or reduction in current income taxes resulting
from the reacquisition should be apportioned over the remainder of the
original life of the issued retired or over the life of the new issue,
as appropriate, as directed more specifically in paragraphs (q)(5) and
(6) of this section.
(5) When the utility recognizes the loss in the year of
reacquisition as a tax deduction, Account 410.1, Provision for Deferred
Income Taxes, Utility Operating Income, shall be debited and Account
283, Accumulated Deferred Income Taxes--Other, shall be credited with
the amount of the related tax effect, such amount to be allocated to the
periods affected in accordance with the provisions of Account 283.
(6) When the utility chooses to recognize the gain in the year of
reacquisition as a taxable gain, Account 411.1, Provision for Deferred
Income Taxes--Credit, Utility Operating Income, shall be debited with
the amount of the related tax effect, such amount to be allocated to the
periods affected in accordance with the provisions of Account 190,
Accumulated Deferred Income Taxes.
(7) When the utility chooses to use the optional privilege of
deferring the tax on the gain attributable to the reacquisition of debt
by reducing the depreciable basis of utility property for tax purposes,
pursuant to Section 108 of the Internal Revenue Code (26 U.S.C. 108),
the related tax effects shall be deferred as the income is recognized
for accounting purposes, and the deferred amounts shall be amortized
over the life of the associated property on a vintage year basis.
(i) Account 410.1, Provision for Deferred Income Taxes, Utility
Operating Income, shall be debited, and Account 282, Accumulated
Deferred Income Taxes--Other Property, shall be credited with an amount
equal to the estimated income tax effect applicable to the portion of
the income, attributable to reacquired debt, recognized for accounting
purposes during the period.
(ii) Account 282 shall be debited and Account 411.1, Provision for
Deferred Income Taxes--Credit, Utility Operating Income, shall be
credited with an amount equal to the estimated income tax effects,
during the life of the property, attributable to the reduction in the
depreciable basis for tax purposes.
[[Page 817]]
(8) The tax effects relating to gain or loss shall be allocated as
above to utility operations except in cases where a portion of the debt
reacquired is directly applicable to nonutility operations.
(i) In that event, the related portion of the tax effects shall be
allocated to nonutility operations.
(ii) Where it can be established that reacquired debt is generally
applicable to both utility and nonutility operations, the tax effects
shall be allocated between utility and nonutility operations based on
the ratio of net investment in utility plant to net investment in
nonutility plant.
(9) Premium, discount, or expense on debt shall not be included as
an element in the cost of construction or acquisition of property
(tangible or intangible), except under the provisions of Account 432,
Allowance for Borrowed Funds Used During Construction--Credit.
(10) Alternate method. Where a regulatory authority or a group of
regulatory authorities having prime rate jurisdiction over the utility
specifically disallows the rate principle of amortizing gains or losses
on reacquisition of long-term debt without refunding, and does not apply
the gain or loss to reduce interest charges in computing the allowed
rate of return for rate purposes, the following alternate method may be
used to account for gains or losses relating to reacquisition of long-
term debt, with or without refunding:
(i) The difference between the amount paid upon reacquisition of any
long-term debt and the face value, adjusted for unamortized discount,
expenses or premium, as the case may be, applicable to the debt redeemed
shall be recognized currently in income and recorded in Account 421,
Miscellaneous Nonoperating Income, or Account 426.5, Other Deductions.
(ii) When this alternate method of accounting is used, the utility
shall include a footnote to each financial statement, prepared for
public use, explaining why this method is being used along with the
treatment given for ratemaking purposes.
(r) Comprehensive interperiod income tax allocation. (1) Where there
are timing differences between the periods in which transactions affect
taxable income and the periods in which they enter into the
determination of pretax accounting income, the income tax effects of
such transactions are to be recognized in the periods in which the
differences between book accounting income and taxable income arise and
in the periods in which the differences reverse using the deferred tax
method.
(2) Comprehensive interperiod tax allocation should be followed
whenever transactions enter into the determination of pretax accounting
income for the period even though some transactions may affect the
determination of taxes payable in a different period.
(3) Utilities are not required to utilize comprehensive interperiod
income tax allocation until the deferred income taxes are included as an
expense in the rate level by the regulatory authority having rate
jurisdiction over the utility.
(4) Where comprehensive interperiod tax allocation accounting is not
practiced the utility shall include as a note to each financial
statement, prepared for public use, a footnote explanation setting forth
the utility's accounting policies with respect to interperiod tax
allocation and describing the treatment for rate making purposes of the
tax timing differences by regulatory authorities having rate
jurisdiction.
(5) Should the utility be subject to more than one agency having
rate jurisdiction, its accounts shall appropriately reflect the
ratemaking treatment (deferral or flow through) of each jurisdiction.
(6) Once comprehensive interperiod tax allocation has been initiated
either in whole or in part it shall be practiced on a consistent basis
and shall not be changed or discontinued without prior RUS approval.
(7) Tax effects deferred currently will be recorded as deferred
debits or deferred credits in Accounts 190, Accumulated Deferred Income
Taxes; 281, Accumulated Deferred Income Taxes--Accelerated Amortization
Property; 282, Accumulated Deferred Income Taxes--Other Property, and
283, Accumulated Deferred Taxes--Other, as appropriate.
(8) The resulting amounts recorded in these accounts shall be
disposed of as
[[Page 818]]
prescribed in this system of accounts or as otherwise authorized by RUS.
(s) Criteria for classifying leases. (1) If, at its inception, a
lease meets one or more of the following criteria, the lease shall be
classified as a capital lease:
(i) The lease transfers ownership of the property to the lessee by
the end of the lease term.
(ii) The lease contains a bargain purchase option.
(iii) The lease term is equal to 75 percent or more of the estimated
economic life of the leased property. However, if the beginning of the
lease term falls within the last 25 percent of the total estimated
economic life of the leased property, including earlier years of use,
this criterion shall not be used for purposes of classifying the lease.
(iv) The present value at the beginning of the lease term of the
minimum lease payments, excluding that portion of the payments
representing executory costs such as insurance, maintenance, and taxes
to be paid by the lessor, including any profit thereon, equals or exceed
90 percent of the excess of the fair value of the leased property to the
lessor at the inception of the lease over any related investment tax
credit retained by the lessor and expected to be realized by lessor.
(A) However, if the beginning of the lease term falls within the
last 25 percent of the total estimated economic life of the leased
property, including earlier years of use, this criterion shall not be
used for purposes of classifying the lease.
(B) The lessee utility shall compute the present value of the
minimum lease payments using its incremental borrowing rate, unless it
is practicable for the utility to learn the implicit rate computed by
the lessor, and the implicit rate computed by the lessor is less than
the lessee's incremental borrowing rate. If both of those conditions are
met, the lessee shall use the implicit rate.
(2) If, at any time, the lessee and lessor agree to change the
provisions of the lease, other than by renewing the lease or extending
its term, in a manner that would have resulted in a different
classification of the lease under the criteria in paragraph (s)(1) of
this section had the changed terms been in effect at the inception of
the lease, the revised agreement shall be considered as a new agreement
over its term, and the criteria in paragraph (s)(1) of this section
shall be applied for purposes of the expiration of the existing lease
term, such as the exercise of a lease renewal option other than those
already included in the lease term, shall be considered as a new
agreement and shall be classified according to the above provision.
Changes in estimates (for example, changes in estimates of the economic
life or of the residual value of the leased property) or changes in
circumstances (for example, default by the lessee) shall not give rise
to a new classification of a lease for accounting purposes.
(t) Accounting for leases. (1) All leases shall be classified as
either capital or operating leases.
(2) The utility shall record a capital lease as an asset in Account
101.1, Property Under Capital Leases, and Account 120.6, Nuclear Fuel
Under Capital Leases; as appropriate, and an obligation in Account 227,
Obligations Under Capital Leases--Noncurrent, or Account 243,
Obligations Under Capital Leases--Current, at an amount equal to the
present value at the beginning of the lease term of minimum lease
payments during the lease term, excluding that portion of the payments
representing executory costs such as insurance, maintenance, and taxes
to be paid by the lessor, together with any profit thereon. However, if
the amount so determined exceeds the fair value of the leased property
at the inception of the lease, the amount recorded as the asset and
obligation shall be the fair value.
(3) Rental payments on all leases shall be charged to rent expense,
fuel expense, construction work in progress, or other appropriate
accounts as they become payable.
(4) For a capital lease, for each period during the lease term, the
amounts recorded for the asset and obligation shall be reduced by an
amount equal to the portion of each lease payment that would have been
allocated to the reduction of the obligation, if the payment had been
treated as a payment on an installment obligation (liability) and
[[Page 819]]
allocated between interest expense and a reduction of the obligation so
as to produce a constant periodic rate of interest on the remaining
balance.
(u) Allowances. (1) Title IV of the Clean Air Act Amendments of
1990, Pub. L. 101-549, 104 Stat. 2399, 2584 (42 U.S.C. 7407 and 42
U.S.C. 7651), provides for the issuance of allowances as a means to
limit the emissions of certain airborne pollutants by various entities,
including utilities. Utilities owning allowances, other than those
acquired for speculative purposes, shall account for such allowances at
cost in Account 158.1, Allowance Inventory, or Account 158.2, Allowances
Withheld, as appropriate. Allowances acquired for speculative purposes
and identified as such in contemporaneous records at the time of
purchase shall be accounted for in Account 124, Other Investments.
(2) When purchased, allowances become eligible for use in different
years, and the allocation of the purchase cost cannot be determined by
fair value, the purchase cost allocated to allowances of each vintage
shall be determined through use of a present-value based measurement.
The interest rate used in the present-value measurement shall be the
utility's incremental borrowing rate, in the month in which the
allowances are acquired, for a loan with a term similar to the period
that it will hold the allowances and in an amount equal to the purchase
price.
(3) The underlying records supporting Account 158.1 and Account
158.2 shall be maintained in sufficient detail so as to provide the
number of allowances and the related cost by vintage year.
(4) Issuances from inventory included in Account 158.1 and Account
158.2 shall be accounted for on a vintage basis using a monthly
weighted-average method of cost determination. The cost of eligible
allowances not used in the current year shall be transferred to the
vintage for the immediately following year.
(5) Account 158.1 shall be credited and Account 509, Allowances,
debited so that the cost of the allowances to be remitted for the year
is charged to expense monthly based on each month's emissions. This may,
in certain circumstances, require allocation of the cost of an allowance
between months on a fractional basis.
(6) In any period in which actual emissions exceed the amount
allowable based on eligible allowances owned, the utility shall estimate
the cost to acquire the additional allowances needed and charge Account
158.1 with the estimated cost. This estimated cost of future allowance
acquisitions shall be credited to Account 158.1 and charged to Account
509 in the same accounting period as the related charge to Account
158.1. Should the actual cost of these allowances differ from the
estimated cost, the differences shall be recognized in the then-current
period's inventory issuance cost.
(7) Any penalties assessed by the Environmental Protection Agency
for the emission of excess pollutants shall be charged to Account 426.3,
Penalties.
(8) Gains on dispositions of allowances, other than allowances held
for speculative purposes, shall be accounted for as follows. First, if
there is uncertainty as to the regulatory treatment, the gain shall be
deferred in Account 254, Other Regulatory Liabilities, pending
resolution of the uncertainty. Second, if there is certainty as to the
existence of a regulatory liability, the gain will be credited to
Account 254, with subsequent recognition in income when reductions in
charges to customers occur or the liability is otherwise satisfied.
Third, all other gains will be credited to Account 411.8, Gains from
Disposition of Allowances. Losses on disposition of allowances, other
than allowances held for speculative purposes, shall be accounted for as
follows. Losses that qualify as regulatory assets shall be charged
directly to Account 182.3, Other Regulatory Assets. All other losses
shall be charged to Account 411.9, Losses from Disposition of
Allowances. (See the definition of regulatory assets and liabilities.)
Gains or losses on disposition of allowances held for speculative
purposes shall be recognized in Account 421, Miscellaneous Nonoperating
Income, or Account 426.5, Other Deductions, as appropriate.
(9) The costs and benefits of exchange-traded allowance futures
contracts used to protect the utility from the risk of unfavorable price
changes
[[Page 820]]
(``hedging transactions'') shall be deferred in Account 186,
Miscellaneous Deferred Debits, or Account 253, Other Deferred Credits,
as appropriate. Such deferred amounts shall be included in Account
158.1, Allowance Inventory, in the month in which the related allowances
are acquired, sold or otherwise disposed of. Where the costs or benefits
of hedging transactions are not identifiable with specific allowances,
the amounts shall be included in Account 158.1 when the futures contract
is closed. The costs and benefits of exchange-traded allowance futures
contracts entered into as a speculating activity shall be charged or
credited to Account 421, Miscellaneous Nonoperating Income, or Account
426.5, Other Deductions, as appropriate.
Sec. 1767.16 Electric plant instructions.
(a) Classification of electric plant at effective date of system of
accounts. (1) The electric plant accounts provided herein are the same
as those contained in the prior system of accounts except for inclusion
of accounts for nuclear production plant and some changes in
classification in the general equipment accounts. Except for these
changes, the balances in the various plant accounts, as determined under
the prior system of accounts, should be carried forward. Any remaining
balance of plant which has not yet been classified, pursuant to the
requirements of the prior system, shall be classified in accordance with
the following instructions.
(2) The cost to the utility of its unclassified plant shall be
ascertained by analysis of the utility's records. Adjustments shall not
be made to record in utility plant accounts amounts previously charged
to operating expenses or to income deductions in accordance with the
USoA in effect at the time or in accordance with the discretion of
management as exercised under a USoA, or under accounting practices
previously followed.
(3) The detailed electric plant accounts (301 to 399, inclusive)
shall be stated on the basis of cost to the utility of plant constructed
by it and the original cost, estimated if not known, of plant acquired
as an operating unit or system. The difference between the original
cost, as above, and the cost to the utility of electric plant after
giving effect to any accumulated provision for depreciation or
amortization shall be recorded in Account 114, Electric Plant
Acquisition Adjustments. The original cost of electric plant shall be
determined by analysis of the utility's records or those of the
predecessor or vendor companies with respect to electric plant
previously acquired as operating units or systems and the difference
between the original cost so determined, less accumulated provisions for
depreciation and amortization and the cost to the utility with necessary
adjustments for retirements from date of acquisition, shall be entered
in Account 114, Electric Plant Acquisition Adjustments. Any difference
between the cost of electric plant and its book cost, when not properly
includible in other accounts, shall be recorded in Account 116, Other
Electric Plant Adjustments.
(b) Electric plant to be recorded at cost. (1) All amounts included
in the accounts for electric plant acquired as an operating unit or
system, except as otherwise provided in the texts of the intangible
plant accounts, shall be stated at the cost incurred by the person who
first devoted the property to utility service. All other electric plant
shall be included in the accounts at the cost incurred by the utility
except for property acquired by lease which qualifies as capital lease
property under Sec. 1767.15 (s), Criteria for Classifying Leases, and
is recorded in Account 101.1, Property Under Capital Lease, or Account
120.6, Nuclear Fuel Under Capital Leases. Where the term ``cost'' is
used in the detailed plant accounts, it shall have the meaning stated in
this paragraph (b).
(2) When the consideration given for property is other than cash,
the value of such consideration shall be determined on a cash basis
(see, however, the definition of cost in Sec. 1767.10). In the entry
recording such transition, the actual consideration shall be described
with sufficient particularity to identify it. The utility shall be
prepared to furnish RUS the particulars of its determination of the cash
value of the consideration if other than cash.
(3) When property is purchased under a plan involving deferred
payments, no
[[Page 821]]
charge shall be made to the electric plant accounts for interest,
insurance, or other expenditures occasioned solely by such form of
payment.
(4) The electric plant accounts shall not include the cost or other
value of electric plant contributed to the company. Contributions in the
form of money or its equivalent toward the construction of electric
plant shall be credited to accounts charged with the cost of such
construction. Plant constructed from contributions of cash or its
equivalent shall be shown as a reduction to gross plant constructed when
assembling cost data in work orders for posting to plant ledgers of
accounts. The accumulated gross costs of plant accumulated in the work
order shall be recorded as a debit in the plant ledger of accounts along
with the related amount of contributions concurrently be recorded as a
credit.
(c) Components of construction cost. The cost of construction
properly includible in the electric plant accounts shall include, where
applicable, the direct and overhead costs as listed and defined
hereunder:
(1) Contract work includes amounts paid for work performed under
contract by other companies, firms, or individuals, costs incident to
the award of such contracts, and the inspection of such work.
(2) Labor includes the pay and expenses of employees of the utility
engaged on construction work, and related workmen's compensation
insurance, payroll taxes, and similar items of expense. It does not
include the pay and expenses of employees which are distributed to
construction through clearing accounts nor the pay and expenses included
in other items hereunder.
(3) Materials and supplies includes the purchase price at the point
of free delivery plus customs duties, excise taxes, the cost of
inspection, loading and transportation, the related stores expenses, and
the cost of fabricated materials from the utility's shop. In determining
the cost of materials and supplies used for construction, proper
allowance shall be made for unused materials and supplies, for materials
recovered from temporary structures used in performing the work
involved, and for discounts allowed and realized in the purchase of
materials and supplies.
Note: The cost of individual items of equipment of small value (for
example, $500 or less) or of short life, including small portable tools
and implements, shall not be charged to utility plant accounts unless
the correctness of the accounting therefor is verified by current
inventories. The cost shall be charged to the appropriate operating
expense or clearing accounts, according to the use of such items, or, if
such items are consumed directly in construction work, the cost shall be
included as part of the cost of the construction.
(4) Transportation includes the cost of transporting employees,
materials and supplies, tools, purchased equipment, and other work
equipment (when not under own power) to and from points of construction.
It includes amounts paid to others as well as the cost of operating the
utility's own transportation equipment. (See Item in paragraph (c)(5) of
this section.)
(5) Special machine service includes the cost of labor (optional),
materials and supplies, depreciation, and other expenses incurred in the
maintenance, operation and use of special machines, such as steam
shovels, pile drivers, derricks, ditchers, scrapers, material unloaders,
and other labor saving machines; also expenditures for rental,
maintenance and operation of machines of others. It does not include the
cost of small tools and other individual items of small value or short
life which are included in the cost of materials and supplies. (See Item
in paragraph (c)(3) of this section.) When a particular construction job
requires the use for an extended period of time of special machines,
transportation or other equipment, the net book cost thereof, less the
appraised or salvage value at time of release from the job, shall be
include in the cost of construction.
(6) Shop service includes the proportion of the expense of the
utility's shop department assignable to construction work except that
the cost of fabricated materials from the utility's shop shall be
included in ``materials and supplies.''
(7) Protection includes the cost of protecting the utility's
property from fire or other casualties and the cost of preventing
damages to others, or to the
[[Page 822]]
property of others, including payments for discovery or extinguishment
of fires, cost of apprehending and prosecuting incendiaries, witness
fees in relation thereto, amounts paid to municipalities and others for
fire protection, and other analogous items of expenditures in connection
with construction work.
(8) Injuries and damages includes expenditures or losses in
connection with construction work on account of injuries to persons and
damages to the property of others; also the cost of investigation of and
defense against actions for such injuries and damages. Insurance
recovered or recoverable on account of compensation paid for injuries to
persons incident to construction shall be credited to the account or
accounts to which such compensation is charged. Insurance recovered or
recoverable on account of property damages incident to construction
shall be credited to the account or accounts charged with the cost of
the damages.
(9) Privileges and permits includes payments for and expenses
incurred in securing temporary privileges, permits or rights in
connection with construction work, such as for the use of private or
public property, streets, or highways, but it does not include rents, or
amounts chargeable as franchises and consents for which see Account 302,
Franchises and Consents.
(10) Rents includes amounts paid for the use of construction
quarters and office space occupied by construction forces and amounts
properly includible in construction costs for such facilities jointly
used.
(11) Engineers and supervision includes the portion of the pay and
expenses of engineers, surveyors, draftsmen, inspectors, superintendents
and their assistants applicable to construction work.
(12) General administration capitalized includes the portion of the
pay and expenses of the general officers and administrative and general
expenses applicable to construction work.
(13) Engineering services includes amounts paid to other companies,
firms, or individuals engaged by the utility to plan, design, prepare
estimates, supervise, inspect, or give general advice and assistance in
connection with construction work.
(14) Insurance includes premiums paid or amounts provided or
reserved as self-insurance for the protection against loss and damages
in connection with construction, by fire or other casualty, injuries or
deaths of persons other than employees, damages to property of others,
defalcation of employees and agents, and the nonperformance of
contractual obligations of others. It does not include workmen's
compensation or similar insurance on employees included as ``labor'' in
Item in paragraph (c)(2) of this section.
(15) Law expenditures includes the general law expenditures incurred
in connection with construction and the court and legal costs directly
related thereto, other than law expenses included in ``Protection,''
Item in paragraph (c)(7) of this section, and in Injuries and damages,
Item in paragraph (c)(8) of this section.
(16) Taxes includes taxes on physical property (including land)
during the period of construction and other taxes properly includible in
construction costs before the facilities become available for service.
(17) Allowance for funds used during construction includes the net
cost for the period of construction of borrowed funds used for
construction purposes and a reasonable rate on other funds when so used,
not to exceed, without prior approval of RUS, allowances computed in
accordance with the formula prescribed in Item in paragraph (c)(17)(i)
of this section. No allowance for funds used during construction charges
shall be included in these accounts upon expenditures for construction
projects which have been abandoned.
(i) The formula and elements for the computation of the allowance
for funds used during construction shall be:
[[Page 823]]
[GRAPHIC] [TIFF OMITTED] TC16SE91.004
Where:
A<INF>i</INF> = Gross allowance for borrowed funds used during
construction rate.
A<INF>c</INF> = Allowance for other funds used during construction rate.
S = Average short-term debt.
s = Short-term debt interest rate.
D = Long-term debt.
d = Long-term debt interest rate.
P = Preferred stock.
p = Preferred stock cost rate.
C = Patronage capital assigned.
c = Entity's incremental borrowing rate.
W = Average balance in construction work in progress plus nuclear fuel
in process of refinement, conversion, enrichment, and fabrication.
(ii) The rate shall be determined annually.
(A) The balance for long-term debt, preferred stock, and patronage
capital assigned shall be the actual book balances as of the end of the
prior year.
(B) The cost rate for long-term debt and preferred stock shall be
the weighted average cost.
(C) The cost rate for patronage capital assigned shall be the
entity's incremental borrowing rate.
(D) The short-term debt balances and related cost and the average
balance for construction work in progress plus nuclear fuel in process
of refinement, conversion, enrichment, and fabrication shall be
estimated for the current year with appropriate adjustments as actual
data becomes available.
Note: When only a portion of a plant or project is placed in
operation or is completed and ready for service but the construction
work as a whole is incomplete, that part of the cost of the property
placed in operation or ready for service shall be treated as ``Electric
Plant in Service,'' and an allowance for funds used during construction
thereon as a charge to construction shall cease. Allowance for funds
used during construction on that part of the cost of the plant which is
incomplete may continue to be charged to construction until such time as
it is placed in operation or is ready for service, except as limited in
Item in paragraph (c)(17) of this section.
(18) Earnings and expenses during construction. The earnings and
expenses during construction shall constitute a component of
construction costs.
(i) The earnings shall include revenues received or earned for power
produced by generating plants during the construction period and sold or
used by the utility.
(A) Where such power is sold to an independent purchaser before
intermingling with power generated by other plants, the credit shall
consist of the selling price of the energy.
(B) Where the power generated by a plant under construction is
delivered to the utility's electric system for distribution and sale, or
is delivered to an associated company, or is delivered to and used by
the utility for purposes other than distribution and sale (for
manufacturing or industrial use, for example), the credit shall be the
fair value of the energy so delivered.
(C) Revenue shall also include rentals for lands, buildings, and
other property, and miscellaneous receipts not properly includible in
other accounts.
(ii) Expenses shall consist of the cost of operating the power
plant, and other costs incident to the production and delivery of the
power for which construction is credited under paragraph (c)(18)(i) of
this section, including the cost of repairs and other expenses of
operating and maintaining lands, buildings, and other property, and
other miscellaneous and like expenses not properly includible in other
accounts.
(19) Training costs. (i) When it is necessary that employees be
trained to operate or maintain plant facilities that are being
constructed and such facilities are not conventional in nature, or are
new to the company's operations,
[[Page 824]]
these costs may be capitalized as a component of construction cost.
(ii) Once plant is placed in service, the capitalization of training
costs shall cease and subsequent training costs shall be expensed. (See
Sec. 1767.17 (d).)
(20) Studies. (i) Studies include the costs of studies such as
nuclear operational, safety, or seismic studies, or environmental
studies mandated by regulatory bodies relative to plant under
construction.
(ii) Studies relative to facilities in service shall be charged to
Account 183, Preliminary Survey and Investigation Charges.
(d) Overhead construction costs. (1) All overhead construction
costs, such as engineering, supervision, general office salaries and
expenses, construction engineering and supervision performed by others
than the accounting utility, law expenses, insurance, injuries and
damages, relief and pensions, taxes and interest, shall be charged to
particular jobs or units on the basis of the amounts of such overheads
reasonably applicable thereto, to the end that each job or unit shall
bear its equitable proportion of such costs and that the entire cost of
the unit, both direct and overhead, shall be deducted from the plant
accounts as the time the property is retired.
(2) As far as practicable, the determination of payroll charges
includible in construction overheads shall be based on time card
distributions thereof.
(i) Where this procedure is impractical, special studies shall be
made periodically of the time of supervisory employees devoted to
construction activities to the end that only such overhead costs as have
a definite relation to construction shall be capitalized.
(ii) The addition to direct construction cost of arbitrary
percentages or amounts to cover assumed overhead costs is not permitted.
(3) The records supporting the entries for overhead constructions
costs shall be so kept as to show:
(i) The total amount of each overhead for each year;
(ii) The nature and amount of each overhead expenditure charged to
each construction work order and to each electric plant account; and
(iii) The bases of distribution of such costs.
(e) Electric plant purchased or sold. (1) When electric plant
constituting an operating unit or system is acquired by purchase,
merger, consolidation, liquidation, or otherwise, after the effective
date of this system of accounts, the costs of acquisition, including
expenses incidental thereto properly includible in electric plant, shall
be charged to Account 102, Electric Plant Purchased or Sold.
(2) The accounting for the acquisition shall then be completed as
follows:
(i) The original cost of plant, estimated if not known, shall be
credited to Account 102, Electric Plant Purchased or Sold, and
concurrently charged to the appropriate electric plant in service
accounts and to Account 104, Electric Plant Leased to Others; Account
105, Electric Plant Held for Future Use; and Account 107, Construction
Work in Progress--Electric, as appropriate.
(ii) The depreciation and amortization applicable to the original
cost of the properties purchased shall be charged to Account 102,
Electric Plant Purchased or Sold, and concurrently credited to the
appropriate account for accumulated provision for depreciation or
amortization.
(iii) The cost to the utility of any property includible in Account
121, Nonutility Property, shall be transferred thereto.
(iv) The amount remaining in Account 102, Electric Plant Purchased
or Sold, shall then be closed to Account 114, Electric Plant Acquisition
Adjustments.
(3) If property acquired in the purchase of an operating unit or
system is in such physical condition when acquired that it is necessary
to substantially rehabilitate it in order to bring the property up to
the standards of the utility, the cost of such work, except
replacements, shall be accounted for as a part of the purchase price of
the property.
(4) When any property acquired as an operating unit or system
includes duplicate or other plant which will be retired by the
accounting utility in the
[[Page 825]]
reconstruction of the acquired property or its consolidation with
previously owned property, the proposed accounting for such property
shall be presented to RUS.
(5) In connection with the acquisition of electric plant
constituting an operating unit or system, the utility shall procure, if
possible, all existing records relating to the property acquired or
certified copies thereof, and shall preserve such records in conformity
with regulations or practices governing the preservation of records of
its own construction.
(6) When electric plant constituting an operating unit or system is
sold, conveyed, or transferred to another by sale, merger,
consolidation, or otherwise, the book cost of the property sold or
transferred to another shall be credited to the appropriate utility
plant accounts, including amounts carried in Account 114, Electric Plant
Acquisition Adjustments, and the amounts (estimated if not known)
carried with respect thereto in the accounts for accumulated provision
for depreciation and amortization and in Account 252, Customer Advances
for Construction, shall be charged to such accounts and contra entries
made to Account 102, Electric Plant Purchased or Sold. Unless otherwise
ordered by RUS, the difference, if any, between:
(i) The net amount of debits and credits, and
(ii) The consideration received for the property (less commissions
and other expenses of making the sale) shall be included in Account
421.1, Gain on Disposition of Property, or Account 421.2, Loss on
Disposition of Property. (See Account 102, Electric Plant Purchased or
Sold.)
Note: In cases where existing utilities merge or consolidate because
of financial or operating reasons or statutory requirements rather than
as a means of transferring title of purchased properties to a new owner,
the accounts of the constituent utilities, with the approval of RUS, may
be combined. In the event original cost has not been determined, the
resulting utility shall proceed to determine such cost as outlined
herein.
(f) Expenditures on leased property. (1) The cost of substantial
initial improvements (including repairs, rearrangements, additions, and
betterments) made in the course of preparing for utility service
property leased for a period of more than one year, and the cost of
subsequent substantial additions, replacements, or betterments to such
property, shall be charged to the electric plant account appropriate for
the class of property leased.
(i) If the service life of the improvements is terminable by action
of the lease, the cost, less net salvage, of the improvements shall be
spread over the life of the lease by charges to Account 404,
Amortization of Limited-Term Electric Plant.
(ii) If the service life is not terminated by action of the lease
but by depreciation proper, the cost of the improvements, less net
salvage, shall be accounted for as depreciable plant. The provisions of
(1) are applicable to property leased under either capital leases or
operating leases.
(2) If improvements made to property leased for a period of more
than one year are of relatively minor cost, or if the lease is for a
period of not more than one year, the cost of the improvements shall be
charged to the account in which the rent is included, either directly or
by amortization thereof.
(g) Land and land rights. (1) The accounts for land and land rights
shall include the cost of land owned in fee by the utility and rights,
interests, and privileges held by the utility in land owned by others,
such as leaseholds, easements, water and water power rights, diversion
rights, submersion rights, rights-of-way, and other like interests in
land.
(i) Do not include in the accounts for land and land rights and
rights-of-way costs incurred in connection with first clearing and
grading of land and rights-of-way and the damage costs associated with
the construction and installation of plant.
(ii) Such costs shall be included in the appropriate plant accounts
directly benefited.
(2) Where special assessments for public improvements provide for
deferred payments, the full amount of the assessments shall be charged
to the appropriate land account and the unpaid balance shall be carried
in an appropriate liability account.
[[Page 826]]
(i) Interest on unpaid balances shall be charged to the appropriate
interest account.
(ii) If any part of the cost of public improvements is included in
the general tax levy, the amount thereof shall be charged to the
appropriate tax account.
(3) The net profit from the sale of timber, cord wood, sand, gravel,
other resources or other property acquired with the rights-of-way or
other lands shall be credited to the appropriate plant accounts to which
related. Where land is held for a considerable period of time and timber
and other natural resources on the land at the time of purchase increase
in value, the net profit (after giving effect to the cost of the natural
resources) from the sale of timber or its products or other natural
resources shall be credited to the appropriate utility operating income
account when such land has been recorded in Account 105, Electric Plant
Held for Future Use, or classified as plant in service, otherwise to
Account 421, Miscellaneous Nonoperating Income.
(4) Separate entries shall be made for the acquisition, transfer, or
retirement of each parcel of land, and each land right (except rights-
of-way for distribution lines), or water right, having a life of more
than one year.
(i) A record shall be maintained showing the nature of ownership,
full legal description, area, map reference, purpose for which used,
city, county, and tax district on which situated, from whom purchased or
to whom sold, payment given or received, other costs, contract date and
number, date of recording of deed, and book and page of record.
(ii) Entries transferring or retiring land or land rights shall
refer to the original entry recording its acquisition.
(5) Any difference between the amount received from the sale of land
or land rights, less agents' commissions and other costs incident to the
sale, and the book cost of such land or rights, shall be included in
Account 411.6, Gains from Disposition of Utility Plant, or 411.7, Losses
from Disposition of Utility Plant, when such property has been recorded
in Account 105, Electric Plant Held for Future Use, otherwise to Account
421.1, Gain on Disposition of Property, or 421.2, Loss on Disposition of
Property, as appropriate, unless a reserve therefor has been authorized
and provided. Appropriate adjustments of the accounts shall be made with
respect to any structures or improvements located on land sold.
(6) The cost of buildings and other improvements (other than public
improvements) shall not be included in the land accounts. If, at the
time of acquisition of an interest in land, such interest extends to
buildings or other improvements (other than public improvements) which
are then devoted to utility operations, the land and improvements shall
be separately appraised and a cost allocated to land and buildings or
improvements on the basis of the appraisals. If the improvements are
removed or wrecked without being used in operations, the cost of
removing or wrecking shall be charged and the salvage credited to the
account in which the cost of land is recorded.
(7) When the purchase of land for electric operations requires the
purchase of more land than needed for such purposes, the charge to the
specific land account shall be based upon the cost of the land
purchased, less the fair market value of that portion of the land which
is not to be used in utility operations. The portion of the cost
measured by the fair market value of the land not to be used shall be
included in Account 105, Electric Plant Held for Future Use, or Account
121, Nonutility Property, as appropriate.
(8) Provisions shall be made for amortizing amounts carried in the
accounts for limited-term interest in land so as to apportion equitably
the cost of each interest over the life thereof. (See Account 111,
Accumulated Provision for Amortization of Electric Utility Plant, and
Account 404, Amortization of Limited-Term Electric Plant.)
(9) The items of cost to be included in the accounts for land and
land rights are as follows:
(i) Bulkheads, buried, not requiring maintenance or replacement;
(ii) First cost of acquisition including mortgages and other liens
assumed (but not subsequent interest thereon);
[[Page 827]]
(iii) Condemnation proceedings, including court and counsel costs;
(iv) Consents and abutting damages;
(v) Conveyancers' and notaries' fees;
(vi) Fees, commissions, and salaries to brokers, agents, and other
in connection with the acquisition of the land or land rights;
(vii) Leases, cost of voiding upon purchase to secure possession of
land;
(viii) Removing, relocating, or reconstructing property of others,
such as buildings, highways, railroads, bridges, cemeteries, churches,
telephone and power lines, etc., in order to acquire quiet possession;
(ix) Retaining walls unless identified with structures;
(x) Special assessments levied by public authorities for public
improvements on the basis of benefits for new roads, new bridges, new
sewers, new curbing, new pavements, and other public improvements, but
not taxes levied to provide for the maintenance of such improvements;
(xi) Surveys in connection with the acquisition, but not amounts
paid for topographical surveys and maps where such costs are
attributable to structures or plant equipment erected or to be erected
or installed on such land;
(xii) Taxes assumed, accrued to date of transfer of title;
(xiii) Title, examining, clearing, insuring, and registering in
connection with the acquisition and defending against claims relating to
the period prior to the acquisition;
(xiv) Appraisals prior to closing title;
(xv) Cost of dealing with distributees or legatees residing outside
of the state or county, such as recording power of attorney, recording
will or exemplification of will, recording satisfaction of state tax;
(xvi) Filing satisfaction of mortgage;
(xvii) Documentary stamps;
(xviii) Photographs of property at acquisition;
(xix) Fees and expenses incurred in the acquisition of water rights
and grants;
(xx) Cost of fill to extend bulkhead line over land under water,
where riparian rights are held, which is not occasioned by the erection
of a structure;
(xxi) Sidewalks and curbs constructed by the utility on public
property; and
(xxii) Labor and expenses in connection with securing rights of way,
where performed by company employees and company agents.
(h) Structures and improvements. (1) The accounts for structures and
improvements shall include the cost of all buildings and facilities to
house, support, or safeguard property or persons, including all fixtures
permanently attached to and made a part of buildings and which cannot be
removed therefrom without cutting into the walls, ceilings, or floors,
or without in some way impairing the buildings, and improvements of a
permanent character on or to land.
(2) Also include those costs incurred in connection with the first
clearing and grading of land and rights-of-way and the damage costs
associated with construction and installation of plant.
(3) The cost of specially provided foundations not intended to
outlast the machinery or apparatus for which provided, and the cost of
angle irons, and castings installed at the base of an item of equipment,
shall be charged to the same account as the cost of the machinery,
apparatus, or equipment.
(4) Minor buildings and structures, such as valve towers,
patrolmen's towers, telephone stations, fish and wildlife, and
recreation facilities which are used directly in connection with or form
a part of a reservoir, dam or waterway shall be considered a part of the
facility in connection with which constructed or operated and the cost
thereof accounted for accordingly.
(5) Where furnaces and boilers are used primarily for furnishing
steam for some particular department and only incidentally for
furnishing steam for heating a building and operating the equipment
therein, the entire cost of such furnaces and boilers shall be charged
to the appropriate plant account, and no part to the building account.
(6) Where the structure of a dam forms also the foundation of the
power plant building, such foundation shall be considered a part of the
dam.
[[Page 828]]
(7) The cost of disposing of materials excavated in connection with
construction of structures shall be considered as a part of the cost of
such work, except when such material is used for filling, the cost of
loading, hauling, and dumping shall be equitably apportioned between the
work in connection with which the removal occurs and the work in
connection with which the material is used; and when such material is
sold, the net amount realized from such sales shall be credited to the
work in connection with which the removal occurs. If the amount realized
from the sale of excavated materials exceeds the removal costs and the
costs in connection with the sale, the excess shall be credited to the
land account in which the site is carried.
(8) Lighting or other fixtures temporarily attached to building for
purposes of display or demonstration shall not be included in the cost
of the building but in the appropriate equipment account.
(9) The items of cost to be included in the accounts for structures
and improvements are as follows:
(i) Architects' plans and specifications including supervision;
(ii) Ash pits (when located within the building);
(iii) Athletic field structures and improvements;.
(iv) Boilers, furnaces, piping, wiring, fixtures, and machinery for
heating, lighting, signaling, ventilating, and air conditioning systems,
plumbing, vacuum cleaning systems, incinerator and smoke pipe, flues,
etc;
(v) Bulkheads, including dredging, riprap fill, piling, decking,
concrete, fenders, etc., when exposed and subject to maintenance and
replacement;
(vi) Chimneys;
(vii) Coal bins and bunkers;
(viii) Commissions and fees to brokers, agents, architects and
others;
(ix) Conduit (not to be removed) with its contents;
(x) Damages to abutting property during construction;
(xi) Docks;
(xii) Door checks and door stops;
(xiii) Drainage and sewerage systems;
(xiv) Elevators, cranes, hoists, etc., and the machinery for
operating them;
(xv) Excavation, including shoring, bracing, bridging, refill and
disposal of excess excavated material, cofferdams around foundation,
pumping water from cofferdams during construction and test borings;
(xvi) Fences and fence curbs (not including protective fences
isolating items of equipment, which shall be charged to the appropriate
equipment accounts);
(xvii) Fire protection systems when forming a part of a structure;
(xviii) Flagpole;
(xix) Floor covering (permanently attached);
(xx) Foundations and piers for machinery, constructed as a permanent
part of a building or other item listed herein;
(xxi) Grading and clearing when directly occasioned by the building
of a structure;
(xxii) Intrasite communication system, poles, pole fixtures, wires,
and cable;
(xxiii) Landscaping, lawns, shrubbery, etc.;
(xxiv) Leases, voiding upon purchase to secure possession of
structures;
(xxv) Leased property, expenditures on;
(xxvi) Lighting fixtures and outside lighting system;
(xxvii) Mailchutes when part of a building;
(xxviii) Marquee, permanently attached to the building;
(xxix) Painting, first cost;
(xxx) Permanent paving, concrete, brick, flagstone, asphalt, etc.,
within the property lines;
(xxxi) Partitions, including movable;
(xxxii) Permits and privileges;
(xxxiii) Platforms, railings and gratings when constructed as a part
of a structure;
(xxxiv) Power boards for services to a building;
(xxxv) Refrigerating systems for general use;
(xxxvi) Retaining walls except when identified with land;
(xxxvii) Roadways, railroads, bridges, and trestles intrasite except
railroads provided for in equipment accounts;
(xxxviii) Roofs;
(xxxix) Scales, connected to and forming a part of a structure;
[[Page 829]]
(xl) Screens;
(xli) Sewer systems, for general use;
(xlii) Sidewalks, culverts, curbs and streets constructed by the
utility on its property;
(xliii) Sprinkling systems;
(xliv) Sump pumps and pits;
(xlv) Stacks--brick, steel, or concrete, when set on foundation
forming part of general foundation and steelwork of a building;
(xlvi) Steel inspection during construction;
(xlvii) Storage facilities constituting a part of a building;
(xlviii) Storm doors and windows;
(xlix) Subways, areaways, and tunnels, directly connected to and
forming part of a structure;
(l) Tanks, constructed as part of a building or as a distinct
structural unit;
(li) Temporary heating during construction (net cost);
(lii) Temporary water connection during construction (net cost);
(liii) Temporary shanties and other facilities used during
construction (net cost);
(liv) Topographical maps;
(lv) Tunnels, intake and discharge, when constructed as part of a
structure, including sluice gates, and those constructed to house mains;
(lvi) Vaults constructed as part of a building;
(lvii) Watchmen's sheds and clock systems (net cost when used during
construction only);
(lviii) Water basins or reservoirs;
(lix) Water front improvements;
(lx) Water meters and supply system for a building or for general
company purposes;
(lxi) Water supply piping, hydrants, and wells;
(lxii) Wharves;
(lxiii) Window shades and ventilators;
(lxiv) Yard drainage system;
(lxv) Yard lighting system; and
(lxvi) Yard surfacing, gravel, concrete, or oil (First cost only).
Note: Structures and improvements accounts shall be credited with
the cost of coal bunkers, stacks, foundations, subways, and tunnels, the
use of which has terminated with the removal of the equipment with which
they are associated even though they have not been physically removed.
(i) Equipment. (1) The cost of equipment chargeable to the electric
plant accounts, unless otherwise indicated in the text of an equipment
account, includes the net purchase price thereof, sales taxes,
investigation and inspection expenses necessary to such purchase,
expenses of transportation when borne by the utility, labor employed,
materials, and supplies consumed, and expenses incurred by the utility
in unloading and placing the equipment in readiness to operate.
(2) Also include those costs incurred in connection with the first
clearing and grading of land and rights-of-way and the damage costs
associated with construction and installation of plant.
(3) Exclude from equipment accounts hand and other portable tools,
which are likely to be lost or stolen or which have relatively small
value (for example, $500 or less) or short life, unless the correctness
of the accounting therefor as electric plant is verified by current
inventories.
(i) Special tools acquired and included in the purchase price of
equipment shall be included in the appropriate plant accounts.
(ii) Portable drills and similar tool equipment when used in
connection with the operation and maintenance of a particular plan or
department, such as production, transmission, or distribution or in
``stores'', shall be charged to the plant accounts appropriate for their
use.
(4) The equipment accounts shall include angle irons and similar
items which are installed at the base of an item of equipment, but piers
and foundations which are designed to be as permanent as the buildings
which house the equipment, or which are constructed as a part of the
building and which cannot be removed without cutting into the walls,
ceilings, or floors or, without in some way impairing the building,
shall be included in the building accounts.
(5) The equipment accounts shall include the necessary costs of
testing or running a plant or parts thereof during an experimental or
test period prior to such plant becoming ready for or placed in service.
(i) The utility shall furnish RUS with full particulars of and
justification for
[[Page 830]]
any test or experimental run extending beyond a period of 120 days for
nuclear plant, and a period of 90 days for all other plant.
(ii) Such particulars shall include a detailed operational and
downtime log showing days of production, gross kilowatts generated by
hourly increments, types, and periods of outages by hours with
explanation thereof, beginning with the first date the equipment was
either tested or synchronized on the line to the end of the test period.
(6) The cost of efficiency or other tests made subsequent to the
date equipment becomes available for service shall be charged to the
appropriate expense accounts, except that tests to determine whether
equipment meets the specifications and requirements as to efficiency, or
performance guaranteed by manufacturers, made after operations have
commenced and within the period specified in the agreement or contract
of purchase, may be charged to the appropriate electric plant accounts.
(j) Additions and retirements of electric plant. (1) For the purpose
of avoiding undue refinement in accounting for additions to and
retirements and replacements of electric plant, all property shall be
considered as consisting of retirement units and minor items of
property.
(2) The addition and retirement of retirement units shall be
accounted for as follows:
(i) When a retirement unit is added to electric plant, the cost
thereof shall be added to the appropriate electric plant account, except
that when units are acquired in the acquisition of any electric plant
constituting an operating system, they shall be accounted for as
provided in paragraph (e) of this section.
(ii) When a retirement unit is retired from electric plant, with or
without replacement, the book cost thereof shall be credited to the
electric plant account in which it is included, determined in the manner
set forth in Item in paragraph (j)(4) of this section. If the retirement
unit is of a depreciable class, the book cost of the unit retired and
credited to electric plant shall be charged to the accumulated provision
for depreciation applicable to such property. The cost of removal and
the salvage shall be charged or credited, as appropriate, to such
depreciation account.
(3) The addition and retirement of minor items of property shall be
accounted for as follows:
(i) When a minor item of property which did not previously exist is
added to plant, the cost thereof shall be accounted for in the same
manner as for the addition of a retirement unit, as set forth in Item in
paragraph (j)(2)(i) of this section, if a substantial addition results,
otherwise the charge shall be to the appropriate maintenance expense
account.
(ii) When a minor item of property is retired and not replaced, the
book cost thereof shall be credited to the electric plant account in
which it is included; and, in the event the minor item is a part of
depreciable plant, the account for accumulated provision for
depreciation shall be charged with the book cost and cost of removal and
credited with the salvage. If, however, the book cost of the minor item
retired and not replaced has been or will be accounted for by its
inclusion in the retirement unit of which it is a part when such unit is
retired, no separate credit to the property account is required when
such minor item is retired.
(iii) When a minor item of depreciable property is replaced
independently of the retirement unit of which it is a part, the cost of
replacement shall be charged to the maintenance account appropriate for
the item, except that if the replacement effects a substantial
betterment (the primary aim of which is to make the property affected
more useful, more efficient, of greater durability, or of greater
capacity), the excess cost of the replacement over the estimated cost at
current prices of replacing without betterment shall be charged to the
appropriate electric plant accounts.
(4) The book cost of electric plant retired shall be the amount at
which such property is included in the electric plant accounts,
including all components of construction costs. The book cost shall be
determined from the utility's records and if this cannot be done, it
shall be estimated. When it is impracticable to determine the book
[[Page 831]]
cost of each unit, due to the relatively large number or small cost
thereof, an appropriate average book cost of the units with due
allowance for any differences in size and character, shall be used as
the book cost of the units retired.
(5) The book cost of land retired shall be credited to the
appropriate land accounts. If the land is sold, the difference between
the book cost (less any accumulated provision for depreciation or
amortization therefore which has been authorized and provided) and the
sale price of the land (less commissions and other expenses of making
the sale) shall be recorded in Account 411.6, Gains from Disposition of
Utility Plant, or Account 411.7, Losses from Disposition of Utility
Plant, when the property has been recorded in Account 105, Electric
Plant Held for Future Use, otherwise to Accounts 421.1, Gain on
Disposition of Property, or 421.2, Loss on Disposition of Property, as
appropriate. If the land is not used in utility service but is retained
by the utility, the book cost shall be charged to Account 105, Electric
Plant Held for Future Use, or Account 121, Nonutility Property, as
appropriate.
(6) The book cost less net salvage of depreciable electric plant
retired shall be charged in its entirety to Account 108, Accumulated
Provision for Depreciation of Electric Utility Plant in Service. Any
amounts which, by approval or order of RUS, are charged to Account
182.1, Extraordinary Property Losses, shall be credited to Account 108.
(7) The accounting for the retirement of amounts included in Account
302, Franchises and Consents, and Account 303, Miscellaneous Intangible
Plant, and the items of limited-term interest in land included in the
accounts for land and land rights, shall be as provided for in the text
of Account 111, Accumulated Provision for Amortization of Electric
Utility Plant in Service; Account 404, Amortization of Limited-Term
Electric Plant; and Account 405, Amortization of Other Electric Plant.
(k) Work order and property record system required. (1) Each utility
shall record all construction and retirements of electric plant by means
of work orders or job orders. Separate work orders may be opened for
additions to and retirements of electric plant or the retirements may be
included with the construction work order, provided, however, that all
items relating to the retirements shall be kept separate from those
relating to construction and provided, further, that any maintenance
costs involved in the work shall likewise be segregated.
(2) Each utility shall keep its work order system so as to show the
nature of each addition to or retirement of electric plant, the total
cost thereof, the source or sources of costs, and the electric plant
account or accounts to which charged or credited. Work orders covering
jobs of short duration may be cleared monthly.
(3) Each utility shall maintain records in which, for each plant
account, the amounts of the annual additions and retirements are
classified so as to show the number and cost of the various record units
or retirement units.
(l) Transfers of property. When property is transferred from one
electric plant account to another, from one utility department to
another, such as from electric to gas, from one operating division or
area to another, to or from Account 101, Electric Plant in Service;
Account 104, Electric Plant Leased to Others; Account 105, Electric
Plant Held for Future Use, and Account 121, Nonutility Property, the
transfer shall be recorded by transferring the original cost thereof
from the one account, department, or location to the other. Any related
amounts carried in the accounts for accumulated provision for
depreciation or amortization shall be transferred in accordance with the
segregation of such accounts.
(m) Common utility plant. (1) If the utility is engaged in more than
one utility service, such as electric, gas, and water, and any of its
utility plant is used in common for several utility services or for
other purposes to such an extent and in such manner that it is
impracticable to segregate it by utility services currently in the
accounts, such property, with the approval of RUS, may be designated and
classified as ``common utility plant.''
(2) The book amount of utility plant designated as common plant
shall be
[[Page 832]]
included in Account 118, Other Utility Plant, and if applicable in part
to the electric department, shall be segregated and accounted for in
subaccounts as electric plant is accounted for in Accounts 101 to 107,
inclusive, and electric plant adjustments in Account 116, Other Electric
Plant Adjustments; any amounts classifiable as common plant acquisition
adjustments or common plant adjustments shall be subject to disposition
as provided in Paragraphs C and B of Accounts 114 and 116, respectively,
for amounts classified in those accounts. The original cost of common
utility plant in service shall be classified according to the detailed
utility plant accounts appropriate for the property.
(3) The utility shall be prepared to show, at any time, and to
report to RUS annually, or more frequently, if required, and by utility
plant accounts (301 to 399) the book cost of common utility plant, the
allocation of such cost to the respective departments using the common
utility plant, and the basis of the allocation.
(4) The accumulated provision for depreciation and amortization of
the utility shall be segregated so as to show the amount applicable to
the property classified as common utility plant.
(5) The expenses of operation, maintenance, rents, depreciation and
amortization of common utility plant shall be recorded in the accounts
prescribed herein, but designated as common expenses, and the allocation
of such expenses to the departments using the common utility plant shall
be supported in such manner as to reflect readily the basis of
allocation used.
(n) Transmission and distribution plant. For the purpose of this
system of accounts:
(1) Transmission system is all land, conversion structures, and
equipment employed at a primary source of supply (i.e. generating
station, or point of receipt in the case of purchased power) to change
the voltage or frequency of electricity for the purpose of its more
efficient or convenient transmission; all land, structures, lines,
switching and conversion stations, high tension apparatus, and their
control and protective equipment between a generating or receiving point
and the entrance to a distribution center or wholesale point; and all
lines and equipment whose primary purpose is to augment, integrate or
tie together the sources of power supply.
(2) Distribution system is all land, structures, conversion
equipment, lines, line transformers, and other facilities employed
between the primary source of supply (i.e. generating station, or point
of receipt in the case of purchased power) and of delivery to customers,
which are not includible in transmission system, as defined in Item in
paragraph (n)(1) of this section, whether or not such land, structures,
and facilities are operated as part of a transmission system or as part
of a distribution system.
Note: Stations which change electricity from transmission to
distribution voltage shall be classified as distribution stations.
(3) Where poles or towers support both transmission and distribution
conductors, the poles, towers, anchors, guys, and rights-of-way shall be
classified as transmission system. The conductors, cross-arms, braces,
grounds, tiewire, and insulators shall be classified as transmission or
distribution facilities, according to the purpose for which used.
(4) Where underground conduit contains both transmission and
distribution conductors, the underground conduit and right-of-way shall
be classified as distribution system. The conductors shall be classified
as transmission or distribution facilities according to the purpose for
which used.
(5) Land (other than rights-of-way) and structures used jointly for
transmission and distribution purposes shall be classified as
transmission or distribution according to the major use thereof.
(o) Hydraulic production plant. For purpose of this system of
accounts hydraulic production plant is all land and land rights,
structures and improvements used in connection with hydraulic power
generation, reservoirs, dams and waterways, water wheels, turbines,
generators, accessory electric equipment, roads, railroads, and bridges
and structures and improvements used in connection with fish and
wildlife, and recreation.
[[Page 833]]
(p) Nuclear fuel records required. Each utility shall keep all the
necessary records to support the entries to the various nuclear fuel
plant accounts classified under ``Assets and Other Debits,'' Utility
Plant Accounts 120.1 through 120.5, inclusive; Account 518, Nuclear Fuel
Expense; and Account 157, Nuclear Materials Held for Sale. These records
shall be so kept as to readily furnish the basis of the computation of
the net nuclear fuel costs.
Sec. 1767.17 Operating expense instructions.
(a) Supervision and engineering. The supervision and engineering
includible in the operating expense accounts shall consist of the
salary, employee pensions and benefits, social security and other
payroll taxes, injuries and damages, and other expenses of
superintendents, engineers, clerks, other employees, and consultants
engaged in supervising and directing the operation and maintenance of
each utility function. Whenever allocations are necessary in order to
arrive at the amount to be included in any account, the method and basis
of allocation shall be reflected by underlying records.
(1) Labor items:
(i) Special tests to determine efficiency of equipment operation;
(ii) Preparing or reviewing budgets, estimates, and drawings
relating to operation or maintenance for departmental approval;
(iii) Preparing instructions for operations and maintenance
activities;
(iv) Reviewing and analyzing operating results;
(v) Establishing organizational setup of departments and executing
changes therein;
(vi) Formulating and reviewing routines of departments and executing
changes therein;
(vii) General training and instruction of employees by supervisors
whose pay is chargeable hereto. Specific instructions and training in a
particular type of work is chargeable to the appropriate functional
account (See paragraph (c)(19) of this section); and
(viii) Secretarial work for supervisory personnel, but not general
clerical and stenographic work chargeable to other accounts.
(2) Expense items:
(i) Employee pensions and benefits;
(ii) Social security and other payroll taxes;
(iii) Injuries and damages;
(iv) Consultants' fees and expenses; and
(v) Meals, traveling, and incidental expenses.
(b) Maintenance. (1) The cost of maintenance chargeable to the
various operating expense and clearing accounts includes labor, employee
pensions and benefits, social security and other payroll taxes, injuries
and damages, materials, overheads, and other expenses incurred in
maintenance work. A list of work operations applicable generally to
utility plant is included in this paragraph (b). Other work operations
applicable to specific classes of plant are listed in functional
maintenance expense accounts.
(2) Materials recovered in connection with the maintenance of
property shall be credited to the same account to which the maintenance
cost was charged.
(3) If the book cost of any property is carried in Account 102,
Electric Plant Purchased or Sold, the cost of maintaining such property
shall be charged to the accounts for maintenance of property of the same
class and use, the book cost of which is carried in other electric plant
in service accounts. Maintenance of property leased from others shall be
treated as provided in paragraph (c) of this section.
(4) Items:
(i) Direct field supervision of maintenance;
(ii) Inspecting, testing, and reporting on condition of plant
specifically to determine the need for repairs, replacements,
rearrangements, and changes and inspecting and testing the adequacy of
repairs which have been made;
(iii) Work performed specifically for the purpose of preventing
failure, restoring serviceability or maintaining life of plant;
(iv) Rearranging and changing the location of plant not retired;
(v) Repairing for reuse materials recovered from plant;
(vi) Testing for, locating, and clearing trouble;
[[Page 834]]
(vii) Net cost of installing, maintaining, and removing temporary
facilities to prevent interruptions in service; and
(viii) Replacing or adding minor items of plant which do not
constitute a retirement unit.
(c) Rents. (1) The rent expense accounts provided under the several
functional groups of expense accounts shall include all rents, including
taxes paid by the lessee on leased property, for property used in
utility operations, except minor amounts paid for occasional or
infrequent use of any property or equipment and all amounts paid for use
of equipment that, if owned, would be includible in plant Accounts 391
to 398 inclusive, which shall be treated as an expense item and included
in the appropriate function account and rents which are chargeable to
clearing accounts, and distributed therefrom to the appropriate account.
(2) If rents cover property used for more than one function such as
production and transmission, or by more than one department, the rents
shall be apportioned to the appropriate rent expense or clearing
accounts of each department on an actual, or if necessary, an estimated
basis.
(3) When a portion of property or equipment rented from others for
use in connection with utility operations is subleased, the revenue
derived from such subleasing shall be credited to the rent revenue
account in operating revenues; provided, however, that in case the rent
was charged to a clearing account, amounts received from subleasing the
property shall be credited to such clearing account.
(4) The cost, when incurred by the lessee, of operating and
maintaining leased property, shall be charged to the accounts
appropriate for the expense if the property were owned.
(5) The cost incurred by the lessee of additions and replacements to
electric plant leased from others shall be account for as provided in
Sec. 1767.16 (f).
(d) Training costs. (1) When it is necessary that employees be
trained to specifically operate or maintain plant facilities that are
being constructed, the related costs shall be accounted for as a current
operating and maintenance expense.
(2) These expenses shall be charged to the appropriate functional
accounts currently as they are incurred.
(3) When the training costs involved relate to facilities which are
not conventional in nature, or are new to the company's operations, see
Sec. 1767.16 (c)(19), for the accounting.
[58 FR 59825, Nov. 10, 1993, as amended at 62 FR 42290, Aug. 6, 1997]
Sec. 1767.18 Assets and other debits.
The asset and other debits accounts identified in this section shall
be used by all RUS borrowers.
Assets and Other Debits
Utility Plant
101 Electric Plant in Service
101.1 Property Under Capital Leases
102 Electric Plant Purchased or Sold
103 Experimental Electric Plant Unclassified
104 Electric Plant Leased to Others
105 Electric Plant Held for Future Use
106 Completed Construction not Classified--Electric
107 Construction Work in Progress--Electric
107.1 Construction Work in Progress--Contract
107.2 Construction Work in Progress--Force Account
107.3 Construction Work in Progress--Special Equipment
108 Accumulated Provision for Depreciation of Electric Utility Plant
108.1 Accumulated Provision for Depreciation of Steam Production Plant
108.2 Accumulated Provision for Depreciation of Nuclear Production Plant
108.3 Accumulated Provision for Depreciation of Hydraulic Production
Plant
108.4 Accumulated Provision for Depreciation of Other Production Plant
108.5 Accumulated Provision for Depreciation of Transmission Plant
108.6 Accumulated Provision for Depreciation of Distribution Plant
108.7 Accumulated Provision for Depreciation of General Plant
108.8 Retirement Work in Progress
109-110 [Reserved]
111 Accumulated Provision for Amortization of Electric Utility Plant
112-113 [Reserved]
114 Electric Plant Acquisition Adjustments
115 Accumulated Provision for Amortization of Electric Plant Acquisition
Adjustments
116 Other Electric Plant Adjustments
118 Other Utility Plant
119 Accumulated Provision for Depreciation and Amortization of Other
Utility Plant
[[Page 835]]
120.1 Nuclear Fuel in Process of Refinement, Conversion, Enrichment, and
Fabrication
120.2 Nuclear Fuel Materials and Assemblies--Stock Account
120.3 Nuclear Fuel Assemblies in Reactor
120.4 Spent Nuclear Fuel
120.5 Accumulated Provision for Amortization of Nuclear Fuel Assemblies
120.6 Nuclear Fuel Under Capital Leases
Other Property and Investments
121 Nonutility Property
122 Accumulated Provision for Depreciation and Amortization of
Nonutility Property
123 Investment in Associated Companies
123.1 Patronage Capital from Associated Cooperatives
123.3 Investment in Associated Organizations--Federal Economic
Development Loans
123.4 Investment in Associated Organizations--Non-Federal Economic
Development Loans
123.11 Investment in Subsidiary Companies
123.21 Subscriptions to Capital Term Certificates--Supplemental
Financing
123.22 Investments in Capital Term Certificates--Supplemental Financing
123.23 Other Investments in Associated Organizations
124 Other Investments
124.1 Other Investments--Federal Economic Development Loans
124.2 Other Investments--Non-Federal Economic Development Loans
125 Sinking Funds
126 Depreciation Fund
128 Other Special Funds
Current and Accrued Assets
131 Cash
131.1 Cash--General
131.2 Cash--Construction Fund--Trustee
131.3 Cash--Installation Loan and Collection Fund
131.4 Transfer of Cash
131.12 Cash--General--Economic Development Loan Funds
131.13 Cash--General--Economic Development Grant Funds
131.14 Cash--General--Economic Development Non-Federal Revolving Funds
132 Interest Special Deposits
133 Dividend Special Deposits
134 Other Special Deposits
135 Working Funds
136 Temporary Cash Investments
141 Notes Receivable
141.1 Accumulated Provision for Uncollectible Notes--Credit
142 Customer Accounts Receivable
142.1 Customer Accounts Receivable--Electric
142.2 Customer Accounts Receivable--Other
143 Other Accounts Receivable
144 Accumulated Provision for Uncollectible Accounts--Credit
144.1 Accumulated Provision for Uncollectible Customer Accounts--Credit
144.2 Accumulated Provision for Uncollectible Merchandising Accounts--
Credit
144.3 Accumulated Provision for Uncollectible Accounts, Officers and
Employees--Credit
144.4 Accumulated Provision for Other Uncollectible Accounts--Credit 145
Notes Receivable from Associated Companies
145 Notes Receivable from Associated Companies
146 Accounts Receivable from Associated Companies
151 Fuel Stock
152 Fuel Stock Expenses Undistributed
153 Residuals
154 Plant Materials and Operating Supplies
155 Merchandise
156 Other Materials and Supplies
157 Nuclear Materials Held for Sale
158.1 Allowance Inventory
158.2 Allowances Withheld
163 Stores Expense Undistributed
165 Prepayments
165.1 Prepayments--Insurance
165.2 Other Prepayments
171 Interest and Dividends Receivable
172 Rents Receivable
173 Accrued Utility Revenues
174 Miscellaneous Current and Accrued Assets
Deferred Debits
181 Unamortized Debt Expense
182.1 Extraordinary Property Losses
182.2 Unrecovered Plant and Regulatory Study Costs
182.3 Other Regulatory Assets
183 Preliminary Survey and Investigation Charges
184 Clearing Accounts
184.1 Transportation Expense--Clearing
184.2 Clearing Accounts--Other
185 Temporary Facilities
186 Miscellaneous Deferred Debits
187 Deferred Losses from Disposition of Utility Plant
188 Research, Development, and Demonstration Expenditures
189 Unamortized Loss on Reacquired Debt
190 Accumulated Deferred Income Taxes
Assets and Other Debits
Utility Plant
101 Electric Plant in Service
A. This account shall include the original cost of electric plant,
included in Accounts 301 to 399, prescribed herein, owned and used by
the utility in its electric utility operations, and having an
expectation of life in
[[Page 836]]
service of more than one year from date of installation, including such
property owned by the utility but held by nominees.
B. (See also Account 106 for unclassified construction costs of
completed plant actually in service.)
C. The cost of additions to and betterments of property leased from
others, which are includible in this account, shall be recorded in
subdivisions separate and distinct from those relating to owned
property. (See Sec. 1767.16 (f).)
101.1 Property Under Capital Leases
A. This account shall include the amount recorded under capital
leases for plant leased from others and used by the utility in its
utility operations.
B. The electric property included in this account shall be
classified separately according to the detailed accounts (301 to 399)
prescribed for electric plant in service.
C. Records shall be maintained with respect to each capital lease
reflection: (1) name of lessor, (2) basic details of lease, (3) terminal
date, (4) original cost or fair market value of property leased, (5)
future minimum lease payments, (6) executory costs, (7) present value of
minimum lease payments, (8) the amount representing interest and the
interest rate used, and (9) expenses paid.
102 Electric Plant Purchased or Sold
A. This account shall be charged with the cost of electric plant
acquired as an operating unit or system by purchase, merger,
consolidation liquidation, or otherwise, and shall be credited with the
selling price of like property transferred to others pending the
distribution to appropriate accounts in accordance with Sec. 1767.16
(e).
B. Within 6 months from the date of acquisition or sale of property
recorded herein, the borrower shall file with RUS the proposed journal
entries to clear from this account the amounts recorded herein.
103 Experimental Electric Plant Unclassified
A. This account shall include the cost of electric plant which was
constructed as a research, development, and demonstration plant under
the provisions of Paragraph C, Account 107, Construction Work in
Progress--Electric, and due to the nature of the plant, it is desirous
to operate it for a period of time in an experimental status.
B. Amounts in this account shall be transferred to Account 101,
Electric Plant in Service, or Account 121, Nonutility Property, as
appropriate when the project is no longer considered as experimental.
C. The depreciation on property in this account shall be charged to
Account 403, Depreciation Expense, and credited to Account 108,
Accumulated Provision for Depreciation of Electric Utility Plant. The
amounts herein shall be depreciated over a period which would correspond
to the estimated useful life of the relevant project considering the
characteristics involved. However, when projects are transferred to
Account 101, Electric Plant in Service, a new depreciation rate based
upon the remaining service life and undepreciated amounts, will be
established.
D. Records shall be maintained with respect to each unit of
experiment so that full details may be obtained as to the cost,
depreciation, and the experimental status.
E. Should it be determined that experimental plant recorded in this
account will fail to satisfactorily perform its function, the costs
thereof shall be accounted for as directed or authorized by RUS.
104 Electric Plant Leased to Others
A. This account shall include the original cost of electric plant
owned by the utility, but leased to others as operating units or
systems, where the lessee has exclusive possession.
B. The property included in this account shall be classified
according to the detailed accounts (301 to 399) prescribed for electric
plant in service and this account shall be maintained in such detail as
though the property were used by the owner in its utility operations.
105 Electric Plant Held for Future Use
A. This account shall include the original cost of electric plant
(except land and land rights) owned and held for future use in electric
service under a definite plan for such use, to include: (1) Property
acquired (except land and land rights) but never used by the utility in
electric service, but held for such service in the future under a
definite plan, and (2) property (except land and land rights) previously
used by the utility in service but retired from such service and held
pending its reuse in the future, under a definite plan, in electric
service.
B. This account shall also include the original cost of land and
land rights owned and held for future use in electric service under a
plan for such use, to include land and land rights: (1) Acquired but
never used by the utility in electric service, but held for such service
in the future under a plan, and (2) previously held by the utility in
service, but retired from such service and held pending its reuse in the
future under a plan, in electric service. (See Sec. 1767.16 (g).)
C. In the event that property recorded in this account shall no
longer be needed or appropriate for future utility operations, the
borrower shall notify RUS of such condition and request approval of
journal entries to remove such property from this account.
D. Gains or losses from the sale of land and land rights or other
disposition of such property previously recorded in this account and
[[Page 837]]
not placed in utility service shall be recorded directly in Accounts
411.6 or 411.7, as appropriate, except when determined to be significant
by RUS. Upon such a determination, the amounts shall be transferred to
Account 256, Deferred Gains from Disposition of Utility Plant, or
Account 187, Deferred Losses from Disposition of Utility Plant, and
amortized to Account 411.6, Gains from Disposition of Utility Plant, or
Account 411.7, Losses from Disposition of Utility Plant, as appropriate.
E. The property included in this account shall be classified
according to the detail accounts (301 to 399) prescribed for electric
plant in service and the account shall be maintained in such detail as
though the property were in service.
Note: Materials and supplies, meters and transformers held in
reserve, and normal spare capacity of plant in service shall not be
included in this account.
106 Completed Construction not Classified--Electric
At the end of the year or such other date as a balance sheet may be
required by RUS, this account shall include the total of the balances of
work orders for electric plant which has been completed and placed in
service but which work orders have not been classified for transfer to
the detailed electric plant accounts.
Note: For the purpose of reporting to RUS, the classification of
electric plant in service by accounts is required, the utility shall
also report the balance in this account tentatively classified as
accurately as practicable according to prescribed account
classifications. The purpose of this provision is to avoid any
significant omissions in reported amounts of electric plant in service.
107 Construction Work in Progress--Electric
A. This account shall include the total of the balances of work
orders for electric plant in process of construction.
B. Work orders shall be cleared from this account as soon as
practicable, after completion of the job. Further, if a project, such as
a hydroelectric project, a steam station, or a transmission line, is
designed to consist of two or more units or circuits which may be placed
in service at different dates, any expenditures which are common to and
which will be used in the operation of the project as a whole shall be
included in electric plant in service upon the completion and the
readiness for service of the first unit. Any expenditures which are
identified exclusively with units of property not yet in service shall
be included in this account.
C. Expenditures on research, development, and demonstration projects
for construction of utility facilities are to be included in a separate
subdivision in this account. Records must be maintained to show
separately each project along with complete detail of the nature and
purpose of the research, development, and demonstration project together
with the related costs.
D. Account 107 shall be subaccounted as follows:
107.1 Construction Work in Progress--Contract
107.2 Construction Work in Progress--Force Account
107.3 Construction Work in Progress--Special Equipment
108 Accumulated Provision for Depreciation of Electric Utility Plant
A. This account shall be credited with the following:
1. Amounts charged to Account 403, Depreciation Expense, or to
clearing accounts for current depreciation expense for electric plant in
service.
2. Amounts charged to Account 421, Miscellaneous Nonoperating
Income, for depreciation expense on property included in Account 105,
Electric Plant Held for Future Use. Include, also, the balance of
accumulated provision for depreciation on property when transferred to
Account 105, Ele