Financial Accounting, Reporting and Records Retention Requirements Under the Public Utility Holding Company Act of 2005, 28464-28512 [06-4043]
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Federal Register / Vol. 71, No. 94 / Tuesday, May 16, 2006 / Proposed Rules
Energy Regulatory Commission, 888
First Street, NE., Washington, DC
20426. Telephone: (202) 502–8989. Email: rosemary.womack@ferc.gov.
Julia A. Lake (Legal Information), Office
of the General Counsel—Energy
Markets, Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426. Telephone:
(202) 502–8370. E-mail:
julia.lake@ferc.gov.
SUPPLEMENTARY INFORMATION:
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Parts 366, 367, 368, 369 and
375
[Docket No. RM06–11–000]
Financial Accounting, Reporting and
Records Retention Requirements
Under the Public Utility Holding
Company Act of 2005
Issued April 24, 2006.
Federal Energy Regulatory
Commission, DOE.
ACTION: Notice of proposed rulemaking.
sroberts on PROD1PC70 with PROPOSALS
AGENCY:
SUMMARY: In this Notice of Proposed
Rulemaking, the Federal Energy
Regulatory Commission (Commission)
proposes to amend its regulations to
further implement the Public Utility
Holding Company Act of 2005 (PUHCA
2005). Specifically, the Commission is
proposing to add a Uniform System of
Accounts for Centralized Service
Companies, to add preservation of
records requirements for holding
companies and service companies, to
revise Form No. 60, Annual Report for
Centralized Service Companies, to
provide for financial reporting
consistent with the proposed Uniform
System of Accounts and to provide for
electronic filing of Form No. 60. These
changes are proposed to be made
effective January 1, 2007. In addition,
the Commission directs staff to hold a
technical conference to provide
interested entities an opportunity to
discuss the proposed regulations.
DATES: Comments must be filed on or
before June 15, 2006.
ADDRESSES: You may submit comments,
identified by Docket No. RM06–11–000,
by one of the following methods:
• Agency Web Site: https://ferc.gov.
Follow the instructions for submitting
comments via the eFiling link found in
the Comment Procedures Section of the
preamble.
• Mail: Commenters unable to file
comments electronically must mail or
hand deliver an original and 14 copies
of their comments to: Federal Energy
Regulatory Commission, Office of the
Secretary, 888 First Street, NE.,
Washington, DC 20426. Please refer to
the Comment Procedures Section of the
preamble for additional information on
how to file paper comments.
FOR FURTHER INFORMATION CONTACT:
Rosemary Womack (Technical
Information), Division of Audits and
Accounting, Office of Market
Oversight and Investigation, Federal
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I. Introduction
1. The Commission proposes to
amend its regulations to further
implement the Public Utility Holding
Company Act of 2005 (PUHCA 2005).
The Commission is proposing to add a
new Uniform System of Accounts for
Centralized Service Companies and new
preservation of records requirements as
new Parts 367 and 368, respectively, to
the Commission’s regulations; to add
Form No. 60, Annual Report for
Centralized Service Companies, as Part
369 to the Commission’s regulations; to
revise Form No. 60 to provide for
financial reporting by centralized
service companies, i.e., service
companies that are not special purpose
companies, consistent with the
proposed Uniform System of Accounts;
and to provide for electronic filing of
Form No. 60. The Commission also is
proposing conforming changes to its
regulations in Part 366 and
corresponding changes to the Chief
Accountant’s delegations of authority in
Part 375 of the Commission’s
regulations.1 The Commission proposes
to make the revised regulations effective
January 1, 2007. In addition, the
Commission directs staff to hold a
technical conference to provide
interested entities an opportunity to
discuss the proposed regulations.
II. Background
2. On August 8, 2005, the Energy
Policy Act of 2005 (EPAct 2005) 2 was
signed into law. In relevant part, it
repealed the Public Utility Holding
Company Act of 1935 (PUHCA 1935) 3
and enacted the Public Utility Holding
Company Act of 2005 (PUHCA 2005),4
which, with one exception not relevant
here, became effective on February 8,
2006 (six months from the date of
enactment). On December 8, 2005, the
Commission issued Order No. 667,
adding a new Subchapter U and Part
366 to Title 18 of the Code of Federal
1 See
18 CFR Parts 366 and 375.
Policy Act of 2005, Pub. L. 109–58, 119
Stat. 594 (2005).
3 15 U.S.C. 79a et seq. (2000).
4 EPAct 2005 at 1261 et seq.
2 Energy
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Regulations to implement PUHCA
2005.5
3. Order No. 667 required that, unless
otherwise exempted by Commission
rule or order, holding companies 6 and
service companies 7 must maintain and
make available to the Commission their
books and records.8 In addition, Order
No. 667 allowed holding companies and
service companies that did not currently
follow the Commission’s records
retention requirements to transition to
the Commission’s requirements by
January 1, 2007. Order No. 667 further
provided that holding companies would
not be required to comply with a
Uniform System of Accounts, but that
centralized service companies would be
required to do so as of January 1, 2007.
4. The Commission indicated in Order
No. 667 that it would initiate a separate
rulemaking proceeding to address how
the Commission’s Uniform Systems of
Accounts and records retention
requirements in Parts 101, 125, 201 and
225 of its regulations should be
modified to adopt or otherwise integrate
the relevant parts of the SEC’s Uniform
System of Accounts and records
retention rules. The Commission
indicated that it intended to issue a final
rule on any appropriate accounting and
records retention requirements
modifications before January 1, 2007, so
that service companies would be able to
transition to the Commission’s Uniform
System of Accounts and records
retention requirements and so that
holding companies could transition to
5 Order No. 667, 70 FR 75592 (Dec. 20, 2005),
FERC Stats. & Regs.; Regulations and Preambles
2001–2005 ¶ 31,197 (2005), order on reh’g, Order
No. 667–A, published elsewhere in this issue of the
Federal Register, FERC Stats. & Regs. ¶ 31,213
(2006).
6 As defined in 18 CFR 366.1, holding company
means (i) any company that directly or indirectly
owns, controls, or holds, with power to vote, 10
percent or more of the outstanding voting securities
of a public-utility company or of a holding
company of any public-utility company; and (ii)
any person, determined by the Commission, after
notice and opportunity for hearing, to exercise
directly or indirectly (either alone or pursuant to an
arrangement or understanding with one or more
persons) such a controlling influence over the
management or policies of any public-utility
company or holding company as to make it
necessary or appropriate for the rate protection of
utility customers with respect to rates that such
person be subject to the obligations, duties, and
liabilities imposed by this subtitle upon holding
companies.
7 As defined in 18 CFR 366.1, service company
means any associate company within a holding
company system organized specifically for the
purpose of providing non-power goods or services
or the sale of goods or construction work to any
public utility in the same holding company system.
8 Order No. 667 also required traditional,
centralized service companies to file the newly
created Form No. 60, Annual Report for Centralized
Service Companies.
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the Commission’s records retention
requirements, by that date.
5. As discussed below, this Notice of
Proposed Rulemaking proposes to adopt
a Uniform System of Accounts for
centralized service companies, and
records retention requirements for
holding companies and service
companies, under PUHCA 2005.
III. Discussion
6. In Order No. 667, the Commission
prescribed uniform accounting
requirements for centralized service
companies, i.e., service companies that
are not special purpose companies,
within holding company systems, and
records retention requirements for both
service companies and holding
companies. In that order, the
Commission announced its intention to
modify the existing Uniform Systems of
Accounts for public utilities and
licensees and natural gas companies in
Parts 101 and 201, respectively, of the
Commission’s regulations to
accommodate centralized service
companies’ use of those systems. The
Commission also announced its
intention to similarly modify the
existing records retention requirements
contained in Parts 125 and 225 of the
Commission’s regulations.
7. Since the issuance of Order No.
667, we have examined in greater depth
some of the implementation issues
associated with revising the
Commission’s existing Uniform Systems
of Accounts and records retention
requirements for public utilities and
licensees and for natural gas companies
to cover service companies and holding
companies. After taking into
consideration the overall framework of
the Commission’s regulations and the
range of changes that would be required
to the Uniform Systems of Accounts and
records retention requirements, we have
concluded that modifying the existing
accounting and records retention
requirements to accommodate service
companies and holding companies
would make understanding and
applying the accounting and records
retention requirements difficult for
users of the systems. Instead, the
Commission proposes to adopt a
separate Uniform System of Accounts
for centralized service companies, i.e.,
service companies that are not special
purpose companies, and separate
records retention requirements for
service companies and holding
companies. While these new regulations
appear lengthy, we believe the detail
will actually make it simpler and easier
for service companies and holding
companies to comply with our
requirements.
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8. In developing the proposed
regulations, we were guided by three
overarching objectives: (1) The new
accounting and records retention
requirements should mirror the existing
requirements contained in Parts 101,
201, 125 and 225 of the Commission’s
regulations for public utilities and
licensees and natural gas companies to
the maximum extent practicable, but
should exclude provisions that are not
relevant; (2) the new accounting
requirements should allow for the
consolidation of service company
financial information with the financial
information of associate public utilities
and licensees and natural gas companies
as needed for stockholder and SEC
reporting; and (3) the new Uniform
System of Accounts for centralized
service companies should include
requirements that reflect aspects of
business operations that are unique to
such service companies.
A. Proposed Uniform System of
Accounts
9. The Commission proposes to add as
Part 367 of the Commission’s
regulations a Uniform System of
Accounts for Centralized Service
Companies. The proposed Uniform
System of Accounts for Centralized
Service Companies conforms, to the
maximum extent practicable, to the
Commission’s existing Uniform Systems
of Accounts for public utilities and
licensees and for natural gas companies
as set forth in Parts 101 and 201,
respectively, of the Commission’s
regulations. As explained more fully
below, however, there are a number of
instances in which the existing
requirements contained in Parts 101 and
201 of the Commission’s regulations
need to be revised or modified to reflect
the unique business characteristics of
centralized service companies. In some
instances, the revisions simply change a
word, e.g., substituting ‘‘service
company’’ property for ‘‘utility’’
property.9 In other instances, the
changes were more significant. The
sections that follow identify and explain
the basis for the more significant
revisions and modifications to the
accounting requirements contained in
Parts 101 and 201 of the Commission’s
regulations that we believe are
appropriate or necessary to reflect the
unique business characteristics of
centralized service companies in the
proposed Uniform System of Accounts
for Centralized Service Companies.
9 For purposes of discussion, when revisions to
an instruction or account are limited to such word
changes we consider it as adopting the affected
instruction or account in total.
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1. Definitions and Instructions
10. The Commission proposes to
adopt most of the definitions contained
in Parts 101 and 201 of the
Commission’s regulations. Additionally,
the Commission proposes to adopt the
definitions contained in the SEC’s
Uniform System of Accounts for direct
cost, indirect cost, non-associate
company, and work order system. The
Commission also proposes to
incorporate definitions for construction,
electric utility company, gas utility
company, goods, holding company
system, natural gas company, public
utility, public-utility company, service
and service company from § 366.1 of the
Commission’s regulations. The
definitions adopted from the SEC’s
Uniform System of Accounts and
§ 366.1 of the Commission’s regulations
are necessary to facilitate understanding
other instructions not contained in Parts
101 and 201 of the Commission’s
regulations as they should be applied to
centralized service companies, i.e.,
service companies that are not special
purpose companies.
11. Consistent with the instructions in
Parts 101 and 201 of the Commission’s
regulations, we propose to adopt
instructions grouped into four
categories: General Instructions, Service
Company Property Instructions,
Operating Expense Instructions and
Special Instructions. These instructions
include most of the instructions
contained in Parts 101 and 201 of the
Commission’s regulations and in the
SEC’s Uniform System of Accounts. We
propose to adopt instructions in the
SEC’s Uniform System of Accounts
because they provide instructions
relevant to certain transactions and
events of a centralized service company,
that are not specifically addressed in the
instructions for Parts 101 and 201 of the
Commission’s regulations. The
instructions we propose to adopt in the
Special Instructions category include
many of the instructions for groups of
accounts, which are embedded in the
text to the accounts in Parts 101 and 201
of the Commission’s regulations.
Instructions not adopted from Parts 101
and 201 of the Commission’s regulations
and the SEC’s Uniform System of
Accounts are considered irrelevant to
centralized service company operations
or duplicative of other instructions.
Additionally, many of the instructions
from Parts 101 and 201 are modified for
centralized service company operations.
The more significant additions,
deletions and modifications to the
instructions contained in Parts 101 and
201 of the Commission’s regulations are
discussed below.
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12. The instructions found in both
Parts 101 and 201 of the Commission’s
regulations contain provisions for
implementing the ratemaking principle
of original cost. Under this principle,
companies are required to record utility
property in the plant in service accounts
at the cost to the person who first
devoted the property to public service.
Although public utilities and natural gas
companies frequently enter into
property transactions in which the
original cost concept is at issue,
centralized service companies are
expected to have few, if any,
transactions in which that is the case.
Moreover, centralized service
companies can now provide centralized
services to both utility and non-utility
entities. In this context, the original cost
accounting rules that exist for public
utilities and natural gas companies
would be difficult to apply to
centralized service companies.
Therefore, the proposed instructions in
the Uniform System of Accounts for
Centralized Service Companies do not
contain the requirements that would
otherwise be needed to implement the
original cost concept. In proposed
§ 367.50,10 Service company property to
be recorded at cost, and § 367.53,11
Service company property purchased or
sold, we propose to modify Electric and
Gas Plant Instructions Nos. 2 and 5,
respectively, to require centralized
service company property to be
recorded at the cost of acquisition rather
than its original cost. The instructions to
proposed § 367.53 also require
centralized service companies to file
journal entries with the Commission
when acquired property is at a purchase
price of $10 million or more and has
been previously devoted to public
service.12 This filing requirement
provides the Commission and others the
opportunity to monitor transactions
involving property previously devoted
to public service.
13. We propose to adopt in § 367.23
an instruction for transactions with nonassociate companies from the SEC’s
Uniform System of Accounts (17 CFR
§ 265.01–2). This instruction requires
that profits and losses on transactions
10 Proposed 18 CFR 367.50 is adopted from
Electric Plant Instructions No. 2, Electric plant to
be recorded at cost, and Gas Plant Instructions No.
2, Gas plant to be recorded at cost.
11 Proposed 18 CFR 367.53 is adopted from
Electric Plant Instructions No. 5, Electric plant
purchased or sold, and Gas Plant Instructions No.
5, Gas plant purchased or sold.
12 The $10 million threshold is consistent with
the threshold for certain transactions subject to
section 203 of the Federal Power Act, as amended
by section 1289 of the Energy Policy Act of 2005.
See Order No. 669, 71 FR 1348 (Jan. 6, 2006), FERC
Stats. & Regs. ¶ 31,200 (2005).
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with non-associate companies be
recorded in Account 458.4, Excess or
deficiency on servicing non-associate
utility companies (§ 367.4584), and
Account 459.4, Excess or deficiency on
servicing non-associate non-utility
companies (§ 367.4594), as appropriate.
The instruction also requires centralized
service companies to determine the sum
of the closing balances, at the end of
each calendar year, in Account 458.4
(§ 367.4584) and Account 459.4
(§ 367.4594). If the sum of the closing
balances of these accounts combine to a
net credit, the amount of the net credit
must be deducted from amounts
reimbursable by associate companies as
compensation for use of capital invested
in the centralized service company. By
following this instruction, service
companies will be required to channel
net profits from transactions with nonassociate companies to the associate
companies within the holding company
system. The Commission believes this
requirement is appropriate and
reasonable because centralized service
companies should be not-for-profit in
nature and provide services to associate
companies at cost.13 Therefore, profits
received outside of the holding
company system should be used to
reduce the cost of providing service to
associate companies within the holding
company system.
14. We propose to adopt instructions
from Parts 101 and 201 of the
Commission’s regulations on
extraordinary items 14 with certain
modifications in proposed § 367.8.
Under the instructions contained in
Parts 101 and 201, an item can be
accounted for as extraordinary, without
prior Commission approval if the item
is more than five percent of income
before extraordinary items. We do not
view this stipulation as practical for
centralized service companies because
service companies typically have little
or no income. Therefore, we propose to
eliminate this threshold requirement to
recognize an extraordinary item, but
will require centralized service
companies to seek Commission
approval to record all extraordinary
items.
15. In proposed § 367.16, we propose
to adopt, in part, instructions for
accounting for long-term debt from Parts
13 Not-for-profit as used here does not preclude a
reasonable return on equity capital. In addition, in
Order No. 667, the Commission allowed centralized
service companies to continue to sell non-power
goods and services to affiliated utilities ‘‘at-cost.’’
Order No. 667, FERC Stats. & Regs. ¶ 31,197 at P
14.
14 See General Instructions No. 7, Extraordinary
items, in Parts 101 and 201 of the Commission’s
regulations.
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101 and 201 of the Commission’s
regulations.15 We are not adopting
instructions pertaining to the rate
principle of amortizing gains and losses
on the reacquisition of long-term debt
because centralized service companies
are not rate regulated and such gains
and losses should be recognized
immediately in income.
16. In proposed § 367.58, we propose
to adopt instructions for maintaining a
work order system for all construction
and retirements of service company
property from Parts 101 and 201 of the
Commission’s regulations.16
Additionally, in proposed § 367.31, the
Commission proposes to adopt
instructions from the SEC’s Uniform
System of Accounts for maintaining
work order systems for accumulating
reimbursable costs and charges to
customers.17 The Commission believes
it is necessary to adopt this additional
instruction from the SEC’s Uniform
System of Accounts because this
specific instruction is appropriate for
this proposed Uniform System of
Accounts and is not provided for in the
instructions contained in Parts 101 and
201 of the Commission’s regulations.
17. We note that there appears to be
´
a regulatory gap vis-a-vis Commission
jurisdiction as it relates to service
companies with electric utility company
affiliates and natural gas company
affiliates in PUHCA 2005. As a result of
the definitions for holding company,
holding company system, natural gas
company, public-utility company,
electric utility company and gas utility
company in PUHCA 2005 section 1262,
it appears that the Commission can
regulate holding companies with
electric utility company affiliates as to
their books, accounts, memoranda, and
other records. On the other hand, it
appears that PUHCA 2005 would not
grant the Commission authority to
require service companies that have
only natural gas company affiliates to
comply with the Commission’s financial
accounting and reporting and records
retention requirements; this is in
contrast to holding companies with gas
utility company affiliates, i.e., holding
companies with natural gas local
distribution company affiliates.18
15 See General Instructions No. 17, Long-term
debt: Premium, discount and expense and gain or
loss on reacquisition, in Parts 101 and 201 of the
Commission’s regulations.
16 See Electric (Gas) Plant Instructions No. 11,
Work order and property record system required in
Parts 101 and 201 of the Commission’s regulations.
17 See 17 CFR 256.00–1(f), 256.03(c).
18 In PUHCA 2005 section 1262, a holding
company is any company that directly or indirectly
owns, controls, or holds, with power to vote, 10
percent or more of the outstanding voting securities
of a public-utility company or of a holding
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Companies with only natural gas
company affiliates would not be a
holding company under PUHCA 2005.
The Commission is seeking comments
on how we should deal with this
apparent regulatory gap under PUHCA
2005, e.g., what, if any, action the
Commission might take under the
Natural Gas Act. Commenters are
invited to address (1) whether there is,
in fact, a regulatory gap, (2) if there is
a regulatory gap, whether there is a need
to address the gap, and, (3) if so, how
the Commission should address this gap
under the Natural Gas Act.
property used exclusively in providing
services to non-utility customers or a
non-service business activity. While we
believe it is important that such
investments be identified and disclosed,
we feel that it can be done more
appropriately by the use of a schedule
as opposed to adopting a separate
account. Therefore, we propose to
include Schedule III-A, Summary of
Service Company Property and
Accumulated Provision for Depreciation
and Amortization, in revised Form No.
60.
2. Balance Sheet Accounts
21. The Commission proposes to
incorporate income statement accounts
contained in Parts 101 and 201 of the
Commission’s regulations. We modified
the accounts related to expenses for
non-utility companies19 and revenue
accounts. The additions, deletions and
modifications to the income statement
accounts contained in Parts 101 and 201
that are proposed for inclusion in the
Uniform System of Accounts for
Centralized Service Companies are
discussed further below.
22. The Commission is proposing to
include in the Uniform System of
Accounts for Centralized Service
Companies the same instructions
covering income tax accounting
presently contained in Parts 101 and
201 of the Commission’s regulations.
We are aware that those instructions
need to be revised to reflect the liability
method of accounting for income taxes
that all other Commission jurisdictional
companies now follow.20 However, the
changes needed to integrate the liability
method of accounting for income taxes
into the Uniform Systems of Accounts
and other Commission regulations are
expected to be complex and should be
taken up in a separate proceeding.21
Until that proceeding can be
undertaken, centralized service
companies and all other Commission
jurisdictional companies should
account for income taxes using the same
rules as modified by an Accounting
Guidance Letter dated April 23, 1993.
This will, in our view, facilitate the
preparation of consolidated financial
statements.
23. We do not propose to include the
following accounts, as contained in
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18. The Commission proposes to
adopt in the new Uniform Systems of
Accounts for Centralized Service
Companies most of the balance sheet
accounts contained in Parts 101 and 201
of the Commission’s regulations, and
primary property Accounts 301
(§ 367.3010), 303 (§ 367.3030) and 389
to 399.1 (§§ 367.3890 to 367.3991).
Accounts not adopted are considered
not applicable to centralized service
companies. In most instances, the nonapplicability of those accounts to
centralized service companies is
apparent from the account instructions
and further discussion as to the reason
for not adopting them is not necessary.
However, a few warrant comment.
19. The Commission does not propose
to adopt Accounts 102, Electric and Gas
plant purchased or sold, 114, Electric
and Gas plant acquisition adjustments,
and 116, Other electric and gas plant
acquisition adjustments, because, as
discussed above, property acquired will
be included in Account 101, Service
company property (§ 367.1010), at
acquisition cost as opposed to original
cost. As a result, these accounts are not
necessary for centralized service
companies.
20. In addition, we are not adopting
Accounts 118, Other utility plant, and
121, Non-utility property. These
accounts are used by public utilities and
natural gas companies to record the cost
of property used exclusively in
providing other utility services, e.g.,
water, railway, etc., or non-utility
services. In the Commission’s view, the
corollary use of these accounts by
centralized service companies would be
to record in these accounts the cost of
company of any public utility company. A publicutility company is an electric utility company or a
gas utility company. An electric utility company is
any company that owns or operates facilities used
for the generation, transmission, or distribution of
electric energy for sale. A gas utility company is any
company that owns or operates facilities used for
distribution at retail of natural or manufactured gas,
i.e., a natural gas local distribution company.
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3. Income Statement Accounts
19 A non-utility company is defined in proposed
18 CFR § 367.1 as ‘‘a company that is not a utility
company.’’
20 See Accounting Guidance Letter AI93–50–000,
Accounting for Income Taxes, (April 23, 1993).
21 Regulations Implementing Tax Normalization
for Certain Items Reflecting Timing Differences in
the Recognition of Expenses or Revenues for
Ratemaking and Income Tax Purposes, Order No.
144, FERC Stats. & Regs. ¶ 30,254 (1981).
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Parts 101 and 201 of the Commission’s
regulations, because we do not
anticipate centralized service companies
having transactions that give rise to the
use of these accounts:
• Account 404.1, Amortization and
depletion of producing natural gas land
and land rights.
• Account 404.2, Amortization of
underground storage land and land
rights.
• Account 406, Amortization of
electric plant acquisition adjustments.
• Account 407, Amortization of
property losses, unrecovered plant and
regulatory study costs.
• Account 407.2, Amortization of
conversion expense.
• Account 407.3, Regulatory debits.
• Account 407.4, Regulatory credits.
• Account 411.6, Gains from
disposition of utility plant.
• Account 411.7, Losses from
disposition of utility plant.
• Account 411.8, Gains from
disposition of allowances.
• Account 411.9, Losses from
disposition of allowances.
• Account 412, Revenues from
electric plant leased to others.
• Account 413, Expenses of electric
plant leased to others.
• Account 414, Other utility
operating income.
• Account 417, Revenues from nonutility operations.
• Account 418, Non-operating rental
income.
• Account 420, Investment tax
credits.
• Account 428.1, Amortization of loss
on reacquired debt.
• Account 429.1, Amortization of
gain on reacquired debt—Credit.
24. We propose to add Account 417.1,
Expenses of non-utility company related
operations (§ 367.4171). This account
will include expenses incurred in
providing services to non-utility
companies where the revenues from
which are included in Account 459,
Services rendered to non-utility
companies (§ 367.4590). Expenses
related to providing customer, sales or
administrative and general services to
non-utility companies will initially be
recorded in the 900 series of accounts
and transferred to Account 417.1
(§ 367.4171), through credits to Account
922, Administrative expenses
transferred—Credit (§ 367.9220). The
cost of other services provided to nonutility companies will be charged
directly to Account 417.1 (§ 367.4171).
25. We propose to add the following
retained earnings accounts:
• Account 433, Balance transferred
from income (§ 367.4330).
• Account 436, Appropriations of
retained earnings (§ 367.4360).
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• Account 437, Dividends declaredpreferred stock (§ 367.4370).
• Account 438, Dividends declared—
common stock (§ 367.4380).
• Account 439, Adjustments to
retained earnings (§ 367.4390).
26. We propose to adopt retained
earnings Accounts 215, Appropriated
retained earnings (§ 367.2150), and 216,
Unappropriated retained earnings
(§ 367.2160), as balance sheet accounts
to track changes in the retained earnings
accounts. We also propose to revise
Form No. 60 to reflect the use of these
accounts.
27. We do not propose adopting the
following operating revenue accounts,
contained in Parts 101 and 201 of the
Commission’s regulations:
• Account 440, Residential sales.
• Account 442, Commercial and
industrial sales.
• Account 444, Public street and
highway lighting.
• Account 445, Other sales to public
authorities (Major only).
• Account 446, Sales to railroads and
railways (Major only).
• Account 447, Sales for resale.
• Account 448, Interdepartmental
sales.
• Account 449, Other sales (Nonmajor only).
• Account 449.1, Provision for rate
refunds.
• Account 450, Forfeited discounts.
• Account 451, Miscellaneous service
revenues.
• Account 453, Sales of water and
water power.
• Account 454, Rent from electric
property.
• Account 455, Interdepartmental
rents.
• Account 456, Other electric
revenues.
• Account 480, Residential sales.
• Account 481, Commercial and
industrial sales.
• Account 482, Other sales to public
authorities.
• Account 483, Sales for resale.
• Account 484, Interdepartmental
sales.
• Account 485, Intracompany
transfers.
These accounts are for recording
revenues from the sale of electricity or
gas and transmission or transportation
service. Transactions of this nature
would not be entered into by centralized
service companies. However, we
propose to adopt new revenue control
Accounts 457, Services rendered to
associate utility companies (§ 367.4570),
458, Services rendered to non-associate
utility companies (§ 367.4580) and 459,
Services rendered to non-utility
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22:18 May 15, 2006
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companies (§ 367.4590).22 Each of these
revenue control accounts will have a
corresponding subaccount or direct
labor account (Accounts 457.1, 458.1
and 459.1 in §§ 367.4571, 367.4581 and
367.4591), indirect labor account
(Accounts 457.2, 458.2 and 459.2 in
§§ 367.4572, 367.4582 and 367.4592)
and an account for compensation for use
of capital (Accounts 457.3, 458.3 and
459.3 in §§ 367.4573, 367.3593 and
367.4593). This differs slightly from the
SEC’s Uniform System of Accounts,
which provided control accounts for
aggregating revenues between associate
and non-associate companies only.
However, the SEC’s requirements were
developed under PUHCA 1935, which
restricted registered holding companies
and their associated companies to utility
operations or directly related business
interests. With the repeal of the PUHCA
1935 and the elimination of the
distinction between registered and
exempt holding companies,23 these
restrictions no longer apply. As a
consequence, we expect that centralized
service companies may provide an
increasing amount of services to nonutility companies. As an aid to
monitoring the potential for cross
subsidization, we believe that it is
important to have accounts that
aggregate financial information in a way
that separately identifies and measures
this activity. We propose including
revenue Accounts 458.4, Excess or
deficiency on servicing non-associate
utility companies (§ 367.4584, and
459.4, Excess or deficiency on servicing
non-associate non-utility companies
(§ 367.4594). These accounts are
necessary to monitor and ensure that
centralized service companies comply
with the requirements that profits from
services provided to non-associate
companies are used to reduce the
billings of associate companies and to
ensure that losses are not automatically
passed on to associate companies.
28. We propose to include in the
Uniform System of Accounts for
Centralized Service Companies all of the
500 series of electric operation and
maintenance expense accounts
presently contained in Part 101 of the
Commission’s regulations and all of the
800 series of gas operation and
maintenance accounts contained in Part
201 of the Commission’s regulations.
22 A control account includes the total of the
related subaccounts.
23 Order No. 667 states, ‘‘[a]lthough, as also
discussed below, we will provide certain
exemptions from PUHCA 2005, we will not recreate the PUHCA 1935 distinction between
‘‘exempt’’ and ‘‘registered’’ holding companies.’’
Order No. 667, FERC Stats. & Regs. ¶ 31,197 at P
10.
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Service companies use these accounts
when providing utility-related services
to utility companies. However, to avoid
unnecessary duplication and to ensure
that symmetry is maintained between
the Uniform Systems of Accounts, we
propose to direct service companies to
use the 500 and 800 series of accounts
contained in Parts 101 and 201 of the
Commission’s regulations instead of
including all of the 500 and 800 series
of accounts in the Uniform System of
Accounts for Centralized Service
Companies.
29. We propose to include in the
Uniform System of Accounts for
CentralizedService Companies all of the
900 series of expense accounts presently
contained in Parts 101 and 201 of the
Commission’s regulations, except the
following accounts:
• Account 906, Customer service and
informational expenses (Non-major
only).
• Account 917, Sales expenses (Nonmajor only).
• Account 927, Franchise
requirements.
• Account 929, Duplicate charges—
Credit.
• Account 933, Transportation
expenses (Non-major)
Accounts 906, 917 and 933 are nonmajor. Accounts 927 and 929 relate to
utility sales of electricity. We could not
cross reference the 900 series accounts
as we did for the 500 or 800 series of
accounts because the individual account
instructions in Part 101 differ from the
counterpart instructions in Part 201. In
order to eliminate confusion that might
be caused by the differences, we
modified the text of these accounts and
propose to adopt them, as modified, as
part of the Uniform System of Accounts
for Centralized Service Companies.
B. Proposed Records Retention
Requirements
30. The Commission proposes to
establish, as Part 368 of the
Commission’s regulations, records
retention requirements for holding
companies and service companies. We
stress that, consistent with Order No.
667, while the proposed Uniform
System of Accounts applies only to
centralized service companies, i.e.,
service companies that are not special
purpose companies, the proposed
records retention requirements apply to
all holding companies and service
companies. The records retention
requirements proposed generally are
based on the requirements contained in
§§ 125.3 and 225.3 of the Commission’s
regulations, with certain modifications
considered appropriate for holding
companies and service companies.
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These modifications implement reduced
retention periods for certain holding
company and service company records
where the retention periods were longer
under the SEC’s requirements than the
retention periods applicable to similar
records in §§ 125.3 and 225.3 of the
Commission’s regulations. In addition,
the modifications incorporate certain
records retention requirements that
were not part of the Commission’s
regulations in §§ 125.3 and 225.3 of the
Commission’s regulations.
31. To the extent that the
Commission’s retention periods differ
from other regulatory agency
requirements, holding companies and
service companies should retain records
for the longer of the required retention
periods.
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C. Proposed Statements of Reports
(Schedules)
32. The Commission proposes to add
as Part 369 of the Commission’s
regulations instructions for filing the
Form No. 60. The instructions propose
to require centralized service companies
to prepare and file electronically with
the Commission an annual report by
April 18 for the previous calendar year.
Also, the instructions require service
companies that do not file Form No. 60
to file annually a narrative description
of their functions.
D. Proposed Revised FERC Form No. 60
33. The proposed changes, if adopted,
will require revising the existing
schedules in the Form No. 60 filed with
the Commission. Revised Form No. 60
is included in Appendix A to this
Notice of Proposed Rulemaking. We
plan to develop submission software to
provide for electronic filing of revised
Form No. 60 similar to the software
used for electronic filing of the
Commission’s other annual reporting
forms, i.e., Form No. 1 and Form No. 2.
34. The proposed revisions to revised
Form No. 60 include:
(1) The title of the form is changed to
‘‘Annual Report of Centralized Service
Companies’’.
(2) The format of the schedules is
revised consistent with Annual Report
Form Nos. 1 and 2 (Form Nos. 1 and 2).
Instructions have been added to
schedules, where necessary, because
they are non-existent in the current
Form No. 60. A new cover page is added
similar to the cover page for Form Nos.
1 and 2.
(3) Two instructional pages are added
to replace existing instructions. This is
consistent with Form Nos. 1 and 2.
General Information Item No. III is
added to indicate how Form No. 60 is
to be submitted. General Instruction No.
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Jkt 208001
II is added to indicate that amounts
should be reported in whole dollars.
The current Form No. 60 instruction
allows reporting in whole dollars,
thousands of dollars and millions of
dollars. This revision is necessary for
consistency. General Instruction No. IV
is added consistent with the adoption of
submission software. General
Instruction No. VII is added to indicate
the process of how resubmissions are to
be filed.
(4) Page 1 is revised consistent with
Form Nos. 1 and 2 and a telephone
number and an e-mail address for
contact person designated to respond to
questions about Form No. 60 has been
added. There currently is no contact
information except for a correspondence
address. A Corporate Officer
Certification has been added the same as
for Forms 1 and 2 and the Signature
Clause page has been deleted.
(5) The filing date for Form No. 60 is
changed to April 18 from May 1. April
18 filing date is consistent with the due
date for most of the Commission’s
annual report forms that contain
financial information.
(6) Schedule I, Comparative Balance
Sheet, is revised to include the balance
sheet accounts proposed to be adopted
herein.
(7) Schedule II, Service Company
Property, is revised to include the
property accounts proposed to be
adopted in this NOPR.
(8) Schedule III–A, Summary of
Service Company Property and
Accumulated Provision for Depreciation
and Amortization, is added to
distinguish service company property
devoted exclusively to utility-related
operations and property devoted
exclusively to non-utility operations.
(9) Schedule XI, Proprietary Capital,
is revised to include a statement of
retained earnings.
(10) Schedule XV, Comparative
Income Statement, is revised to include
the income statement accounts
proposed to be adopted herein.
(11) Schedule XV–A, Schedule of
Utility Company Operating Expenses is
added to disclose operating expenses
which were only summarized in
Schedule XV, Comparative Income
Statement.
(12) Schedule, Analysis of Billing
Associate Companies—Account 457, is
revised to only include associate utility
companies. This is consistent with
proposed Account 457.
(13) Schedule, Analysis of Billing
Non-associate Companies—Account
458, is revised to only include nonassociate utility companies. This is
consistent with proposed Account 458.
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28469
(14) A new schedule, Analysis of
Billing Non-Utility Companies—
Account 459, is added to Form No. 60.
This is consistent with proposed
Account 459.
(15) Schedule XVI—Analysis of
Charges for Service—Associate and
Non-associate Companies, is revised to
reflect the breakdown of utility
companies and non-utility companies
proposed for Accounts 457, 458 and
459.
(16) Schedule XVII, Expense
Distribution by Department or Service
Function, is revised by adding all
income statement accounts.
D. Proposed Conforming Revisions to
Parts 366 and 375
35. The Commission proposes to
revise §§ 366.21(b), 366.22(a)(1) and
(b)(1) and 366.23(a) of the Commission’s
regulations to conform to the new
accounting, and records retention and
reporting requirements proposed in this
notice of proposed rulemaking.
36. The Commission also proposes to
revise § 375.303(c), (d), (e), (f), (g) and
(h) of the Commission’s regulations to
update the delegations to give to the
Chief Accountant or the Chief
Accountant’s designee certain
authorities related to service company
financial accounting and reporting
matters. These authorities are similar to
those that the Chief Accountant has for
public utilities and licensees, natural
gas companies and oil pipeline
companies.
E. Technical Conference
37. In addition to providing an
opportunity to comment on the
regulations proposed in this Notice of
Proposed Rulemaking, the Commission
directs staff to hold a technical
conference regarding the proposed
Uniform System of Accounts, the
records retention requirements and
revised Form No. 60 to provide
interested entities an opportunity to
discuss the proposed regulations
following the close of the comment
period for this Notice of Proposed
Rulemaking. Entities are invited to
include a separate list of subjects they
would like discussed at this technical
conference in their comments.24
24 This technical conference is distinct from the
technical conference announced in Order No. 667.
This technical conference will address the specific
details associated with the proposed Uniform
System of Accounts, records retention requirements
and revised Form No. 60. The conference
announced in Order No. 667, on the other hand,
will address other issues identified in the PUHCA
2005 and FPA section 203 final rules and rehearing
orders on those rules.
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IV. Information Collection Statement
38. The following collections of
information contained in this proposed
rule have been submitted to the Office
of Management and Budget (OMB) for
review under section 3507(d) of the
to enhance the quality, utility and
clarity of the information to be collected
or retained, and any suggested methods
for minimizing respondents’ burden,
including the use of automated
information techniques.
Paperwork Reduction Act of 1995.25
The Commission solicits comments on
the Commission’s need for this
information, whether the information
will have practical utility, the accuracy
of the provided burden estimates, ways
ESTIMATED ANNUAL BURDEN
Number of
respondents
Data collection
Number of
hours per
response
Number of
responses
Total annual
hours
38
300
38
........................
10
1,080
380
324,000
Totals ........................................................................................................
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FERC form No. 60 ...........................................................................................
FERC–555A (new) ...........................................................................................
........................
........................
........................
324,380
Total Annual Hours for Collection
(Reporting and Recordkeeping) =
324,380.
Information Collection Costs: The
Commission seeks comments on the
costs to comply with the requirements.
It has projected the average annualized
costs for all respondents to be the
following:
FERC Form 60 = 380 hours at $120 an
hour (an average of 3 staff at $40 an
hour) = $45,600.
FERC–555A = The Commission
projects an annualized average cost of
all respondents as 324,000 hours at $68
an hour ($17 an hour, an average of 4
staff) = $22,032,000 (staffing) +
$6,696,000 (storage) = $28,728,000.
These costs assume that the average
office storage space cost is $7,440 for
retaining records on-site. (Usually
records after the initial years are
transferred to off-site where the storage
costs drop to $925 (on average). As these
requirements are being approved for an
initial three year period, the assumption
was made that during that period the
records would be retained on-site.)
These costs used as an example 120
cubic feet (20 four drawer file cabinets)
and include the cubic feet of storage
plus the cost of floor space plus the
costs for records storage cartons. Greater
savings can be accomplished if
documents are stored electronically, i.e.,
one file cabinet (four drawer) (10,000
pages on average) = 500 MegaBytes
(MByte) = one CD ROM. The
Commission seeks comments on the
costs to comply with these
requirements. Total costs (reporting and
recordkeeping) = $9,908,880.
OMB regulations 26 require OMB to
approve certain information collection
requirements imposed by agency rule.
The Commission is submitting
notification of this proposed rule to
OMB. These information collection
25 44
U.S.C. 3507(d).
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requirements are mandatory
requirements.
Title: Annual Report for Centralized
Service Companies (Form No. 60) and
Preservation of Records for Service
Companies Subject to PUHCA 2005
(555A).
Action: Proposed Collections.
OMB Control Nos.: 1902–0215 (Form
No. 60) and new FERC–555A (To Be
Determined).
Respondents: Businesses or other for
profit.
Frequency of Responses: Annually
(Form No. 60) and recordkeeping
(555A).
Necessity of the Information: This
proposed rule implements certain
provisions of Title XII of the Energy
Policy Act of 2005, by adding financial
accounting requirements and reporting
by centralized service companies and
the establishment of recordkeeping
requirements for both holding
companies and service companies.
Section 1275(b) provides for
Commission review and authorization
of cost allocations for non-power goods
or services provided by service
companies. In Order No. 667, the
Commission prescribed, for an initial
transition period, uniform financial
accounting and reporting requirements
for centralized service companies’
requirements within holding companies
and record retention requirements for
both service companies and holding
companies and that the modification of
the Commission’s Uniform System of
Accounts and records retention
requirements would be implemented
later. However, upon further review, the
decision was made to implement a new
Uniform System of Accounts and
records retention requirements to ensure
a smoother transition for service
companies and holding companies. The
Commission has developed
26 5
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PO 00000
standardized accounting rules. These
rules, contained in the new Uniform
System of Accounts for Centralized
Service Companies, are generally
consistent with the accounting
standards that must be followed by
commercial enterprises. Timely
reporting of the information is critical to
monitoring the industry to ensure that
practices are not discriminatory and that
appropriate rates are charged. The
official records maintained by the
regulated companies are in accordance
with schedules already set by the
Commission in its regulations and
already used by companies as the basis
for required filings and reports with the
Commission. In addition, the records
will be used by the Commission’s audit
staff during compliance reviews and
special analyses as deemed necessary by
the Commission. The additional
financial transparency required by these
requirements will aid the Commission
in meeting its oversight and market
monitoring obligations and will benefit
the public both as ratepayers and
investors.
Internal Review: The Commission has
reviewed the proposed accounting and
records retention requirements and
made a preliminary determination that
these requirements are necessary to
implement Title XII of the Energy Policy
Act of 2005. By adapting relevant parts
of the SEC’s Uniform System of
Accounts and records retention rules to
the Commission’s Uniform System of
Accounts and records retention
requirements, facilitates the
Commission’s need to conduct
examinations, audits and verification of
this information for the protection of
utility customers with respect to
jurisdictional rates. These requirements
conform to the Commission’s plan for
efficient information collection,
communication and management within
CFR 1320.11.
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the energy industry. The Commission
has assured itself, by means of internal
review, that there is specific, objective
support for the burden estimates
associated with the information
requirements.
Interested persons may obtain
information on the reporting
requirements by contacting the
following: Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426 [Attention:
Michael Miller, Office of the Executive
Director, Phone (202) 502–8415, fax:
(202) 273–0873, e-mail:
michael.miller@ferc.gov].
For submitting comments concerning
the collection(s) of information and the
associated burden estimate(s), please
send your comments to the contact
listed above and to the Office of
Management and Budget, Office of
Information and Regulatory Affairs,
Washington, DC 20503 [Attention: Desk
Officer for the Federal Energy
Regulatory Commission, phone (202)
395–4650, fax: (202) 295–7285, e-mail:
oira_submission@omb.eop.gov].
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V. Environmental Analysis
39. The Commission is required to
prepare an Environmental Assessment
or an Environmental Impact Statement
for any action that may have a
significant adverse effect on the human
environment.27 The Commission has
categorically excluded certain actions
from this requirement as not having a
significant effect on the human
environment. Included in the exclusion
are rules that carry out legislation,
involve information gathering, analyses
and dissemination, and involve
accounting.28 These proposed rules, if
finalized, carry out EPAct 2005, involve
information gathering and analysis, and
involve accounting, and, therefore, fall
under these exclusions. Consequently,
no environmental consideration is
necessary.
VI. Regulatory Flexibility Act
Certification
40. The Regulatory Flexibility Act of
1980 (RFA) requires rulemakings to
contain either a description and analysis
of the effect that the rule will have on
small entities or a certification that the
rule will not have a significant
economic impact on a substantial
number of small entities.29 Most holding
companies to which the rules proposed
herein, if finalized, would not fall
27 Regulations
Implementing the National
Environmental Policy Act, Order No. 486, 52 FR
47897 (Dec. 17, 1987), FERC Stats. & Regs. 1986–
1990 ¶ 30,783 (1987).
28 18 CFR 380.4(a)(3), (a)(5), (a)(16).
29 5 U.S.C. 603 (2000).
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22:18 May 15, 2006
Jkt 208001
within the RFA’s definition of small
entity.30 Consequently, the rules
proposed herein, if finalized, will not
have a ‘‘significant economic impact on
a substantial number of small entities.’’
VII. Comment Procedures
41. The Commission invites interested
persons to submit comments on the
matters and issues proposed in this
notice to be adopted, including any
related matters or alternative proposals
that commenters may wish to discuss.
Comments are due on or before June 15,
2006. Comments must refer to Docket
No. RM06–11–000, and must include
the commenter’s name, the organization
he or she represents, if applicable, and
his or her address.
42. Comments may be filed
electronically via the eFiling link on the
Commission’s website at https://
www.ferc.gov. The Commission accepts
most standard word processing formats,
and commenters may attach additional
files with supporting information in
certain other file formats. Commenters
filing electronically do not need to make
a paper filing.
43. Commenters who are not able to
file comments electronically must send
an original and 14 copies of their
comments to: Federal Energy Regulatory
Commission, Office of the Secretary,
888 First Street, NE., Washington, DC
20426.
44. All comments will be placed in
the Commission’s public files and may
be viewed, printed, or downloaded
remotely as described in the Document
Availability section below. Commenters
on this notice of proposed rulemaking
are not required to serve copies of their
comments on other commenters.
VIII. Document Availability
45. In addition to publishing the full
text of this document in the Federal
Register, the Commission provides all
interested persons an opportunity to
view and/or print the contents of this
document via the Internet through the
Commission’s home page https://
30 5 U.S.C. 601(3)(2000), citing to section 3 of the
Small Business Act, 15 U.S.C. 632 (2000). Section
3 of the Small Business Act defines a ‘‘small
business concern’’ as a business that is
independently owned and operated and that is not
dominant in its field of operation. 15 U.S.C. 632
(2000). The Small Business Size Standards
component of the North American Industry
Classification System (NAICS) defines, for example,
a small electric utility as one that, including its
affiliates, is primarily engaged in the generation,
transmission, and/or distribution of electric energy
for sale and whose total electric output for the
preceding fiscal year did not exceed four million
MWh. NAICS defines a natural gas pipeline
company as one that transports natural gas and
whose annual receipts (total income plus cost of
goods sold) did not exceed $6.5 million dollars for
the preceding year. 13 CFR 121.201.
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28471
www.ferc.gov and in the Commission’s
Public Reference Room during normal
business hours (8:30 a.m. to 5 p.m.
Eastern time) at 888 First Street, NE.,
Room 2A, Washington, DC 20426.
46. From the Commission’s home
page on the Internet, this information is
available in the Commission’s document
management system, eLibrary. The full
text of this document is available on
eLibrary in PDF and Microsoft Word
format for viewing, printing, and/or
downloading. To access this document
in eLibrary, type the docket number
excluding the last three digits of this
document in the docket number field.
47. User assistance is available for
eLibrary and the Commission’s website
during normal business hours. For
assistance, please contact FERC Online
Support at 1–866–208–3676 (toll free) or
202–502–6652 (e-mail at FERCOnlineSupport@ferc.gov), or the Public
Reference Room at 202–502–8371, TTY
202–502–8659 (e-mail at
public.referenceroom@ferc.gov).
List of Subjects
18 CFR Part 366
Electric power, Natural gas, Reporting
and recordkeeping requirements.
18 CFR Part 367
Electric power, Natural gas, Uniform
System of Accounts, Reporting and
recordkeeping requirements.
18 CFR Part 368
Electric power, Natural gas, Reporting
and recordkeeping requirements.
18 CFR Part 369
Electric power, Natural gas, Reporting
and recordkeeping requirements.
18 CFR Part 375
Authority delegations (Government
agencies), Seals and insignia, Sunshine
Act.
By direction of the Commission.
Magalie R. Salas,
Secretary.
In consideration of the foregoing, the
Commission proposes to amend parts
366 and 375 and to add parts 367, 368
and 369, Chapter I, Title 18 of the Code
of Federal Regulations, as follows:
PART 366—PUBLIC UTILITY HOLDING
COMPANY ACT OF 2005
1. The authority citation for part 366
continues to read as follows:
Authority: Pub. L. 109–58, 1261 et seq.,
119 Stat. 594, 972 et seq.
2. In § 366.21, paragraph (b) is revised
to read as follows:
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§ 366.21 Accounts and records for holding
companies.
*
*
*
*
*
(b) Unless otherwise exempted or
granted a waiver by Commission rule or
order pursuant to §§ 366.3 and 366.4 of
this chapter, beginning January 1, 2007,
all holding companies must comply
with the Commission’s records retention
requirements for holding companies and
service companies as prescribed in part
368 of this chapter. Until December 31,
2006, holding companies registered
under the Public Utility Holding
Company Act of 1935 (15 U.S.C. 79a et
seq.) may follow either the
Commission’s records retention rules for
public utilities and licensees or for
natural gas companies, as appropriate
(parts 125 and 225 of this chapter), or
the Securities and Exchange
Commission’s record retention rules in
17 CFR part 257.
*
*
*
*
*
3. In § 366.22, paragraphs (a)(1) and
(b)(1) are revised to read as follows:
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§ 366.22 Accounts and records of service
companies.
(a) Records retention requirements—
(1) General. Unless otherwise exempted
or granted a waiver by Commission rule
or order pursuant to §§ 366.3 and 366.4
of this chapter, beginning January 1,
2007, every service company must
maintain and make available to the
Commission such books, accounts,
memoranda, and other records in such
manner and preserve them for such
periods as the Commission prescribes in
part 368 of this chapter, in sufficient
detail to permit examination, audit, and
verification, as necessary and
appropriate for the protection of utility
customers with respect to jurisdictional
rates.
*
*
*
*
*
(b) Accounting requirements—(1)
General. Unless otherwise exempted or
granted a waiver by Commission rule or
order pursuant to §§ 366.3 and 366.4 of
this chapter, beginning January 1, 2007,
every centralized service company (See
§ 367.2 of this chapter) must maintain
and make available to the Commission
such books, accounts, memoranda, and
other records as the Commission
prescribes in part 367 of this chapter, in
sufficient detail to permit examination,
audit, and verification, as necessary and
appropriate for the protection of utility
customers with respect to jurisdictional
rates. Every such service company must
maintain and make available such
books, accounts, memoranda, and other
records in such manner as are
prescribed in part 367 of this chapter,
and must keep no other records with
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respect to the same subject matter
except:
(i) Records other than accounts;
(ii) Records required by federal or
state law;
(iii) Subaccounts or supporting
accounts which are not inconsistent
with the accounts required either by the
Uniform System of Accounts for
Centralized Service Companies in part
367 of this chapter; and
(iv) Any other accounts that may be
authorized by the Commission.
*
*
*
*
*
4. In § 366.23, the section heading and
paragraph (a) are revised to read as
follows:
§ 366.23 FERC Form No. 60, Annual report
of service companies, and FERC–61,
Narrative description of service company
functions.
(a) General. (1) FERC Form No. 60.
Unless otherwise exempted or granted a
waiver by Commission rule or order
pursuant to §§ 366.3 and 366.4 of this
chapter, every centralized service
company (See § 367.2 of this chapter) in
a holding company system must file
with the Commission by May 1, 2006
and May 1, 2007, and by April 18 each
year thereafter, an annual report, FERC
Form No. 60, for the prior calendar year.
Every report must be submitted on the
FERC Form No. 60 then in effect and
shall be prepared in accordance with
the instructions incorporated in that
form.
(2) FERC–61. Unless otherwise
exempted or granted a waiver by
Commission rule or order pursuant to
§§ 366.3 and 366.4 of this chapter, every
service company in a holding company
system, including a special-purpose
company (e.g., a fuel supply company or
a construction company), that does not
file a FERC Form No. 60 shall instead
file with the Commission by April 18,
2007 and by April 18 each year
thereafter, a narrative description,
FERC–61, of the service company’s
functions during the prior calendar year.
In complying with this section, a
holding company may make a single
filing on behalf of all such service
company subsidiaries.
(3) For good cause shown, the
Commission may extend the time
within which any such report or
narrative description required to be filed
pursuant to paragraphs (a)(1) or (2) of
this chapter is to be filed or waive the
requirements applicable to any such
report or narrative description.
*
*
*
*
*
5. Part 367 is added to read as follows:
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PART 367—UNIFORM SYSTEM OF
ACCOUNTS FOR CENTRALIZED
SERVICE COMPANIES SUBJECT TO
THE PROVISIONS OF PUCHA 2005
Subpart A—Definitions
Sec.
367.1 Definitions.
Subpart B—General Instructions
367.2 Companies for which this system of
accounts is prescribed.
367.3 Records.
367.4 Numbering system.
367.5 Accounting period.
367.6 Submittal of questions.
367.7 Item list.
367.8 Extraordinary items.
367.9 Prior period items.
367.10 Unaudited items.
367.11 Distribution of pay and expenses of
employees.
367.12 Payroll distribution.
367.13 Accounting to be on accrual basis.
367.14 Transactions with associate
companies.
367.15 Contingent assets and liabilities.
367.16 Long-term debt: Premium, discount
and expense, and gain or loss on
reacquisition.
367.17 Comprehensive inter-period income
tax allocation.
367.18 Criteria for classifying leases.
367.19 Accounting for leases.
367.20 Depreciation accounting.
367.22 Accounting for asset retirement
obligations
367.23 Transactions with non-associate
companies.
367.24 Construction and service contracts
for other companies.
367.25 Determination of service cost.
367.26 Departmental classification.
367.27 Billing procedures.
367.28 Methods of allocation.
367.29 Compensation for use of capital.
367.30 Work order system for associate
companies.
Subpart C—Service Company Property
Instructions
367.50 Service company property to be
recorded at cost.
367.51 Components of construction.
367.52 Overhead construction costs.
367.53 Service Company property
purchased or sold.
367.54 Expenditures on leased property.
367.55 Land and land rights.
367.56 Structures and improvements.
367.57 Equipment.
367.58 Work order and property record
system required for service company
property.
367.59 Additions and retirements of
property.
Subpart D—Operating Expense Instructions
367.80 Supervision and engineering.
367.81 Maintenance.
367.82 Rents.
367.83 Training costs.
Subpart E—Special Instructions
367.100 Accounts 131–174, Current and
accrued assets.
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367.101 Accounts 231–243, Current and
accrued liabilities.
367.102 Accounts 408.1 and 408.2, Taxes
other than income taxes.
367.103 Accounts 409.1, 409.2, and 409.3,
Income taxes.
367.104 Accounts 410.1, 410.2, 411.1, and
411.2, Provision for deferred income
taxes.
367.105 Accounts 411.4, and 411.5,
Investment tax credit adjustments.
367.106 Accounts 426.1, 426.2, 426.3,
426.4, and 426.5, Miscellaneous expense
accounts.
Subpart F—Balance Sheet Chart of
Accounts
Service Company Property
367.1010 Account 101, Service company
property.
367.1011 Account 101.1, Property under
capital leases.
367.1070 Account 107, Construction work
in progress.
367.1080 Account 108, Accumulated
provision for depreciation of service
company property.
367.1110 Account 111, Accumulated
provision for amortization of service
company property.
367.1230 Account 123, Investment in
associate companies.
367.1240 Account 124, Other investments.
367.1280 Account 128, Other special funds.
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Current and Accrued Assets
367.1310 Account 131, Cash.
367.1340 Account 134, Other special
deposits.
367.1350 Account 135, Working funds.
367.1360 Account 136, Temporary cash
investments.
367.1410 Account 141, Notes receivable.
367.1420 Account 142, Customer accounts
receivable.
367.1430 Account 143, Other accounts
receivable.
367.1440 Account 144, Accumulated
provision for uncollectible accounts—
Credit.
367.1450 Account 145, Notes receivable
from associate companies.
367.1460 Account 146, Accounts receivable
from associate companies.
367.1520 Account 152, Fuel stock expenses
undistributed.
367.1540 Account 154, Materials and
operating supplies.
367.1630 Account 163, Stores expense
undistributed.
367.1650 Account 165, Prepayments.
367.1710 Account 171, Interest and
dividends receivable.
367.1720 Account 172, Rents receivable.
367.1730 Account 173, Accrued revenues.
367.1740 Account 174, Miscellaneous
current and accrued assets.
Deferred Debits
367.1810 Account 181, Unamortized debt
expense.
367.1830 Account 183, Preliminary survey
and investigation charges.
367.1840 Account 184, Clearing accounts.
367.1850 Account 185, Temporary
facilities.
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367.1860 Account 186, Miscellaneous
deferred debits.
367.1880 Account 188, Research,
development and demonstration
expenditures.
367.1900 Account 190, Accumulated
deferred income taxes.
Proprietary Capital
367.2010 Account 201, Common stock
issued.
367.2040 Account 204, Preferred stock
issued.
367.2110 Account 211, Miscellaneous paidin-capital.
367.2150 Account 215, Appropriated
retained earnings.
367.2160 Account 216, Unappropriated
retained earnings.
367.2161 Account 216.1, Unappropriated
undistributed subsidiary earnings.
367.2190 Account 219, Accumulated other
comprehensive income.
Long-Term Debt
367.2230 Account 223, Advances from
associate companies.
367.2240 Account 224, Other long-term
debt.
367.2250 Account 225, Unamortized
premium on long-term debt.
367.2260 Account 226, Unamortized
discount on long-term debt—Debit.
Other Noncurrent Liabilities
367.2270 Account 227, Obligations under
capital lease—Non-current.
367.2300 Account 230, Assets retirement
obligations.
Current and Accrued Liabilities
367.2310 Account 231, Notes payable.
367.2320 Account 232, Accounts payable.
367.2330 Account 233, Notes payable to
associate companies.
367.2340 Account 234, Accounts payable to
associate companies.
367.2360 Account 236, Taxes accrued.
367.2370 Account 237, Interest accrued.
367.2380 Account 238, Dividends declared.
367.2410 Account 241, Tax collections
payable.
367.2420 Account 242, Miscellaneous
current and accrued liabilities.
367.2430 Account 243, Obligations under
capital leases—Current.
Deferred Credits
367.2530 Account 253, Other deferred
credits.
367.2550 Account 255, Accumulated
deferred investment tax credits.
367.2820 Account 282, Accumulated
deferred income taxes—Other property.
367.2830 Account 283, Accumulated
deferred income taxes—Other
Subpart G—Service Company Property
Chart of Accounts
367.3010 Account 301, Organization.
367.3030 Account 303, Miscellaneous
intangible property.
367.3890 Account 389, Land and land
rights.
367.3900 Account 390, Structures and
improvements.
367.3910 Account 391, Office furniture and
equipment.
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28473
367.3920 Account 392, Transportation
equipment.
367.3930 Account 393, Stores equipment.
367.3940 Account 394, Tools, shop and
garage equipment.
367.3950 Account 395, Laboratory
equipment.
367.3960 Account 396, Power operated
equipment.
367.3970 Account 397, Communication
equipment.
367.3980 Account 398, Miscellaneous
equipment.
367.3990 Account 399, Other tangible
property.
367.3991 Account 399.1, Asset retirement
costs for service company property.
Subpart H—Income Statement Chart of
Accounts
Service Company Operating Income
367.4000 Account 400, Operating revenues.
367.4010 Account 401, Operation expense.
367.4020 Account 402, Maintenance
expense.
367.4030 Account 403, Depreciation
expense.
367.4031 Account 403.1, Depreciation
expense for asset retirement costs.
367.4040 Account 404, Amortization of
limited-term property.
367.4050 Account 405, Amortization of
other property.
367.4081 Account 408.1, Taxes other than
income taxes, operating income.
367.4082 Account 408.2, Taxes other than
income taxes, other income and
deductions.
367.4091 Account 409.1, Income taxes,
operating income.
367.4092 Account 409.2, Income taxes,
other income and deductions.
367.4093 Account 409.3, Income taxes,
extraordinary items.
367.4101 Account 410.1, Provision for
deferred income taxes, operating income.
367.4102 Account 410.2, Provision for
deferred income taxes, other income and
deductions.
367.4111 Account 411.1, Provision for
deferred income taxes—Credit, operating
income.
367.4112 Account 411.2, Provision for
deferred income taxes—Credit, other
income and deductions.
367.4114 Account 411.4, Investment tax
credit adjustments, service company
property.
367.4115 Account 411.5, Investment tax
credit adjustments, other.
367.4116 Account 411.10, Accretion
expense.
367.4150 Account 415, Revenues from
merchandising, jobbing and contract
work.
367.4160 Account 416, Costs and expenses
of merchandising, jobbing and contract
work.
367.4171 Account 417.1, Expenses of nonutility related operations.
367.4181 Account 418.1, Equity in earnings
of subsidiary companies.
367.4190 Account 419, Interest and
dividend income.
367.4191 Account 419.1, Allowance for
other funds used during construction.
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367.4210 Account 421, Miscellaneous
income or loss.
367.4211 Account 421.1, Gain on
disposition of property.
367.4212 Account 421.2, Loss on
disposition of property.
367.4250 Account 425, Miscellaneous
amortization.
367.4261 Account 426.1, Donations.
367.4262 Account 426.2, Life insurance.
367.4263 Account 426.3, Penalties.
367.4264 Account 426.4, Expenditures for
certain civic, political and related
activities.
367.4265 Account 426.5, Other deductions.
367.4270 Account 427, Interest on longterm debt.
367.4280 Account 428, Amortization of
debt discount and expense.
367.4290 Account 429, Amortization of
premium on debt—Credit.
367.4300 Account 430, Interest on debt to
associate companies.
367.4310 Account 431, Other interest
expense.
367.4320 Account 432, Allowance for
borrowed funds used during
construction—Credit.
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Subpart I—Retained Earnings Accounts
367.4330 Account 433, Balance transferred
from income.
367.4340 Account 434, Extraordinary
income.
367.4350 Account 435, Extraordinary
deductions.
367.4360 Account 436, Appropriations of
retained earnings.
367.4370 Account 437, Dividends
declared—preferred stock.
367.4380 Account 438, Dividends
declared—common stock.
367.4390 Account 439, Adjustments to
retained earnings.
Subpart J—Operating Revenue Chart of
Accounts
367.4570 Account 457, Services rendered to
associate utility companies.
367.4571 Account 457.1, Direct costs
charged to associate utility companies.
367.4572 Account 457.2, Indirect costs
charged to associate utility companies.
367.4573 Account 457.3, Compensation for
use of capital—associate utility
companies.
367.4580 Account 458, Services rendered to
non-associate utility companies.
367.4581 Account 458.1, Direct costs
charged to non-associate utility
companies.
367.4582 Account 458.2, Indirect costs
charged to non-associate utility
companies.
367.4583 Account 458.3, Compensation for
use of capital—Non-associate utility
companies.
367.4584 Account 458.4, Excess or
deficiency on servicing non-associate
utility companies.
367.4590 Account 459, Services rendered to
non-utility companies.
367.4591 Account 459.1, Direct costs
charged to non-utility companies.
367.4592 Account 459.2, Indirect costs
charged to non-utility companies.
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367.4593 Account 459.3, Compensation for
use of capital—non-utility companies.
367.4594 Account 459.4, Excess or
deficiency on servicing non-associate
utility companies.
Subpart K—Operation and Maintenance
Expense Chart of Accounts
367.5000 Accounts 500–598, Electric
operation and maintenance accounts.
367.8000 Accounts 800–894, Gas operation
and maintenance accounts.
367.9010 Account 901, Supervision.
367.9020 Account 902, Meter reading
expenses.
367.9030 Account 903, Customer records
and collection expenses.
367.9040 Account 904, Uncollectible
accounts.
367.9050 Account 905, Miscellaneous
customer accounts expenses.
367.9070 Account 907, Supervision.
367.9080 Account 908, Customer assistance
expenses.
367.9090 Account 909, Informational and
instructional advertising expenses.
367.9100 Account 910, Miscellaneous
customer service and informational
expenses.
367.9110 Account 911, Supervision.
367.9120 Account 912, Demonstrating and
selling expenses.
367.9130 Account 913, Advertising
expenses.
367.9160 Account 916, Miscellaneous sales
expenses.
367.9200 Account 920, Administrative and
general salaries.
367.9210 Account 921, Office supplies and
expenses.
367.9220 Account 922, Administrative
expenses transferred—Credit.
367.9230 Account 923, Outside services
employed.
367.9240 Account 924, Property insurance.
367.9250 Account 925, Injuries and
damages.
367.9260 Account 926, Employee pensions
and benefits.
367.9280 Account 928, Regulatory
commission expense.
367.9301 Account 930.1, General
advertising expenses.
367.9302 Account 930.2, Miscellaneous
general expenses.
367.9310 Account 931, Rents.
367.9350 Account 935, Maintenance of
structures and equipment.
Authority: 42 U.S.C. 16451–16463.
Subpart A—Definitions
§ 367.1
Definitions.
(a) When used in this system of
accounts:
(1) Accounts means the accounts
prescribed by this Uniform System of
Accounts.
(2) Actually issued, as applied to
securities issued or assumed by the
service companies, means 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
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with contractual requirements direct to
trustees of sinking funds.
(3) Actually outstanding, as applied to
securities issued or assumed by the
service company, means those which
have been actually issued and are
neither retired nor held by or for the
service company; provided, however,
that securities held by trustees must be
considered as actually outstanding.
(4) Amortization means 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.
(5) Associate company means any
company in the same holding company
system with such company.
(6) 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.
(7) Commission means the Federal
Energy Regulatory Commission.
(8) Company, when not otherwise
indicated in the context, means a
service company.
(9) Construction, when used in the
context of a service provided to other
companies, means any construction,
extension, improvement, maintenance,
or repair of the facilities or any part
thereof of a company, which is
performed for a charge.
(10) Cost means 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, the value of
such consideration must be determined
on a cash basis.
(11) Cost of removal means the cost of
demolishing, dismantling, tearing down
or otherwise removing service property,
including the cost of transportation and
handling incidental thereto. It does not
include the cost of removal activities
associated with asset retirement
obligations that are capitalized as part of
the tangible long-lived assets that give
rise to the obligation. (See General
Instructions in § 367.22).
(12) Debt expense means all expenses
in connection with the issuance and
initial sale of evidences of debt, such as
fees for drafting mortgages and trust
deeds; fees and taxes for issuing or
recording evidences of debt; cost of
engraving and printing bonds and
certificates of indebtedness; fees paid
trustees; specific costs of obtaining
governmental authority; fees for legal
services; fees and commissions paid
underwriters, brokers, and salesmen for
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marketing such evidences of debt; fees
and expenses of listing on exchanges;
and other like costs.
(13) Depreciation, as applied to
depreciable service company property,
means the loss in service value not
restored by current maintenance.
Among the causes to be used as
consideration for causes of loss in
service value are wear and tear, decay,
action of the elements, inadequacy,
obsolescence, changes in the art,
changes in demand and requirements of
public authorities.
(14) Direct cost includes the labor
costs and expenses which can be
identified through a work order system
as being applicable to services
performed for a single or group of
associate and non-associate companies.
Cost incidental to or related to a directly
charged item must be classified as direct
costs.
(15) Discount, as applied to the
securities issued or assumed by the
service company, means 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.
(16) Electric utility company means
any company that owns or operates
facilities used for the generation,
transmission, or distribution of electric
energy for sale. For the purposes of this
subchapter, ‘‘electric utility company’’
shall not include entities that engage
only in marketing of electric energy.
(17) Gas utility company means any
company that owns or operates facilities
used for distribution at retail (other than
the distribution only in enclosed
portable containers or distribution to
tenants or employees of the company
operating such facilities for their own
use and not for resale) of natural or
manufactured gas for heat, light, or
power. For the purposes of this
subchapter, ‘‘gas utility company’’ shall
not include entities that engage only in
marketing of natural and manufactured
gas.
(18) Goods means any goods,
equipment (including machinery),
materials, supplies, appliances, or
similar property (including coal, oil, or
steam, but not including electric energy,
natural or manufactured gas, or utility
assets) which is sold, leased, or
furnished, for a charge.
(19) Holding company—(i) In general.
The term ‘‘holding company’’ means—
(A) Any company that directly or
indirectly owns, controls, or holds, with
power to vote, 10 percent or more of the
outstanding voting securities of a
public-utility company or of a holding
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company of any public-utility company;
and
(B) Any person, determined by the
Commission, after notice and
opportunity for hearing, to exercise
directly or indirectly (either alone or
pursuant to an arrangement or
understanding with one or more
persons) such a controlling influence
over the management or policies of any
public-utility company or holding
company as to make it necessary or
appropriate for the rate protection of
utility customers with respect to rates
that such person be subject to the
obligations, duties, and liabilities
imposed by this subchapter upon
holding companies.
(ii) Exclusions. The term ‘‘holding
company’’ must not include—
(A) A bank, savings association, or
trust company, or their operating
subsidiaries that own, control, or hold,
with the power to vote, public utility or
public utility holding company
securities so long as the securities are—
(1) Held as collateral for a loan;
(2) Held in the ordinary course of
business as a fiduciary; or
(3) Acquired solely for purposes of
liquidation and in connection with a
loan previously contracted for and
owned beneficially for a period of not
more than two years; or
(B) A broker or dealer that owns,
controls, or holds with the power to
vote public utility or public utility
holding company securities so long as
the securities are—
(1) Not beneficially owned by the
broker or dealer and are subject to any
voting instructions which may be given
by customers or their assigns; or
(2) Acquired in the ordinary course of
business as a broker, dealer, or
underwriter with the bona fide intention
of effecting distribution within 12
months of the specific securities so
acquired.
(20) Holding company system means
a holding company, together with its
subsidiary companies.
(21) Indirect cost includes the costs of
a general overhead nature such as
general services, housekeeping costs,
and other support cost which cannot be
separately identified to a single or group
of associate and non-associate
companies and, therefore, must be
allocated. Indirect costs must be
accumulated on a departmental basis.
(22) Investment advances means
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 must be settled by the issuance of
securities or must not be subject to
current settlement.
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(23) Lease, capital means a lease of
property used by the service company,
which meets one or more of the criteria
stated in General Instructions in
§ 367.18.
(24) Lease, operating means a lease of
property used by a service company,
which does not meet any of the criteria
stated in General Instructions in
§ 367.18.
(25) Minor items of property means
the associated parts or items of which
retirement units are composed.
(26) Natural gas company means a
person engaged in the transportation of
natural gas in interstate commerce or
the sale of such gas in interstate
commerce for resale.
(27) Net salvage value means the
salvage value of property retired less the
cost of removal.
(28) Nominally issued, as applied to
securities issued or assumed by the
service company, means 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
fund of the service company, but which
have not been sold, or issued direct to
trustees of sinking funds in accordance
with contractual requirements.
(29) Nominally outstanding, as
applied to securities issued or assumed
by the service company, means those
which, after being actually issued, have
been reacquired by or for the service
company under circumstances which
require them to be considered as held
alive and not retired, provided,
however, that securities held by trustees
must be considered as actually
outstanding.
(30) Non-associate companies means
a person, partnership, organization,
government body or company which is
not a member of the holding company
system.
(31) Non-utility company means a
company that is not a utility company.
(32) Person means an individual or
company.
(33) Premium, as applied to securities
issued or assumed by the service
company, means 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.
(34) Public utility means any person
who owns or operates facilities used for
transmission of electric energy in
interstate commerce or sales of electric
energy at wholesale in interstate
commerce.
(35) Public-utility company means an
electric utility company or gas utility
company.
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(36) Replacing or replacement, when
not otherwise indicated in the context,
means the construction or installation of
service property in place of property
retired, together with the removal of the
property retired.
(37) Research, development, and
demonstration (RD&D) means
expenditures incurred by a service
company, for the service company or on
behalf of others, either directly or
through another person or organization
(such as 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. When
conducted on behalf of an associate or
non-associate utility company such
research, development, and
demonstration costs should be
reasonably related to the existing or
future business of such company. The
term includes, but is not limited to: all
the costs incidental to the 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 or
substitute or synthetic gas supplies
(alternate fuel sources, for example, an
experimental coal gasification plant or
an experimental plant synthetically
producing gas from liquid
hydrocarbons); 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 or pipeline gas 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; consumer surveys,
advertising, promotions, or items of a
like nature.
(38) Retained earnings means the
accumulated net income of the service
company less distribution to
stockholders and transfers to other
capital accounts.
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(39) Retirement units means those
items of property which, when retired,
with or without replacement, are
accounted for by crediting the book cost
of the retirement units to the property
account in which it is included.
(40) Salvage value means 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 recoverable is chargeable to
materials and supplies, or other
appropriate account.
(41) Service means any managerial,
financial, legal, engineering, purchasing,
marketing, auditing, statistical,
advertising, publicity, tax, research, or
any other service (including supervision
or negotiation of construction or of
sales), information or data, which is
sold or furnished for a charge.
(42) Service company means any
associate company within a holding
company system organized specifically
for the purpose of providing non-power
goods or services or the sale of goods or
construction work to any public utility
in the same holding company system.
(43) Service cost means the total of
direct and indirect costs incurred to
provide a service to an associate or nonassociate company which are properly
charged to expense by the service
company.
(44) Service life means the time
between the date property is placed in
service, or property is leased to others,
and the date of its retirement. If
depreciation is accounted for on a
production basis rather than on a time
basis, then service life should be
measured in terms of the appropriate
unit of production.
(45) Service value means the
difference between the cost and net
salvage value of service property.
(46) State commission means any
commission, board, agency, or officer,
by whatever name designated, of a State,
municipality, or other political
subdivision of a State that, under the
laws of such State, has jurisdiction to
regulate public-utility companies.
(47) Uniform System of Accounts
means the Uniform System of Accounts
for Centralized Service Companies
prescribed in this part, as amended from
time to time.
(48) Utility company means a publicutility company or natural gas company
whose rates are regulated by the
Commission, state commission or other
similar regulatory body.
(49) Work order system means a
system for the accumulation of service
company cost on a job, project, or
functional basis. It includes schedules
and worksheets used to account for
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charges billed to single and groups of
associate and non-associate companies.
Subpart B—General Instructions
§ 367.2 Companies for which this system
of accounts is prescribed.
(a) This Uniform System of Accounts
applies to any centralized service
company operating, or organized
specifically to operate, within a holding
company system for the purpose of
providing non-power services to any
public utility in the same holding
company system. A centralized service
company is not a special-purpose
company (e.g., a fuel supply company or
a construction company), but rather is a
service company that provides services
such as administrative, managerial,
financial, accounting, recordkeeping,
legal or engineering services, which are
sold, furnished, or otherwise provided
(typically for a charge) to other
companies in the same holding
company system. To the extent that the
term service company is used in this
Uniform System of Accounts, it applies
only to centralized service companies.
(b) This Uniform System of Accounts
is not applicable to:
(1) Service companies that are
specifically organized as a specialpurpose company such as a fuel supply
company or a construction company.
(2) Electric or gas utility companies.
(3) Companies primarily engaged:
(i) In the production of goods,
including exploration and development
of fuel resources,
(ii) In the provision of water,
telephone, or similar services, the sale
of which is normally subject to public
rate regulation,
(iii) In the provision of transportation,
whether or not regulated, or
(iv) In the ownership of property,
including leased property and fuel
reserves, for the use of associate
companies.
(4) A service company that provides
services exclusively to a local gas
distribution company.
§ 367.3
Records.
(a) Each service company must keep
its books of account, and all other
books, records, and memoranda that
support the entries in the books of
account, so as to be able to furnish full
information on any item included in
any account. Each entry must be
supported by sufficient detailed
information that will permit ready
identification, analysis, and verification
of all facts relevant and related to the
records.
(b) The books and records referred to
in this part include not only accounting
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records in a limited technical sense, but
all other records, such as minutes books,
stock books, reports, correspondence,
and memoranda, that may be useful in
developing the history of or facts
regarding any transaction.
(c) No service company may destroy
any books or records unless the
destruction is permitted by the rules
and regulations of the Commission.
(d) In addition to prescribed accounts,
clearing accounts, temporary or
experimental accounts, and subaccounts
of any accounts may be kept, provided
the integrity of the prescribed accounts
is not impaired.
(e) The arrangement or sequence of
the accounts prescribed in this part
must not be controlling as to the
arrangement or sequence in report forms
that may be prescribed by the
Commission.
sroberts on PROD1PC70 with PROPOSALS
§ 367.4
Numbering system.
(a) The account numbering plan used
in this part consists of a system of threedigit whole numbers as follows:
(1) 100–199, Assets and other debits.
(2) 200–299, Liabilities and other
credits.
(3) 300–399, Property accounts.
(4) 400–432 and 434–435, Income
accounts.
(5) 433, 436 and 439, Retained
earnings accounts.
(6) 457–459, Revenue accounts.
(7) 500–599, Electric operating
expenses.
(8) 800–894, Gas operating expenses.
(9) 900–949, Customer accounts,
customer service and informational,
sales, and general and administrative
expenses.
(b) The numbers prefixed to account
titles are to be considered as parts of the
titles. Each service company, however,
may adopt for its own purposes a
different system of account numbers
(See also General Instructions in
§ 367.3(d)) provided that the numbers
prescribed in this part must appear in
the descriptive headings of the ledger
accounts and in the various sources of
original entry; however, if a service
company uses a different system of
account numbers and it is not
practicable to show the prescribed
account numbers in the various sources
of original entry, the reference to the
prescribed account numbers may be
omitted from the various sources of
original entry. Each service company
using different account numbers for its
own purposes must keep readily
available a list of the account numbers
that it uses and a reconciliation of those
account numbers with the account
numbers provided in this part. It is
intended that the service company’s
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records must be kept so 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
the records at the end of each
accounting period according to the
prescribed accounts.
§ 367.5
Accounting period.
Each service company must keep its
books on a monthly basis so that for
each month all transactions applicable
to the account, as nearly as may be
ascertained, must be entered in the
books of the service company. Amounts
applicable or assignable to a single or
group of associate and non-associate
companies must be segregated monthly.
Each service company must close its
books at the end of each calendar year
unless otherwise authorized by the
Commission.
§ 367.6
Submittal of questions.
To maintain uniformity of accounting,
service companies must submit
questions of doubtful interpretation to
the Commission for consideration and
decision.
§ 367.7
Item list.
Lists of items appearing in the texts of
the accounts or elsewhere in this part
are for the purpose of indicating clearly
the application of the prescribed
accounting. The lists are intended to be
representative, but not exhaustive. 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. The
proper entry in each instance must be
determined by the texts of the accounts.
§ 367.8
Those items related to the effects of
events and transactions that have
occurred during the current period and
that are of an unusual nature and
infrequent occurrence must be
considered extraordinary items.
Accordingly, there will be events and
transactions of significant effect that are
abnormal and significantly different
from the ordinary and typical activities
of the service company, and that would
not reasonably be expected to recur in
the foreseeable future. In determining
significance, items must be considered
individually and not in the aggregate.
However, the effects of a series of
related transactions arising from a single
specific and identifiable event or plan of
action should be considered in the
aggregate. For an item to be recognized
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as extraordinary, Commission approval
must be obtained. (See Accounts 434
and 435 in §§ 367.4340 and 367.4350.)
§ 367.9
Prior period items.
(a) Items of profit and loss related to
the following must be accounted for as
prior period adjustments and excluded
from the determination of net income
for the current year:
(1) Correction of an error in the
financial statements of a prior year.
(2) Adjustments that result from
realization of income tax benefits of preacquisition operating loss carry
forwards of purchased subsidiaries.
(b) All other items of profit and loss
recognized during the year must be
included in the determination of net
income for that year.
§ 367.10
Unaudited items.
Whenever a financial statement is
required by the Commission, if it is
known that a transaction has occurred
that affects the accounts but the amount
involved in the transaction and its effect
upon the accounts cannot be
determined with absolute accuracy, the
amount must be estimated and the
estimated amount included in the
proper accounts. The service company
is not required to anticipate minor items
that would not appreciably affect the
accounts.
§ 367.11 Distribution of pay and expenses
of employees.
The charges to property, operating
expense and other accounts for services
and expenses of employees engaged in
activities chargeable to various
accounts, such as construction,
maintenance, and operations, must be
based upon the actual time engaged in
the respective classes of work, or an
appropriate allocation method.
§ 367.12
Extraordinary items.
28477
Payroll distribution.
Underlying accounting data must be
maintained so that the distribution of
the cost of labor charged direct to the
various accounts will be readily
available. The underlying data must
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, operating functions.
§ 367.13
basis.
Accounting to be on accrual
(a) The service company is required to
keep its accounts on the accrual basis.
This requires the inclusion in its
accounts of all known transactions of
appreciable amount that affect the
accounts. If bills covering the
transactions have not been received or
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rendered, the amounts must be
estimated and appropriate adjustments
made when the bills are received. When
the amount is ascertained, the necessary
adjustments must be made through the
accounts in which the estimate was
recorded. If it is determined during the
interval that a material adjustment will
be required, the estimate must be
adjusted through the current accounts.
The service company is not required to
anticipate minor items which would not
appreciably affect these accounts.
(b) When payments are made in
advance for items such as insurance,
rents, taxes or interest, the amount
applicable to future periods must be
charged to account 165, Prepayments
(§ 367.1650), and spread over the
periods to which they are applicable by
credits to account 165 (§ 367.1650), and
charges to the accounts appropriate for
the expenditure.
§ 367.14 Transactions with associate
companies.
Each service company must keep its
accounts and records so as to be able to
furnish accurately and expeditiously
statements of all transactions with
associate companies. The statements
may be required to show the general
nature of the transactions, the amounts
involved in the transactions and the
amounts included in each account
prescribed in this part with respect to
such transactions. Transactions with
associate companies must be recorded
in the appropriate accounts for
transactions of the same nature. Nothing
contained in this part, however, must be
construed as restraining the service
company from subdividing accounts for
the purpose of recording separately
transactions with associate companies.
sroberts on PROD1PC70 with PROPOSALS
§ 367.15
Contingent assets and liabilities.
Contingent assets represent a possible
source of value to the service company
contingent upon the fulfillment of
conditions regarded as uncertain.
Contingent liabilities include items that,
under certain conditions, may become
obligations of the service company but
that are neither direct nor assumed
liabilities at the date of the balance
sheet. The service company must be
prepared to give a complete statement of
significant contingent assets and
liabilities (including cumulative
dividends on preference stock) in its
annual report and at such other times as
may be requested by the Commission.
§ 367.16 Long-term debt: Premium,
discount and expense, and gain or loss on
reacquisition.
(a) A separate premium, discount and
expense account must be maintained for
each class and series of long-term debt
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(including receivers’ certificates) issued
or assumed by the service company. The
premium must be recorded in account
225, Unamortized premium on longterm debt (§ 367.2250), the discount
must be recorded in account 226,
Unamortized discount on long-term
debt—Debit (§ 367.2260), and the
expense of issuance must be recorded in
account 181, Unamortized debt expense
(§ 367.1810). The premium, discount
and expense must be amortized over the
life of the respective issues under a plan
that will distribute the amounts
equitably over the life of the securities.
The amortization must be on a monthly
basis, and the amounts relating to
discounts and expenses must be charged
to account 428, Amortization of debt
discount and expense (§ 367.4280). The
amounts relating to premiums must be
credited to account 429, Amortization of
premium on debt—Credit (§ 367.4290).
(b) When long-term debt is reacquired
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 must be
recognized currently in income and
recorded in account 421, Miscellaneous
income or loss (§ 367.4210), or account
426.5, Other deductions (§ 367.4265).
§ 367.17 Comprehensive inter-period
income tax allocation.
(a) 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. In general,
comprehensive inter-period 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, as further qualified in
this section.
(b) Once comprehensive inter-period
tax allocation has been initiated, either
in whole or in part, it must be practiced
on a consistent basis and must not be
changed or discontinued without prior
Commission approval.
(c) Tax effects deferred currently will
be recorded as deferred debits or
deferred credits in accounts 190,
Accumulated deferred income taxes
(§ 367.1900), 282, Accumulated deferred
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income taxes—Other property
(§ 367.2820), and 283, Accumulated
deferred income taxes—Other
(§ 367.2830), as appropriate. The
resulting amounts recorded in these
accounts must be disposed of as
prescribed in this system of accounts or
as otherwise authorized by the
Commission.
§ 367.18
Criteria for classifying leases.
(a) If, at its inception, a lease meets
one or more of the following criteria, the
lease must be classified as a capital
lease. Otherwise, it must be classified as
an operating lease.
(1) The lease transfers ownership of
the property to the lessee by the end of
the lease term.
(2) The lease contains a bargain
purchase option.
(3) 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 must not be used
for purposes of classifying the lease.
(4) 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 related profit, equals or exceeds 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 the
lessor. 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 must
not be used for purposes of classifying
the lease. The lessee must compute the
present value of the minimum lease
payments using its incremental
borrowing rate, unless:
(i) It is practicable for the company to
learn the implicit rate computed by the
lessor, and
(ii) The implicit rate computed by the
lessor is less than the lessee’s
incremental borrowing rate.
(iii) If both of those conditions are
met, the lessee must use the implicit
rate.
(b) If, at any time, the lessee and
lessor agree to change the provisions of
the lease, other than by renewing the
lease would have resulted in a different
classification of the lease under the
criteria in paragraph (a) of this section
had the changed terms been in effect at
the inception of the lease, the revised
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agreement must be considered as a new
agreement over its term, and the criteria
in paragraph (a) of this section must be
applied for purposes of classifying the
new lease. Likewise, any action that
extends the lease beyond 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, must be considered as a new
agreement and must be classified
according to the criteria in paragraph (a)
of this section. 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) must not give rise to a new
classification of a lease for accounting
purposes.
sroberts on PROD1PC70 with PROPOSALS
§ 367.19
Accounting for leases.
(a) All leases must be classified as
either capital or operating leases.
(b) The service company must record
a capital lease as an asset in account
101.1, Property under capital leases
(§ 367.1011) and an obligation in
account 227, Obligations under capital
leases—Non-current (§ 367.2270), or
account 243, Obligations under capital
leases—Current (§ 367.2430), 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
related profit. However, if the
determined amount exceeds the fair
value of the leased property at the
inception of the lease, the amount
recorded as the asset and obligation
must be the fair value.
(c) The service company, as a lessee,
must recognize an asset retirement
obligation (See General Instructions in
§ 367.22) arising from the property
under a capital lease unless the
obligation is recorded as an asset and
liability under a capital lease. The
service company must record the asset
retirement cost by debiting account
101.1, Property under capital leases
(§ 367.1011), and crediting the liability
for the asset retirement obligation in
account 230, Asset retirement
obligations (§ 367.2300). Asset
retirement costs recorded in account
101.1 (§ 367.1011) must be amortized by
charging rent expense (See Operating
Expense Instructions in § 367.82) or
account 421, Miscellaneous income or
loss (§ 367.4210), as appropriate, and
crediting a separate subaccount of the
account in which the asset retirement
costs are recorded. Charges for the
periodic accretion of the liability in
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account 230, Asset retirement
obligations (§ 367.2300), must be
recorded by a charge to account 411.10,
Accretion expense, for service company
property (§ 367.4111), and account 421,
Miscellaneous income or loss, for nonservice company property (§ 367.4210)
and a credit to account 230, Asset
retirement obligations (§ 367.2300).
(d) Rental payments on all leases must
be charged to rent expense, fuel
expense, construction work in progress,
or other appropriate accounts as they
become payable.
(e) For a capital lease, for each period
during the lease term, the amounts
recorded for the asset and obligation
must 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 allocated between interest expense
and a reduction of the obligation so as
to produce a constant periodic rate of
interest on the remaining balance.
§ 367.20
Depreciation accounting.
(a) Method. Service companies must
use a method of depreciation that
allocates in a systematic and rational
manner the service value of depreciable
property over the service life of the
property.
(b) Service lives. Estimated useful
service lives of depreciable property
must be supported by engineering,
economic, or other depreciation studies.
(c) Rate. Service companies must use
percentage rates of depreciation that are
based on a method of depreciation that
allocates the service value of
depreciable property over the service
life of the property. Where composite
depreciation rates are used, they must
be based on the weighted average
estimated useful service lives of the
depreciable property comprising the
composite group.
§ 367.22 Accounting for asset retirement
obligations.
(a) An asset retirement obligation
represents a liability for the legal
obligation associated with the
retirement of a tangible, long-lived asset
that a service company is required to
settle as a result of an existing or
enacted law, statute, ordinance, or
written or oral contract, or by legal
construction of a contract under the
doctrine of promissory estoppel. An
asset retirement cost represents the
amount capitalized when the liability is
recognized for the long-lived asset that
gives rise to the legal obligation. The
amount recognized for the liability and
an associated asset retirement cost must
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be stated at the fair value of the asset
retirement obligation in the period in
which the obligation is incurred.
(b) The service company must
initially record a liability for an asset
retirement obligation in account 230,
Asset retirement obligations
(§ 367.2300), and charge the associated
asset retirement costs to service
company property (including account
101.1 in § 367.1011) related to the
property that gives rise to the legal
obligation. The asset retirement cost
must be depreciated over the useful life
of the related asset that gives rise to the
obligations. For periods subsequent to
the initial recording of the asset
retirement obligation, a service
company must recognize the period to
period changes of the asset retirement
obligation that result from the passage of
time due to the accretion of the liability
and any subsequent measurement
changes to the initial liability for the
legal obligation recorded in account
230, Asset retirement obligations
(§ 367.2300), as follows:
(1) The service company must record
the accretion of the liability by debiting
account 411.10, Accretion expense
(§ 367.4116); and
(2) The service company must
recognize any subsequent measurement
changes of the liability initially
recorded in account 230, Asset
retirement obligations (§ 367.2300), for
each specific asset retirement obligation
as an adjustment of that liability in
account 230 with the corresponding
adjustment to service company
property. The service company must on
a timely basis monitor any measurement
changes of the asset retirement
obligations.
(c) Gains or losses resulting from the
settlement of asset retirement
obligations associated with service
company property resulting from the
difference between the amount of the
liability for the asset retirement
obligation included in account 230,
Asset retirement
obligations(§ 367.2300), and the actual
amount paid to settle the obligation
shall be accounted for as follows:
(1) Gains shall be credited to account
421, Miscellaneous income or loss
(§ 367.4210), and;
(2) Losses shall be charged to account
426.5, Other deductions (§ 367.4265).
(d) Separate subsidiary records must
be maintained for each asset retirement
obligation showing the initial liability
and associated asset retirement cost, any
incremental amounts of the liability
incurred in subsequent reporting
periods for additional layers of the
original liability and related asset
retirement cost, the accretion of the
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liability, the subsequent measurement
changes to the asset retirement
obligation, the depreciation and
amortization of the asset retirement
costs and related accumulated
depreciation, and the settlement date
and actual amount paid to settle the
obligation. For purposes of analysis, a
service company must maintain
supporting documentation so as to be
able to furnish accurately and
expeditiously with respect to each asset
retirement obligation the full details of
the identity and nature of the legal
obligation, the year incurred, the
identity of the plant giving rise to the
obligation, the full particulars relating to
each component and supporting
computations related to the
measurement of the asset retirement
obligation.
§ 367.23 Transactions with non-associate
companies.
When a service or construction is
performed for non-associate companies
at an amount other than cost, the
amount of revenues in excess or
deficiency of the cost on servicing the
non-associate companies must be
charged to account 458.4, Excess or
deficiency on servicing non-associate
utility companies (§ 367.4584), or
account 459.4, Excess or deficiency on
servicing non-associate non-utility
companies(§ 367.4594), as appropriate.
A deficiency incurred in a project
deemed beneficial to the associate
companies may be charged to associate
companies subject to disallowance by a
State Commission or Federal
Commission having jurisdiction over
the rates or services of the associate
companies. To the extent not charged,
or if disallowed, the deficiency will be
charged to account 458.4 (§ 367.4584) or
account 459.4 (§ 367.4594), as
appropriate. In computing charges to
associate companies for any calendar
year, the sum of the closing balances in
these accounts, if a credit, must be
deducted from amounts reimbursable by
associate companies as compensation
for use of capital invested in the service
company.
sroberts on PROD1PC70 with PROPOSALS
§ 367.24 Construction and service
contracts for other companies.
(a) Specific accounts have not been
provided to classify expenditures made
in the performance of construction or
service contracts, under which the
service company undertakes projects to
construct physical property for associate
or non-associate companies. The service
company must keep records pursuant to
its work order system indicating the cost
of each contract or project, the amount
of service costs allocated to the
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contracts, and the additional
classification of expenditures relating to
projects that will meet the accounting
requirements of the company for which
the work is performed.
(b) Service costs allocated to
construction must include the proper
proportion of salaries, expense of
officers and employees, pay of
employees on the service company’s
regular staff specifically assigned to
construction work, and other expenses
of maintaining the service company’s
organization and equipment. Cost of
materials, construction payrolls, outside
services, and other expenses directly
attributable to construction work must
be excluded from the accounting system
of the service company and charged
directly by the vendor or supplier to the
construction project.
(c) Service costs allocated to
centralized procurement activities must
include only the cost of the support
services performed by the service
company in connection with the
procurement of goods for associate
companies. Cost of goods procured must
be excluded from the accounting system
of the service company and charged
directly by the vendor or supplier to the
associate company concerned. The
service company must keep records
indicating the cost of goods, if any, that
it procures for each associate company
and the amount of service costs
allocated thereto. These records must be
maintained to meet the Commission’s
accounting requirements for electric and
gas companies.
§ 367.25
Determination of service cost.
A service must be deemed at cost and
fair allocation of costs requires an
accurate accounting for the elements
that makes up the aggregate expense of
conducting the business of the service
company. In the accounts prescribed in
this part, the total amounts included in
the expense accounts during any period
plus the amount that appropriately may
be added as compensation for the use of
capital, if paid, constitute cost during
that period.
§ 367.26
Departmental classification.
Salaries and wages and all other costs
must be classified by departmental or
other functional category in accordance
with the departmental organization of
the service company to provide a
readily available basis for analysis.
§ 367.27
Billing procedures.
All invoices for services rendered
must be submitted monthly with
sufficient information and in sufficient
detail to permit such company, where
applicable, to identify and classify the
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charge in terms of the system of
accounts prescribed by the regulatory
authorities to which it is subject. Each
month a statement must be rendered to
each associate and non-associate utility
company to whom services were
provided containing a summary of the
accounts by work order and showing the
charges, classified as direct cost,
indirect cost, and compensation for use
of capital.
§ 367.28
Methods of allocation.
Indirect costs and compensation for
use of capital must be allocated to work
orders in accordance with the service
company’s applicable and currently
effective methods of allocation. Both
direct and allocated indirect costs of
work orders must be assigned among
those companies in the same manner.
Each work order must identify the
methods of allocation and the accounts
to be charged. Companies must be
notified in writing of any change in the
methods of allocation.
§ 367.29
Compensation for use of capital.
A servicing transaction is deemed to
be performed at no more than cost if the
price of the service does not exceed a
fair and equitable allocation of expenses
plus reasonable compensation for
necessary capital procured through the
issuance of capital stock. Interest on
borrowed capital and compensation for
the use of capital must only represent a
reasonable return on the amount of
capital reasonably necessary for the
performance of services or construction
work for, or the sale of goods to,
associate companies. The compensation
may be estimated and must be
computed monthly. The amount of
compensation must be stated separately
in each billing to the associate
companies. An annual statement to
support the amount of compensation for
use of capital billed for the previous 12
months and how it was calculated must
be supplied to each associate company
at the end of the calendar year.
§ 367.30 Work order system for associate
companies.
Service companies must maintain a
detailed classification of service costs,
that permits costs to be identified with
the functional processes of the associate
companies served. To permit the
classification, each service company
must maintain a work order system for
accumulating reimbursable costs and
charges to the associate companies
served, and maintain time records for all
service company employees in order to
support the accounting allocation of all
expenses assignable to the types of
services performed and chargeable to
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the associate companies served. Service
company employee records must permit
a ready identification of the hours
worked, account numbers charged,
department work order number and
other code designations that facilitate
proper classification.
Subpart C—Service Company Property
Instructions
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§ 367.50 Service company property to be
recorded at cost.
(a) All amounts included in the
accounts for service company property
must be stated at the cost incurred by
the service company, except for
property acquired by lease which
qualifies as capital lease property under
General Instructions in § 367.18, Criteria
for classifying leases, and is recorded in
Account 101.1, Property under capital
leases (§ 367.1011).
(b) When the consideration given for
property is other than cash, the value of
the consideration must be determined
on a cash basis (See, however,
Definitions § 367.1(a)(10)). In the entry
recording the transaction, the actual
consideration must be described with
sufficient particularity to identify it. The
service company must be prepared to
furnish the Commission the particulars
of its determination of the cash value of
the consideration, if other than cash.
(c) When property is purchased under
a plan involving deferred payments, no
charge must be made to the service
company property accounts for interest,
insurance, or other expenditures
occasioned solely by such form of
payment.
(d) The service company property
accounts must not include the cost or
other value of service company property
contributed to the company.
Contributions in the form of money or
its equivalent toward the construction of
property must be credited to accounts
charged with the cost of such
construction. Property constructed from
contributions of cash or its equivalent
must be shown as a reduction to gross
property constructed when assembling
cost data in work orders for posting to
property ledgers of accounts. The
accumulated gross costs of property
accumulated in the work order must be
recorded as a debit in the plant ledger
of accounts along with the related
amount of contributions concurrently
recorded as a credit.
§ 367.51
Components of construction.
(a) For service companies, the cost of
construction properly included in the
service company property accounts
must include, where applicable, the
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direct and overhead costs as listed and
defined as follows:
(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
the work.
(2) Labor includes the pay and
expenses of employees of the service
company 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 that are
distributed to construction through
clearing accounts nor the pay and
expenses included in other items in this
section.
(3)(i) 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 service company’s
shop. In determining the cost of
materials and supplies used for
construction, proper allowance must 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.
(ii) 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,
must not be charged to service company
property accounts unless the correctness
of the accounting is verified by current
inventories. The cost must be charged to
the appropriate operating expense or
clearing accounts, according to the use
of the items, or, if the items are
consumed directly in construction
work, the cost must 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 service company’s own
transportation equipment. (See
paragraph (a)(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
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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 paragraph (a)(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
associated net book cost, less the
appraised or salvage value at time of
release from the job, must be included
in the cost of construction.
(6) Shop service includes the
proportion of the expense of the service
company’s shop department assignable
to construction work except that the
cost of fabricated materials from the
service company’s shop must be
included in materials and supplies.
(7) Protection includes the cost of
protecting the service company’s
property from fire or other casualties
and the cost of preventing damages to
others, or to the property of others,
including payments for discovery or
extinguishment of fires, cost of
apprehending and prosecuting
incendiaries, related witness fees,
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 the injuries and damages.
Insurance recovered or recoverable on
account of compensation paid for
injuries to persons incident to
construction must 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 must 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.
(10) Rents include amounts paid for
the use of construction quarters and
office space occupied by construction
forces and amounts properly includible
in construction costs for the facilities
jointly used.
(11) Engineering and supervision
includes the portion of the pay and
expenses of engineers, surveyors,
draftsmen, inspectors, superintendents
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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 service
company 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 to or death 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 paragraph (a)(2) of
this section.
(15) Law expenditures includes the
general law expenditures incurred in
connection with construction and the
directly related court and legal costs,
other than law expenses included in
protection in paragraph (a)(7) of this
section, and in injuries and damages in
paragraph (a)(8) of this section.
(16) Taxes include 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 the Commission,
allowances computed in accordance
with the formula prescribed in
paragraph (i) of this section. No
allowance for funds used during
construction charges must 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 must be:
(A) Ai=s(S/W)+d(D/D+P+C)(1–S/W)
(B) Ae=[1–S/W][p(P/D+P+C)+c(C/
D+P+C)]
(C) Ai=Gross allowance for borrowed
funds used during construction rate.
(D) Ae=Allowance for other funds
used during construction rate.
(E) S=Average short-term debt.
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(F) s=Short-term debt interest rate.
(G) D=Long-term debt.
(H) d=Long-term debt interest rate.
(I) P=Preferred stock.
(J) p=Preferred stock cost rate.
(K) C=Common equity.
(L) c=Common equity cost rate.
(M) W= Average balance in
construction work in progress, less asset
retirement costs (See General
Instructions in § 367.22) related to
property under construction.
(ii) The rates must be determined
annually. The balances for long-term
debt, preferred stock and common
equity must be the actual book balances
as of the end of the prior year. The cost
rates for long-term debt and preferred
stock must be the weighted average cost
determined in the manner indicated in
§ 35.13 of this chapter. The cost rate for
common equity must be the rate granted
common equity in the last rate
proceeding before the ratemaking body
of any associate public utility company
for which services were provided during
the year. If this cost rate is not available,
the average rate actually earned during
the preceding three years must be used.
The short-term debt balances and
related cost and the average balance for
construction work in progress must be
estimated for the current year with
appropriate adjustments as actual data
becomes available.
(iii) When a part only of a property 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, must be treated as service
company property and allowance for
funds used during the construction as a
charge to construction must cease.
Allowance for funds used during
construction on that part of the cost of
the property that is incomplete may be
continued as a charge to construction
until such time as it is placed in
operation or is ready for service, except
as limited in paragraph (a)(17) of this
section.
(18) Earnings and expenses during
construction. The earnings and
expenses during construction must
constitute a component of construction
costs.
(19) Training costs. When it is
necessary that employees be trained to
operate or maintain property that is
being constructed and the property is
not conventional in nature, or is new to
the company’s operations, these costs
may be capitalized as a component of
construction cost. Once property is
placed in service, the capitalization of
training costs must cease and
subsequent training costs must be
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expensed. (See Operating Expense
Instructions in § 367.83.)
(20) Studies include the costs of
studies such as safety or environmental
studies mandated by regulatory bodies
relative to property under construction.
Studies relative to facilities in service
must be charged to account 183,
Preliminary Survey and Investigation
Charges (§ 367.1830).
(21) Asset retirement costs. The costs
recognized as a result of asset retirement
obligations incurred during the
construction and testing of service
company property must constitute a
component of construction costs.
§ 367.52
Overhead construction costs.
(a) All overhead construction costs,
such as engineering, supervision,
general office salaries and expenses,
construction engineering and
supervision by others than the service
company, law expenses, insurance,
injuries and damages, relief and
pensions, taxes and interest, must be
charged to particular jobs or units on the
basis of the amounts of the reasonably
applicable overheads.
(b) As far as practicable, the
determination of payroll charges
includible in construction overheads
must be based on the related time card
distributions. Where this procedure is
impractical, special studies must be
made periodically of the time of
supervisory employees devoted to
construction activities to the end that
only the overhead costs that have a
definite relation to construction must be
capitalized.
(c) The records supporting the entries
for overhead construction costs must be
kept so as to show the total amount of
each overhead for each year, the nature
and amount of each overhead
expenditure charged to each
construction work order and to each
property account, and the bases of
distribution of such costs.
§ 367.53 Service company property
purchased or sold.
(a) When service company property is
acquired by purchase, merger,
consolidation, liquidation, or otherwise,
after the effective date of this system of
accounts, the costs of acquisition,
including related incidental expenses,
must be charged to the appropriate
service company property accounts and
account 107, Construction work in
progress (§ 367.1070), as appropriate.
(b) If property acquired is in a
physical condition so that it is necessary
to rehabilitate it substantially in order to
bring the property up to the standards
of the service company, the cost of the
work, except replacements, must be
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accounted for as a part of the purchase
price of the property.
(c) Unless otherwise authorized by the
Commission, all service company
property acquired from an affiliate
company must be at its book value.
Additionally, if property is acquired
that is in excess of $10 million and has
been previously devoted to public
service at a price above book value, the
service company must file with the
Commission the proposed journal
entries associated with the acquisition
within six months from the date of
acquisition of the property.
(d) When service company property is
sold, conveyed, or transferred to another
by sale, merger, consolidation, or
otherwise, the book cost of the property
sold or transferred to another must be
credited to the appropriate service
company property accounts. The
amounts (estimated, if not known)
carried with respect the accounts for
accumulated provision for depreciation
and amortization must be charged to
those accounts. The difference, if any,
between the net amount of debits and
credits and the consideration received
for the property (less commissions and
other expenses of making the sale) must
be included in account 421.1, Gain on
disposition of property (§ 367.4211), or
account 421.2, Loss on disposition of
property (§ 367.4212).
(e) In connection with the acquisition
of service company property previously
devoted to service company operations
or acquired from an associate company,
the service company must procure, if
possible, all existing records relating to
the property acquired or related
certified copies, and must preserve the
records in conformity with regulations
or practices governing the preservation
of records of its own construction.
sroberts on PROD1PC70 with PROPOSALS
§ 367.54
Expenditures on leased property.
(a) The cost of substantial initial
improvements (including repairs,
rearrangements, additions, and
betterments) made to prepare service
company property leased to be used for
a period of more than one year, and the
cost of subsequent substantial additions,
replacements, or betterments to the
property, must be charged to the service
company property account appropriate
for the class of property leased. If the
service life of the improvements is
terminable by action of the lease, the
cost, less net salvage, of the
improvements must be spread over the
life of the lease by charges to account
404, Amortization of limited-term
service property. However, if the service
life is not terminated by action of the
lease but by depreciation proper, the
cost of the improvements, less net
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salvage, must be accounted for as
depreciable property. The provisions of
this paragraph are applicable to
property leased under either capital
leases or operating leases.
(b) 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
must be charged to the account in which
the rent is included, either directly or by
amortization.
§ 367.55
Land and land rights.
(a) The accounts for land and land
rights must include the cost of land
owned in fee by the service company
and rights. Interests, and privileges held
by the service company 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. 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
property. The costs must be included in
the appropriate property accounts
directly benefited.
(b) Where special assessments for
public improvements provide for
deferred payments, the full amount of
the assessments must be charged to the
appropriate land account and the
unpaid balance must be carried in an
appropriate liability account. Interest on
unpaid balances must be charged to the
appropriate interest account. If any part
of the cost of public improvements is
included in the general tax levy, the
related amount must be charged to the
appropriate tax account.
(c) 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
must be credited to the appropriate
property account to which it is 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 increases in value, the net
profit (after giving effect to the cost of
the natural resources) from the sales of
timber or its products or other natural
resources must be credited to the
appropriate operating income account
when the land has been recorded in
account 101, Service company property
(§ 367.1010), otherwise to account 421,
Miscellaneous income or loss
(§ 367.4210).
(d) Separate entries must be made for
the acquisition, transfer, or retirement of
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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. A record must 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. Entries transferring or
retiring land or land rights must refer to
the original entry recording its
acquisition.
(e) 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,
must be included in account 421.1,
Gains on disposition of property
(§ 367.4211), or account 421.2, Losses
on disposition of property (§ 367.4212),
when the property has been recorded in
account 101, Service company property
(§ 367.1010). Appropriate adjustments
of the accounts must be made with
respect to any structures or
improvements located on the land sold.
(f) The cost of buildings and other
improvements (other than public
improvements) must not be included in
the land accounts. If, at the time of
acquisition of an interest in land the
interest extends to buildings or other
improvements (other than public
improvements) that are then devoted to
operations, the land and improvements
must be separately appraised and the
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 must be charged and the
salvage credited to the account in which
the cost of the land is recorded.
(g) Provisions must be made for
amortizing amounts carried in the
accounts for limited-term interests in
land so as to apportion equitably the
cost of each interest over the life thereof.
(See account 111, Accumulated
provision for amortization of service
company property in § 367.1110, and
account 404, Amortization of limitedterm property in § 367.4040.)
(h) The items of cost to be included
in the accounts for land and land rights
are as follows:
(1) Bulkheads, buried, not requiring
maintenance or replacement.
(2) Cost, first, of acquisition including
mortgages and other liens assumed (but
not the related subsequent interest).
(3) Condemnation proceedings,
including court and counsel costs.
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(4) Consents and abutting damages,
payment for.
(5) Conveyancers’ and notaries’ fees.
(6) Fees, commissions, and salaries to
brokers, agents and others in connection
with the acquisition of the land or land
rights.
(7) Leases, cost of voiding upon
purchase to secure possession of land.
(8) Removing, relocating, or
reconstructing, property of others, such
as buildings, highways, railroads,
bridges, cemeteries, churches, telephone
and power lines, in order to acquire
quiet possession.
(9) Retaining walls unless identified
with structures.
(10) 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.
(11) Surveys in connection with the
acquisition, but not amounts paid for
topographical surveys and maps where
the costs are attributable to structures or
plant equipment erected or to be erected
or installed on the land.
(12) Taxes assumed, accrued to date
of transfer of title.
(13) Title, examining, clearing,
insuring and registering in connection
with the acquisition and defending
against claims relating to the period
prior to the acquisition.
(14) Appraisals prior to closing title.
(15) 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.
(16) Filing satisfaction of mortgage.
(17) Documentary stamps.
(18) Photographs of property at
acquisition.
(19) Fees and expenses incurred in
the acquisition of water rights and
grants.
(20) Cost of fill to extend bulkhead
line over land under water, where
riparian rights are held, that is not
occasioned by the erection of a
structure.
(21) Sidewalks and curbs constructed
by the service company on public
property.
(22) Labor and expenses in
connection with securing rights of way,
where performed by company
employees and company agents.
§ 367.56
Structures and improvements.
(a) The accounts for structures and
improvements must include the cost of
all buildings and facilities to house,
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support, or safeguard property or
persons, including all fixtures
permanently attached to and made a
part of buildings and that cannot be
removed from the buildings and
facilities 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. Also include those costs
incurred in connection with the first
clearing and grading of land and rightsof-way and the damage costs associated
with construction and installation of
property.
(b) The cost of specially-provided
foundations not intended to outlast the
machinery or apparatus for which
provided, and associated costs, such as
angle irons, castings, and other items
installed at the base of an item of
equipment, must be charged to the same
account as the cost of the machinery,
apparatus, or equipment.
(c) Where the structure of a dam also
forms the foundation of the service
company building, the foundation must
be considered a part of the dam.
(d) The cost of disposing of materials
excavated in connection with
construction of structures must be
considered as a part of the cost of that
work, except as follows:
(1) When the material is used for
filling, the cost of loading, hauling, and
dumping must be equitably apportioned
between the work in connection with
which the removal occurs and the work
in connection with which the material
is used.
(2) When the material is sold, the net
amount realized from the sales must 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 must be credited to the land
account in which the site is carried.
(e) Lighting or other fixtures
temporarily attached to buildings for
purposes of display or demonstration
must not be included in the cost of the
building but in the appropriate
equipment account.
(f) This account must include the
following items:
(1) Architects’ plans and
specifications including supervision.
(2) Ash pits (when located within the
building).
(3) Athletic field structures and
improvements.
(4) Boilers, furnaces, piping, wiring,
fixtures, and machinery for heating,
lighting, signaling, ventilating, and airconditioning systems, plumbing,
vacuum cleaning systems, incinerator
and smoke pipe, flues and similar items.
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(5) Bulkheads, including dredging,
riprap fill, piling, decking, concrete,
fenders, and similar items when
exposed and subject to maintenance and
replacement.
(6) Chimneys.
(7) Coal bins and bunkers.
(8) Commissions and fees to brokers,
agents, architects, and others.
(9) Conduit (not to be removed) with
its contents.
(10) Damages to abutting property
during construction.
(11) Docks.
(12) Door checks and door stops.
(13) Drainage and sewerage systems.
(14) Elevators, cranes, hoists, and the
machinery for operating them.
(15) Excavation, including shoring,
bracing, bridging, refill and disposal of
excess excavated material, cofferdams
around foundation, pumping water from
cofferdams during construction, and test
borings.
(16) Fences and fence curbs (not
including protective fences isolating
items of equipment, which must be
charged to the appropriate equipment
account).
(17) Fire protection systems when
forming a part of a structure.
(18) Flagpole.
(19) Floor covering (permanently
attached).
(20) Foundations and piers for
machinery, constructed as a permanent
part of a building or other item listed in
this paragraph.
(21) Grading and clearing when
directly occasioned by the building of a
structure.
(22) Intrasite communication system,
poles, pole fixtures, wires, and cables.
(23) Landscaping, lawns, shrubbery
and similar items.
(24) Leases, voiding upon purchase to
secure possession of structures.
(25) Leased property, expenditures
on.
(26) Lighting fixtures and outside
lighting system.
(27) Mail chutes when part of a
building.
(28) Marquee, permanently attached
to building.
(29) Painting, first cost.
(30) Permanent paving, concrete,
brick, flagstone, asphalt, within the
property lines.
(31) Partitions, including movable.
(32) Permits and privileges.
(33) Platforms, railings, and gratings
when constructed as a part of a
structure.
(34) Power boards for services to a
building.
(35) Refrigerating systems for general
use.
(36) Retaining walls except when
identified with land.
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(37) Roadways, railroads, bridges, and
trestles intrasite except railroads
provided for in equipment accounts.
(38) Roofs.
(39) Scales, connected to and forming
a part of a structure.
(40) Screens.
(41) Sewer systems, for general use.
(42) Sidewalks, culverts, curbs and
streets constructed by the service
company on its property.
(43) Sprinkling systems.
(44) Sump pumps and pits.
(45) Stacks—brick, steel, or concrete,
when set on foundation forming part of
general foundation and steelwork of a
building.
(46) Steel inspection during
construction.
(47) Storage facilities constituting a
part of a building.
(48) Storm doors and windows.
(49) Subways, areaways, and tunnels,
directly connected to and forming part
of a structure.
(50) Tanks, constructed as part of a
building or as a distinct structural unit.
(51) Temporary heating during
construction (net cost).
(52) Temporary water connection
during construction (net cost).
(53) Temporary shanties and other
facilities used during construction (net
cost).
(54) Topographical maps.
(55) Tunnels, intake and discharge,
when constructed as part of a structure,
including sluice gates, and those
constructed to house mains.
(56) Vaults constructed as part of a
building.
(57) Watchmen’s sheds and clock
systems (net cost when used during
construction only).
(58) Water basins or reservoirs.
(59) Water front improvements.
(60) Water meters and supply system
for a building or for general company
purposes.
(61) Water supply piping, hydrants
and wells.
(62) Wharves.
(63) Window shades and ventilators.
(64) Yard drainage system.
(65) Yard lighting system.
(66) Yard surfacing, gravel, concrete,
or oil. (First cost only.)
(g) Structures and Improvements
accounts must be credited with the cost
of structures created to house, support,
or safeguard equipment, 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.
§ 367.57
Equipment.
(a) The cost of equipment chargeable
to the service company property
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accounts, unless otherwise indicated in
the text of an equipment account,
includes the related net purchase price,
sales taxes, investigation and inspection
expenses necessary to such purchase,
expenses of transportation when borne
by the service company, labor
employed, materials and supplies
consumed, and expenses incurred by
the service company in unloading and
placing the equipment in readiness to
operate. Also include those costs
incurred in connection with the first
clearing and grading of land and rightsof-way and the damage costs associated
with construction and installation of
property.
(b) Exclude from equipment accounts
hand and other portable tools, that are
likely to be lost or stolen or that have
relatively small value (for example,
$500 or less) or short life, unless the
correctness of the related accounting as
service company property is verified by
current inventories. Special tools
acquired and included in the purchase
price of equipment must be included in
the appropriate property account.
Portable drills and similar tool
equipment when used in connection
with the operation and maintenance of
a particular plant or department, such as
production, transmission, distribution,
or similar items, or in stores, must be
charged to the property account
appropriate for their use.
(c) The equipment accounts must
include angle irons and similar items
that are installed at the base of an item
of equipment, but piers and foundations
that are designed to be as permanent as
the buildings that house the equipment,
or that are constructed as a part of the
building and that cannot be removed
without cutting into the walls, ceilings
or floors or without in some way
impairing the building, must be
included in the building accounts.
(d) The cost of efficiency or other tests
made subsequent to the date equipment
becomes available for service must be
charged to the appropriate expense
accounts, except that tests to determine
whether equipment meets the
specifications and requirements as to
efficiency, performance, and similar
items, 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 service
company property account.
§ 367.58 Work order and property record
system required for service company
property.
(a) Each service company must record
all construction and retirements of
service company property by means of
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work orders or job orders. Separate work
orders may be opened for additions to,
and retirements of, service company
property or the retirements may be
included with the construction work
order. All items relating to the
retirements must be kept separate from
those relating to construction and any
maintenance costs involved in the work
likewise must be segregated.
(b) Each service company must keep
its work order system so as to show the
nature of each addition to or retirement
of service company property, the related
total cost, the source or sources of costs,
and the property account or accounts to
which charged or credited. Work orders
covering jobs of short duration may be
cleared monthly.
(c) Each service company must
maintain records in which, for each
property 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.
§ 367.59 Additions and retirements of
property.
(a) For the purpose of avoiding undue
refinement in accounting for additions
to and retirements and replacements of
service company property, all property
will be considered as consisting of
retirement units and minor items of
property. Each company must maintain
a written property units listing for use
in accounting for additions and
retirements of property and apply the
listing consistently.
(b) The addition and retirement of
retirement units must be accounted for
as follows:
(1) When a retirement unit is added,
the related cost must be added to the
appropriate service company property
account.
(2) When a retirement unit is retired,
with or without replacement, the related
book cost must be credited to the
property account in which it is
included, determined in the manner
provided in paragraph (d) of this
section. If the retirement unit is of a
depreciable class, the book cost of the
unit retired and credited to service
company property must be charged to
the accumulated provision for
depreciation applicable to the property.
The cost of removal and the salvage
must be charged or credited, as
appropriate, to the depreciation
account.
(c) The addition and retirement of
minor items of property must be
accounted for as follows:
(1) When a minor item of property
that did not previously exist is added to
service company property, the related
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cost must be accounted for in the same
manner as for the addition of a
retirement unit, as provided in
paragraph (b)(1) of this section, if a
substantial addition results, otherwise
the charge must be to the appropriate
maintenance expense account.
(2) When a minor item of property is
retired and not replaced, the related
book cost must be credited to the
property account in which it is
included; and, in the event the minor
item is a part of depreciable property,
the account for accumulated provision
for depreciation must 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 the unit is retired, no separate
credit to the property account is
required when the minor item is retired.
(3) When a minor item of depreciable
property is replaced independently of
the retirement unit of which it is a part,
the cost of replacement must be charged
to the maintenance account appropriate
for the item. However, 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 must be
charged to the appropriate property
account.
(d) The book cost of service company
property retired must be the amount at
which the property is included in the
property accounts, including all
components of construction costs. The
book cost must be determined from the
service company’s records and, if this
cannot be done, it must be estimated.
Service companies must furnish the
particulars of the estimates to the
Commission, if requested. When it is
impracticable to determine the book
cost of each unit, due to the relatively
large number or related small cost, an
appropriate average book cost of the
units, with due allowance for any
differences in size and character, must
be used as the book cost of the units
retired.
(e) The book cost of land retired must
be credited to the appropriate land
account. If the land is sold, the
difference between the book cost (less
any accumulated provision for related
depreciation or amortization that has
been authorized and provided) and the
sale price of the land (less commissions
and other expenses of making the sale)
must be recorded in accounts 421.1,
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Gain on disposition of property
(§ 367.4211) or 421.2, Loss on
disposition of property (§ 367.4212), as
appropriate.
(f) The book cost less net salvage of
depreciable service company property
retired must be charged in its entirety to
account 108, Accumulated provision for
depreciation of service company
property (§ 367.1080).
(g) The accounting for the retirement
of amounts included in account 303,
Miscellaneous intangible property
(§ 367.3030), and the items of limitedterm interest in land included in the
accounts for land and land rights, must
be as provided for in the text of account
111, Accumulated provision for
amortization of service company
property (§ 367.1110), account 404,
Amortization of limited-term property
(§ 367.4040), and account 405,
Amortization of other property
(§ 367.4050).
Subpart D—Operating Expense
Instructions
§ 367.80
Supervision and engineering.
(a) The supervision and engineering
includible in the operating expense
accounts must consist of the pay and
expenses of superintendents, engineers,
clerks, other employees and consultants
engaged in supervising and directing the
operation and maintenance of each
service company function. Wherever
allocations are necessary in order to
arrive at the amount to be included in
any account, the method and basis of
allocation must be reflected by
underlying records.
(b) This account must include the
following labor items:
(1) Special tests to determine
efficiency of equipment operation.
(2) Preparing or reviewing budgets,
estimates, and drawings relating to
operation or maintenance for
departmental approval.
(3) Preparing instructions for
operations and maintenance activities.
(4) Reviewing and analyzing operating
results.
(5) Establishing organizational setup
of departments and executing related
changes.
(6) Formulating and reviewing
routines of departments and executing
related changes.
(7) General training and instruction of
employees by supervisors whose pay is
chargeable to the training and
instruction. Specific instruction and
training in a particular type of work is
chargeable to the appropriate functional
expense account (See Service Company
Property in § 367.51(a)(19)).
(8) Secretarial work for supervisory
personnel, but not general clerical and
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stenographic work chargeable to other
accounts.
(c) This account must include the
following expense items:
(1) Consultants’ fees and expenses.
(2) Meals, traveling and incidental
expenses.
§ 367.81
Maintenance.
(a) The cost of maintenance
chargeable to the various operating
expense and clearing accounts includes
labor, materials, overheads and other
expenses incurred in maintenance work.
A list of work operations applicable
generally to service company property is
included in paragraph (d) of this
section. Other work operations
applicable to specific classes of property
are listed in functional maintenance
expense accounts.
(b) Materials recovered in connection
with the maintenance of property must
be credited to the same account to
which the maintenance cost was
charged.
(c) Maintenance of property leased
from others must be treated as provided
in operating expense instruction in
§ 367.82.
(d) This account must include the
following items:
(1) Direct field supervision of
maintenance.
(2) Inspecting, testing, and reporting
on condition of property specifically to
determine the need for repairs,
replacements, rearrangements and
changes and inspecting and testing the
adequacy of repairs which have been
made.
(3) Work performed specifically for
the purpose of preventing failure,
restoring serviceability or maintaining
life of property.
(4) Rearranging and changing the
location of property.
(5) Repairing for reuse materials
recovered from property.
(6) Testing for locating and clearing
trouble.
(7) Net cost of installing, maintaining,
and removing temporary facilities to
prevent interruptions in service.
(8) Replacing or adding minor items
of plant which do not constitute a
retirement unit. (See Service Company
Property Instruction in § 367.59.)
§ 367.82
Rents.
(a) The rent expense accounts
provided under the several functional
groups of expense accounts must
include all rents, including taxes paid
by the lessee on leased property, for
property used in the operations of the
service company, except:
(1) Minor amounts paid for occasional
or infrequent use of any property or
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equipment and all amounts paid for use
of equipment that, if owned, would be
includible in property accounts 391 to
398 (§§ 367.3910 to 367.3980),
inclusive, that must be treated as an
expense item and included in the
appropriate functional account, and
(2) Rents that are chargeable to
clearing accounts, and distributed from
the clearing accounts to the appropriate
account. If rents cover property used for
more than one function, such as
production and transmission, or by
more than one department, the rents
must be apportioned to the appropriate
rent expense or clearing accounts of
each department on an actual, or, if
necessary, an estimated basis.
(b) When a portion of property or
equipment rented from others for use in
connection with service company
operations is subleased, the revenue
derived from the subleasing must be
credited to the rent revenue account in
operating revenues. However, if the rent
was charged to a clearing account,
amounts received from subleasing the
property must be credited to the
clearing account.
(c) The cost, when incurred by the
lessee, of operating and maintaining
leased property, must be charged to the
accounts appropriate for the expense if
the property were owned.
(d) The cost incurred by the lessee of
additions and replacements to property
leased from others must be accounted
for as provided in Service Company
Property Instruction in § 367.54.
§ 367.83
Training costs.
When it is necessary that employees
be trained to specifically operate or
maintain facilities that are being
constructed, the related costs must be
accounted for as a current operating and
maintenance expense. These expenses
must be charged to the appropriate
functional accounts currently as they
are incurred. However, when the
training costs involved relate to
facilities that are not conventional in
nature, or are new to the service
company’s operations, these costs may
be capitalized until the time that the
facilities are ready for functional use.
Subpart E—Special Instructions
sroberts on PROD1PC70 with PROPOSALS
§ 367.100 Accounts 131—174, Current and
accrued assets.
Current and accrued assets are cash,
those assets which are readily
convertible into cash or are held for
current use in operations or
construction, current claims against
others, payment of which is reasonably
assured, and amounts accruing to the
service company that are subject to
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current settlement, except those items
for which accounts other than those
designated as current and accrued assets
are provided. There must not be
included in the group of accounts
designated as current and accrued assets
any item, the amount or collectibility of
which is not reasonably assured, unless
an adequate provision for the related
possible loss has been made. Items of
current character but of doubtful value
may be written down and for record
purposes carried in these accounts at
nominal value.
§ 367.101 Accounts 231—243, Current and
accrued liabilities.
Current and accrued liabilities are
those obligations which have either
matured or which become due within
one year from the date from the date of
issuance or assumption, except for:
bonds, receivers’ certificates and similar
obligations which must be classified as
long-term debt until date of maturity;
accrued taxes, such as income taxes,
which must be classified as accrued
liabilities even though payable more
than one year from date; compensation
awards, which must be classified as
current liabilities regardless of date due;
and minor amounts payable in
installments which may be classified as
current liabilities. If a liability is due
more than one year from date of
issuance or assumption by the service
company, it shall be credited to a longterm debt account appropriate for the
transaction, except, however, the
current liabilities previously mentioned.
§ 367.102 Accounts 408.1 and 408.2, Taxes
other than income taxes.
(a) These accounts must include the
amounts of ad valorem, gross revenue or
gross receipts taxes, state
unemployment insurance, franchise
taxes, Federal excise taxes, social
security taxes, and all other taxes
assessed by Federal, state, county,
municipal, or other local governmental
authorities, except income taxes.
(b) These accounts shall be charged in
each accounting period with the
amounts of taxes which are applicable
to each account, with concurrent credits
to account 236, Taxes accrued
(§ 367.2360), or account 165,
Prepayments (§ 367.1650), as
appropriate. When it is not possible to
determine the exact amounts of taxes,
the amounts shall be estimated and
adjustments made in current accruals as
the actual tax levies become known.
(c) The accruals for these taxes must
be apportioned among service company
departments and to Other Income and
Deductions so that, as nearly as
practicable, each tax is included in the
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expenses of the service company
department or Other Income and
Deductions, the item from which gave
rise to the tax.
(d) Special assessments for street and
similar improvements must be included
in the appropriate service company
property account.
(e) Taxes specifically applicable to
construction must be included in the
cost of construction.
(f) Gasoline and other sales taxes must
be charged as far as practicable to the
same account as the materials on which
the tax is levied.
(g) Social security and other forms of
so-called payroll taxes must be
distributed to utility and non-utility
functions on a basis related to payroll.
Amounts applicable to construction
must be charged to the appropriate plant
account.
(h) Interest on tax refunds or
deficiencies must not be included in
these accounts but in account 419,
Interest and dividend income
(§ 367.4190), or 431, Other interest
expense (§ 367.4310), as appropriate.
§ 367.103 Accounts 409.1, 409.2, and
409.3, Income taxes.
(a) These accounts must include the
amounts of local, state and Federal
income taxes on income properly
accruable during the period covered by
the income statement to meet the actual
liability for such taxes. Concurrent
credits for the tax accruals must be
made to account 236, Taxes accrued
(§ 367.2360), and as the exact amounts
of taxes become known, the current tax
accruals must be adjusted by charges or
credits to these accounts, so that these
accounts include the actual taxes
payable by the service company.
(b) The accruals for income taxes shall
be apportioned among service company
departments and to Other Income and
Deductions so that, as nearly as
practicable, each tax will be included in
the expenses of the service company
department or Other Income and
Deductions, the income from which
gave rise to the tax.
(c) Taxes assumed by the service
company on interest must be charged to
account 431, Other interest expense
(§ 367.4310).
(d) Interest on tax refunds or
deficiencies must not be included in
these accounts but in account 419,
Interest and dividend income
(§ 367.4190), or account 431, Other
interest expense (§ 367.4310), as
appropriate.
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§ 367.104 Accounts 410.1, 410.2, 411.1,
and 411.2, Provision for deferred income
taxes.
Subpart F—Balance Sheet Chart of
Accounts
(a) Accounts 410.1 (§ 367.4101) and
410.2 (§ 367.4102) must be debited, and
Accumulated Deferred Income Taxes
must be credited, with amounts equal to
any current deferrals of taxes on income
or any allocations of deferred taxes
originating in prior periods, as provided
by the texts of accounts 190
(§ 367.1900), 282 (§ 367.2820), and 283
(§ 367.2830). There must not be netted
against entries required to be made to
these accounts any credit amounts
appropriately includible in accounts
411.1 (§ 367.4111) or 411.2 (§ 367.4112).
(b) Accounts 411.1 (§ 367.4111) and
411.2 (§ 367.4112) must be credited, and
Accumulated Deferred Income Taxes
must be debited, with amounts equal to
any allocations of deferred taxes
originating in prior periods or any
current deferrals of taxes on income, as
provided by the texts of accounts 190
(§ 367.1900), 282 (§ 367.2820), and 283
(§ 367.2830). There must not be netted
against entries required to be made to
these accounts any debit amounts
appropriately includible in account
410.1 (§ 367.4101) or 410.2 (§ 367.4102).
Service Company Property
§ 367.105 Accounts 411.4, and 411.5,
Investment tax credit adjustments.
sroberts on PROD1PC70 with PROPOSALS
(a) Account 411.4 (§ 367.4114) must
be debited with the amounts of
investment tax credits related to service
company property that are credited to
account 255, Accumulated deferred
investment tax credits (§ 367.2550), by
companies which do not apply the
entire amount of the benefits of the
investment credit as a reduction of the
overall income tax expense in the year
in which such credit is realized (See
account 255 in § 367.2550).
(b) Account 411.4 (§ 367.4114) must
be credited with the amounts debited to
account 255 (§ 367.2550) for
proportionate amounts of tax credit
deferrals allocated over the average
useful life of service company property
to which the tax credits relate or such
lesser period of time as may be adopted
and consistently followed by the
company.
(c) Account 411.5 (§ 367.4115) must
also be debited and credited as directed
in paragraphs (a) and (b), for investment
tax credits related to other income and
deductions.
§ 367.106 Accounts 426.1, 426.2, 426.3,
426.4, and 426.5, Miscellaneous expense
accounts.
These accounts must include
miscellaneous expense items which are
nonoperating in nature but which are
properly deductible before determining
total income before interest charges.
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§ 367.1010
property.
Account 101, Service company
(a) This account must include the cost
of service company property, included
in accounts 301 (§ 367.3010), 303
(§ 367.3030) and 389 to 399.1
(§§ 376.3890 to 367.3991), owned and
used by the service company in its
operations, and having an expectation of
life in service of more than one year
from date of installation.
(b) The cost of additions to, and
betterments of, property leased from
others, that are includible in this
account, must be recorded in
subaccounts separate and distinct from
those relating to owned property. (See
Service Company Property Instruction
in § 367.54.)
§ 367.1011 Account 101.1, Property under
capital leases.
(a) This account must include the
amount recorded under capital leases
for property leased from others and used
by the service company in its
operations.
(b) The property included in this
account must be classified separately
according to detailed accounts 301
(§ 367.3010), 303 (§ 367.3030) and 389
to 399.1 (§§ 367.3890 to 367.3991)
prescribed for service company
property.
(c) Records must be maintained with
respect to each capital lease reflecting:
(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.
§ 367.1070 Account 107, Construction
work in progress.
(a) This account must include the
total of the balances of work orders for
service company property in process of
construction.
(b) Work orders must be cleared from
this account as soon as practicable after
completion of the job. Further, if a
project is designed to consist of two or
more units that may be placed in service
at different dates, any expenditures that
are common to and that will be used in
the operation of the project as a whole
must be included in service company
property upon the completion and the
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readiness for service of the first unit.
Any expenditures that are identified
exclusively with units of property not
yet in service must be included in this
account.
(c) Expenditures on research,
development, and demonstration
projects for construction of facilities are
to be included in a separate subaccount
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.
§ 367.1080 Account 108, Accumulated
provision for depreciation of service
company property.
(a) This account must be credited
with the following:
(1) Amounts charged to account 403,
Depreciation expense (§ 367.4030), or to
clearing accounts for current
depreciation expense for service
company property.
(2) Amounts charged to account 416,
Costs and expenses of merchandising,
jobbing, and contract work (§ 367.4160),
or to clearing accounts for current
depreciation expense.
(3) Amounts of depreciation
applicable to properties acquired. (See
Service Company Property Instruction
in § 367.53.)
(4) Amounts of depreciation
applicable to service company property
donated to the service company.
(b) The service company must
maintain separate subaccounts for
depreciation applicable to service
company property.
(c) At the time of retirement of
depreciable service company property,
this account must be charged with the
book cost of the property retired and the
cost of removal, and must be credited
with the salvage value and any other
amounts recovered, such as insurance.
When retirement, costs of removal and
salvage are entered originally in
retirement work orders, the net total of
such work orders may be included in a
separate related subaccount. Upon
completion of the work order, the
proper distribution to subaccounts of
this account must be made as provided
in paragraph (d) of this section.
(d) The subsidiary records for this
account must reflect the current credits
and debits to this account in sufficient
detail to show the following separately:
(1) The amount of accrual for
depreciation,
(2) The book cost of property retired,
(3) Cost of removal,
(4) Salvage, and
(5) Other items, including recoveries
from insurance.
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(e) The service company is restricted
in its use of the accumulated provision
for depreciation to the purposes
identified in paragraphs (a) through (d)
of this section. It must not transfer any
portion of this account to retained
earnings or make any other use of the
depreciation without authorization by
the Commission.
sroberts on PROD1PC70 with PROPOSALS
§ 367.1110 Account 111, Accumulated
provision for amortization of service
company property.
(a) This account must be credited
with the following:
(1) Amounts charged to account 404,
Amortization of limited-term property
(§ 367.4040), for the current
amortization of limited-term service
company property investments.
(2) Amounts charged to account 405,
Amortization of other property
(§ 367.4050).
(3) Amounts charged to account 425,
Miscellaneous amortization
(§ 367.4250), for the amortization of
intangible or other property, that does
not have a definite or terminable life
and is not subject to charges for
depreciation expense, with Commission
approval.
(b) The service company must
maintain subaccounts of this account for
the amortization applicable to service
company property and property leased
to others.
(c) When any property to which this
account applies is sold, relinquished, or
otherwise retired from service, this
account must be charged with the
amount previously credited in respect to
the property. The book cost of the
retired property less the amount
chargeable to this account and less the
net proceeds realized at retirement must
be included in account 421.1, Gain on
disposition of property (§ 367.4211), or
account 421.2, Loss on disposition of
property (§ 367.4212), as appropriate.
(d) For general ledger and balance
sheet purposes, this account must be
regarded and treated as a single
composite provision for amortization.
The subsidiary records must reflect the
current credits and debits to this
account in sufficient detail to show the
following separately:
(1) The amount of accrual for
amortization,
(2) The book cost of property retired,
(3) Cost of removal,
(4) Salvage, and
(5) Other items, including recoveries
from insurance.
(e) The service company is restricted
in its use of the accumulated provision
for amortization to the purposes
provided in paragraphs (a) through (d)
of this section. It must not transfer any
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portion of this account to retained
earnings or make any other use of the
amortization without authorization by
the Commission.
§ 367.1230 Account 123, Investment in
associate companies.
(a) This account must include the
book cost of investments in securities
issued or assumed by associate
companies and investment advances to
the companies, including related
accrued interest when the interest is not
subject to current settlement, provided
that the investment does not relate to a
subsidiary company. (If the investment
relates to a subsidiary company, it must
be included in account 123.1,
Investment in subsidiary companies
(§ 367.1231).) Include in this account
the offsetting entry to the recording of
amortization of discount or premium on
interest-bearing investments. (See
account 419, Interest and dividend
income (§ 367.4190).)
(b) This account must be maintained
in a manner so as to show the
investment in securities of, and
advances to, each associate company
together with full particulars regarding
any of the investments that are pledged.
(c) Securities and advances of
associate companies owned and pledged
must be included in this account, but
the securities, if held in special deposits
or in special funds, must be included in
the appropriate deposit or fund account.
A complete record of securities pledged
must be maintained.
(d) Securities of associate companies
held as temporary cash investments are
includible in account 136, Temporary
cash investments (§ 367.1360).
(e) Balances in open accounts with
associate companies that are subject to
current settlement are includible in
account 146, Accounts receivable from
associate companies (§ 367.1460).
(f) The service company must write
down the cost of any security in
recognition of a decline in the related
value. Securities must be written off or
written down to a nominal value if there
is no reasonable prospect of substantial
value. Fluctuations in market value
must not be recorded but a permanent
impairment in the value of securities
must be recognized in the accounts.
When securities are written off or
written down, the amount of the
adjustment must be charged to account
426.5, Other deductions (§ 367.4265), or
to an appropriate account for
accumulated provisions for loss in value
established as a separate subdivision of
this account.
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§ 367.1240 Account 124, Other
investments.
(a) This account must include the
book cost of investments in securities
issued or assumed by non-associate
companies, investment advances to
these companies, and any investments
not accounted for elsewhere. This
account must also include unrealized
holding gains and losses on trading and
available-for-sale types of security
investments. Include also the offsetting
entry to the recording of amortization of
discount or premium on interest-bearing
investments. (See account 419, Interest
and dividend income (§ 367.4190).)
(b) The records must be maintained in
a manner so as to show the amount of
each investment and the investment
advances to each person.
§ 367.1280
funds.
Account 128, Other special
(a) This account must include the
amount of cash and book cost of
investments that have been segregated
in special funds for insurance, employee
pensions, savings, relief, hospital, and
other purposes not provided for
elsewhere. This account must also
include unrealized holding gains and
losses on trading and available-for-sale
types of security investments. A
separate account with appropriate title,
must be kept for each fund.
(b) Amounts deposited with a trustee
under the terms of an irrevocable trust
agreement for pensions or other
employee benefits must not be included
in this account.
Current and Accrued Assets
§ 367.1310
Account 131, Cash.
This account must include the
amount of current cash funds except
working funds.
§ 367.1340
deposits.
Account 134, Other special
(a) This account must include
deposits with fiscal agents or others for
special purposes other than the payment
of interest and dividends. The special
deposits may include, among other
things, cash deposited with federal,
state, or municipal authorities as a
guaranty for the fulfillment of
obligations; cash deposited with trustees
to be held until mortgaged property
sold, destroyed, or otherwise disposed
of is replaced; cash realized from the
sale of the accounting service
company’s securities and deposited
with trustees to be held until invested
in property of the service company.
Entries to this account must specify the
purpose for which the deposit is made.
(b) Assets available for general
corporate purposes must not be
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included in this account. Further,
deposits for more than one year, that are
not offset by current liabilities, must be
charged to account 128, Other special
funds (§ 367.1280).
§ 367.1350
Account 135, Working funds.
This account must include cash
advanced to officers, agents, employees,
and others as petty cash or working
funds.
§ 367.1360 Account 136, Temporary cash
investments.
(a) This account must include the
book cost of investments, such as
demand and time loans, bankers’
acceptances, United States Treasury
certificates, marketable securities, and
other similar investments, acquired for
the purpose of temporarily investing
cash.
(b) This account must be maintained
so as to show separately temporary cash
investments in securities of associate
companies and of others. Records must
be kept of any pledged investments.
§ 367.1410
Account 141, Notes receivable.
(a) This account must include the
book cost, not includible elsewhere, of
all collectible obligations in the form of
notes receivable and similar evidences
(except interest coupons) of money due
on demand or within one year from the
date of issue, except, however, notes
receivable from associate companies.
(See account 136, Temporary cash
investments (§ 367.1360), and account
145, Notes receivable from associate
companies (§ 367.1450).)
(b) The face amount of notes
receivable discounted, sold, or
transferred without releasing the service
company from liability as a related
endorser, must be credited to a separate
subaccount of this account and
appropriate disclosure must be made in
financial statements of any contingent
liability arising from the transactions.
§ 367.1420 Account 142, Customer
accounts receivable.
sroberts on PROD1PC70 with PROPOSALS
(a) This account must include
amounts due from customers for service,
and for merchandising, jobbing and
contract work. This account must not
include amounts due from associate
companies.
(b) This account must be maintained
so as to permit ready segregation of the
amounts due for merchandising, jobbing
and contract work.
§ 367.1430 Account 143, Other accounts
receivable.
(a) This account must include
amounts due the service company upon
open accounts, other than amounts due
from associate companies and from
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customers for services and
merchandising, jobbing and contract
work.
(b) This account must be maintained
so as to show separately amounts due
on subscriptions to capital stock and
from officers and employees, but the
account must not include amounts
advanced to officers or others as
working funds. (See account 135,
Working funds (§ 367.1350).)
may be set off against accounts payable
to the same company.
(c) The face amount of notes
receivable discounted, sold or
transferred without releasing the service
company from liability as endorser
thereon, must be credited to a separate
subaccount of this account and
appropriate disclosure must be made in
financial statements of any contingent
liability arising from such transactions.
§ 367.1440 Account 144, Accumulated
provision for uncollectible accounts—
Credit.
§ 367.1460 Account 146, Accounts
receivable from associate companies.
(a) This account must be credited
with amounts provided for losses on
accounts receivable that may become
uncollectible, and also with collections
on related previously charged accounts.
Concurrent charges must be made to
account 904, Uncollectible accounts
(§ 367.9040), for amounts applicable to
service company operations, and to
corresponding accounts for other
operations. Records must be maintained
so as to show the write-offs of account
receivable for each service company
department.
(b) This account must be subdivided
to show the provision applicable to the
following classes of accounts receivable:
(1) Service company customers.
(2) Merchandising, jobbing and
contract work.
(3) Officers and employees.
(4) Others.
(c) Accretions to this account must
not be made in excess of a reasonable
provision against losses of the related
character.
(d) If provisions for uncollectible
notes receivable or for uncollectible
receivables from associate companies
are necessary, separate related
subaccounts must be established under
the account in which the receivable is
carried.
§ 367.1450 Account 145, Notes receivable
from associate companies.
(a) This account must include notes
and drafts upon which associate
companies are liable, and that mature
and are expected to be paid in full not
later than one year from the date of
issue, together with any related interest,
and debit balances subject to current
settlement in open accounts with
associate companies. Items that do not
bear a specified due date but that have
been carried for more than twelve
months and items that are not paid
within twelve months from due date
must be transferred to account 123,
Investment in associate companies
(§ 367.1230).
(b) On the balance sheet, accounts
receivable from an associate company
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(a) This account must include notes
and drafts upon which associate
companies are liable, and that mature
and are expected to be paid in full not
later than one year from the date of
issue, together with any related interest
thereon, and debit balances subject to
current settlement in open accounts
with associate companies. Items that do
not bear a specified due date but that
have been carried for more than twelve
months and items that are not paid
within twelve months from due date
must be transferred to account 123,
Investment in associate companies
(§ 367.1230).
(b) On the balance sheet, accounts
receivable from an associate company
may be set off against accounts payable
to the same company.
(c) The face amount of notes
receivable discounted, sold or
transferred without releasing the service
company from liability as the related
endorser, must be credited to a separate
subaccount of this account and
appropriate disclosure must be made in
financial statements of any contingent
liability arising from the transactions.
§ 367.1520 Account 152, Fuel stock
expenses undistributed.
The service company must utilize this
account, where appropriate, to include
the cost of service company labor and of
office supplies used and operating
expenses incurred with respect to the
review, analysis and management of
fuel supply contracts or agreements, the
accumulation of fuel information and its
interpretation, the logistics and
handling of fuel, and other related
support functions, as a service to the
company engaged in the procurement
and transportation of fuel. This account
must be maintained to show the
expenses attributable to each company
through the use of work orders. All
expenses of a service company’s fuel
department or functions must be cleared
through this account.
§ 367.1540 Account 154, Materials and
operating supplies.
(a) This account must include the cost
of materials purchased primarily for use
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in the service company business for
construction, operation and
maintenance purposes. It must include
the book cost of materials recovered in
connection with construction,
maintenance or the retirement of service
company property, the materials being
credited to construction, maintenance or
accumulated depreciation provision,
respectively. This account must include
the following items:
(1) Reusable materials consisting of
large individual items must be included
in this account at original cost,
estimated if not known. The cost of
repairing the items must be charged to
the maintenance account appropriate for
the previous use.
(2) Reusable materials consisting of
relatively small items, the identity of
which (from the date of original
installation to the related final
abandonment or sale) cannot be
ascertained without undue refinement
in accounting, must be included in this
account at current prices new for the
items. The cost of repairing the items
must be charged to the appropriate
expense account as indicated by
previous use.
(3) Scrap and non-usable materials
included in this account must be carried
at the estimated net amount realizable.
The difference between the amounts
realized for scrap and non-usable
materials sold and the net amount at
which the materials were carried in this
account, as far as practicable, must be
adjusted to the accounts credited when
the materials were charged to this
account.
(b) Materials and supplies issued
must be credited in this account and
charged to the appropriate construction,
operating expense, or other account on
the basis of a unit price determined by
the use of cumulative average, first-infirst-out, or any other method of
inventory accounting that conforms
with accepted accounting standards
consistently applied.
(c) This account must include the
following items:
(1) Invoice price of materials less cash
or other discounts.
(2) Freight, switching or other
transportation charges when practicable
to include as part of the cost of
particular materials to which they
relate.
(3) Customs duties and excise taxes.
(4) Costs of inspection and special
tests prior to acceptance.
(5) Insurance and other directly
assignable charges.
(d) Where expenses applicable to
materials purchased cannot be directly
assigned to particular purchases, they
may be charged to a stores expense
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clearing account (account 163, Stores
expense undistributed (§ 367.1630)),
and distributed from there to the
appropriate account.
(e) When materials and supplies are
purchased for immediate use, they need
not be carried through this account, but
may be charged directly to the
appropriate service company property
or expense account.
§ 367.1630 Account 163, Stores expense
undistributed.
(a) This account must include the cost
of supervision, labor and expenses
incurred in the operation of general
storerooms, including purchasing,
storage, handling and distribution of
materials and supplies.
(b) This account must be cleared by
adding to the cost of materials and
supplies issued a suitable loading
charge that will distribute the expense
equitably over stores issues. The balance
in the account at the close of the
calendar year must not exceed the
amount of stores expenses reasonably
attributable to the inventory of materials
and supplies exclusive of fuel, as any
amount applicable to fuel costs should
be included in account 152, Fuel stock
expenses undistributed (§ 367.1520).
(c) This account must include the
following labor items:
(1) Inspecting and testing materials
and supplies when not assignable to
specific items.
(2) Unloading from shipping facility
and putting in storage.
(3) Supervision of purchasing and
stores department to extent assignable to
materials handled through stores.
(4) Getting materials from stock and in
readiness to go out.
(5) Inventorying stock received or
stock on hand by stores employees but
not including inventories by general
department employees as part of
internal or general audits.
(6) Purchasing department activities
in checking material needs,
investigating sources of supply,
analyzing prices, preparing and placing
orders, and related activities to extent
applicable to materials handled through
stores. (Optional. Purchasing
department expenses may be included
in administrative and general expenses.)
(7) Maintaining stores equipment.
(8) Cleaning and tidying storerooms
and stores offices.
(9) Keeping stock records, including
recording and posting of material
receipts and issues and maintaining
inventory record of stock.
(10) Collecting and handling scrap
materials in stores.
(d) This account must include the
following supplies and expenses items:
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(1) Adjustments of inventories of
materials and supplies, but not
including large differences that can
readily be assigned to important classes
of materials and equitably distributed
among the accounts to which the classes
of materials have been charged since the
previous inventory.
(2) Cash and other discounts not
practically assignable to specific
materials.
(3) Freight, express, and similar items,
when not assignable to specific items.
(4) Heat, light and power for
storerooms and store offices.
(5) Brooms, brushes, sweeping
compounds and other supplies used in
cleaning and tidying storerooms and
stores offices.
(6) Injuries and damages.
(7) Insurance on materials and
supplies and on stores equipment.
(8) Losses due to breakage, leakage,
evaporation, fire or other causes, less
credits for amounts received from
insurance, transportation companies or
others in compensation of the losses.
(9) Postage, printing, stationery and
office supplies.
(10) Rent of storage space and
facilities.
(11) Communication service.
(12) Excise and other similar taxes not
assignable to specific materials.
(13) Transportation expense on
inward movement of stores and on
transfer between storerooms, but not
including charges on materials
recovered from retirements that must be
accounted for as part of cost of removal.
(e) A physical inventory of each class
of materials and supplies must be made
at least every two years.
§ 367.1650
Account 165, Prepayments.
This account must include amounts
representing prepayments of insurance,
rents, taxes, interest and miscellaneous
items, and must be kept or supported in
a manner so as to disclose the amount
of each class of prepayment.
§ 367.1710 Account 171, Interest and
dividends receivable.
(a) This account must include the
amount of interest on bonds, mortgages,
notes, commercial paper, loans, open
accounts, deposits, and other similar
items, the payment of which is
reasonably assured, and the amount of
dividends declared or guaranteed on
stocks owned.
(b) Interest that is not subject to
current settlement must not be included
in this account, but in the account in
which is carried the principal on which
the interest is accrued.
(c) Interest and dividends receivable
from associate companies must be
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included in account 146, Accounts
receivable from associate companies
(§ 367.1460).
§ 367.1720 Accounts 172, Rents
receivable.
(a) This account must include rents
receivable or accrued on property rented
or leased by the service company to
others.
(b) Rents receivable from associate
companies must be included in account
146, Accounts receivable from associate
companies (§ 367.1460).
§ 367.1730
revenues.
Account 173, Accrued
(b) The records supporting the entries
to this account must be kept so that the
service company can furnish complete
information as to the nature and the
purpose of the survey, plans, or
investigations and the nature and
amounts of the several charges.
(c) The amount of preliminary survey
and investigation charges transferred to
service company property must not
exceed the expenditures that may
reasonably be determined to contribute
directly and immediately and without
duplication to service company
property.
At the option of the service company,
the estimated amount accrued for
service rendered, but not billed at the
end of any accounting period, may be
included in this account. In case
accruals are made for unbilled revenues,
they must be made likewise for unbilled
expenses, such as for the purchase of
energy.
§ 367.1840
accounts.
§ 367.1740 Account 174, Miscellaneous
current and accrued assets.
§ 367.1850
facilities.
This account must include the book
cost of all other current and accrued
assets, appropriately designated and
supported so as to show the nature of
each asset included in the account.
This account must include amounts
shown by work orders for property
installed for temporary use for a period
of less than one year. Such work orders
must be charged with the cost of
temporary facilities and credited with
payments received from customers and
net salvage realized on removal of the
temporary facilities. Any net credit or
debit resulting must be cleared to the
construction or service work order to
which the facilities relate.
Deferred Debits
§ 367.1810
expense.
Account 181, Unamortized debt
This account must include expenses
related to the issuance or assumption of
debt securities. Amounts recorded in
this account must be amortized over the
life of each respective issue under a
plan that will distribute the amount
equitably over the life of the security.
The amortization must be on a monthly
basis, and the related amounts must be
charged to account 428, Amortization of
debt discount and expense (§ 367.4280).
Any unamortized amounts outstanding
at the time that the related debt is
prematurely reacquired must be
accounted for as indicated in General
Instructions in § 367.16.
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§ 367.1830 Account 183, Preliminary
survey and investigation charges.
(a) This account must be charged with
all expenditures for preliminary
surveys, plans, investigations, and other
similar items, made for the purpose of
determining the feasibility of service
company projects under contemplation.
If construction results, this account
must be credited and the appropriate
service company property account
charged. If the work is abandoned, the
charge must be made to account 426.5,
Other deductions (§ 367.4265), or to the
appropriate operating expense account.
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Account 184, Clearing
This account must include
undistributed balances in clearing
accounts at the date of the balance
sheet. Balances in clearing accounts
must be substantially cleared not later
than the end of the calendar year unless
the items held relate to a future period.
Account 185, Temporary
§ 367.1860 Account 186, Miscellaneous
deferred debits.
(a) This account must include all
debits not provided for elsewhere, such
as miscellaneous work in progress, and
unusual or extraordinary expenses, not
included in other accounts, that are in
the process of amortization and items
the proper final disposition of which is
uncertain.
(b) The records supporting the entries
to this account must be kept so that the
service company can furnish full
information as to each deferred debit
included in this account.
§ 367.1880 Account 188, Research,
development, or demonstration
expenditures.
(a) This account must be charged with
the cost of all expenditures coming
within the meaning of research,
development and demonstration (RD&D)
of this Uniform System of Accounts (See
Definitions § 367.1(a)(37)), except those
expenditures properly chargeable to
account 107, Construction work in
progress (§ 367.1070).
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(b) Costs that are minor or of a general
or recurring nature must be transferred
from this account to the appropriate
operating expense function or, if the
costs are common to the overall
operations or cannot be feasibly
allocated to the various operating
accounts, then the costs must be
recorded in account 930.2,
Miscellaneous general expenses
(§ 367.9302).
(c) In certain instances, a service
company may incur large and
significant research, development, and
demonstration expenditures that are
nonrecurring and that would distort the
annual research, development, and
demonstration charges for the period. In
such a case, the portion of such amounts
that causes the distortion may be
amortized to the appropriate operating
expense account over a period not to
exceed five years, unless otherwise
authorized by the Commission.
(d) The entries in this account must
be maintained so as 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.
§ 367.1900 Account 190, Accumulated
deferred income taxes.
(a) This account must be debited and
account 411.1, Provision for deferred
income taxes—Credit, operating income
(§ 367.4111), or account 411.2, Provision
for deferred income taxes—Credit, other
income and deductions (§ 367.4112), as
appropriate, must be credited with an
amount equal to that by which income
taxes payable for the year are higher
because of the inclusion of certain items
in income for tax purposes, which items
for general accounting purposes will not
be fully reflected in the service
company’s determination of annual net
income until subsequent years.
(b) This account must be credited and
account 410.1, Provision for deferred
income taxes, operating income
(§ 367.4101), or account 410.2, Provision
for deferred income taxes, other income
and deductions (§ 367.4102), as
appropriate, must be debited with an
amount equal to that by which income
taxes payable for the year are lower
because of prior payment of taxes as
provided by paragraph (a) of this
section, because of difference in timing
for tax purposes of particular items of
income or income deductions from that
recognized by the utility for general
accounting purposes. The credit to this
account and debit to account 410.1
(§ 367.4101), or 410.2 (§ 367.4102) must,
in general, represent the effect on taxes
payable in the current year of the
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smaller amount of book income
recognized for tax purposes as
compared to the amount recognized in
the service company’s current accounts
with respect to the item or class of items
for which deferred tax accounting by the
service company was authorized by the
Commission.
(c) The service company is restricted
in its use of this account to the purpose
provided in paragraphs (a) and (b) of
this section. The service company must
not make use of the balance in this
account or any related portion except as
provided in the text of this account,
without prior approval of the
Commission. Any remaining deferred
tax account balance with respect to an
amount for any prior year’s tax deferral,
the amortization of which or other
recognition in the service company’s
income accounts has been completed, or
other disposition made, must be debited
to account 410.1, Provision for deferred
income taxes, operating income
(§ 367.4101), or account 410.2, Provision
for deferred income taxes, other income
and deductions (§ 367.4102), as
appropriate, or otherwise disposed of as
the Commission may authorize or
direct. (See General Instructions in
§ 367.17.)
Proprietary Capital
§ 367.2010
issued.
Account 201, Common stock
This account must include the par or
stated value of all common capital stock
issued and outstanding.
§ 367.2040
issued.
Account 204, Preferred stock
This account must include the par or
stated value of all preferred stock issued
and outstanding.
§ 367.2110 Account 211, Miscellaneous
paid-in capital.
This account must include the
balance of all other credits for paid-in
capital that is not properly included in
proprietary capital accounts. This
account may include all commissions
and expenses incurred in connection
with the issuance of capital stock.
sroberts on PROD1PC70 with PROPOSALS
§ 367.2150 Account 215, Appropriated
retained earnings.
This account must include the
amount of retained earnings that has
been appropriated or set aside for
special purposes. Separate subaccounts
must be maintained under titles that
will designate the purpose for which
each appropriation was made.
§ 367.2160 Account 216, Unappropriated
retained earnings.
This account must include the
balances, either debit or credit, of
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unappropriated retained earnings
arising from earnings of the service
company. This account must not
include any amounts representing the
undistributed earnings of subsidiary
companies.
§ 367.2161 Account 216.1, Unappropriated
undistributed subsidiary earnings.
This account must include the
balances, either debit or credit, of
undistributed retained earnings of
subsidiary companies since their
acquisition. When dividends are
received from subsidiary companies
relating to amounts included in this
account, this account must be debited
and account 216, Unappropriated
retained earnings (§ 367.2160), credited.
§ 367.2190 Account 219, Accumulated
other comprehensive income.
(a) This account must include
revenues, expenses, gains, and losses
that are properly includable in other
comprehensive income during the
period. Examples of other
comprehensive income include, but are
not limited to, minimum pension
liability adjustments, and unrealized
gains and losses on certain investments
in debt and equity securities. Records
supporting the entries to this account
must be maintained so that the service
company can furnish the amount of
other comprehensive income for each
item included in this account.
(b) This account also must be debited
or credited, as appropriate, with
amounts of accumulated other
comprehensive income that have been
included in the determination of net
income during the period and in
accumulated other comprehensive
income in prior periods. Separate
records for each category of items must
be maintained to identify the amount of
the reclassification adjustments from
accumulated other comprehensive
income to earnings made during the
period.
Long-Term Debt
§ 367.2230 Account 223, Advances from
associate companies.
(a) This account must include the face
value of notes payable to associate
companies and the amount of open book
accounts representing advances from
associate companies. It does not include
notes and open accounts representing
indebtedness subject to current
settlement that are includible in account
233, Notes payable to associate
companies (§ 367.2330), or account 234,
Accounts payable to associate
companies (§ 367.2340).
(b) The records supporting the entries
to this account must be kept so that the
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service company can furnish complete
information concerning each note and
open account.
§ 367.2240
debt.
Account 224, Other long-term
(a) This account must include, until
maturity, all long-term debt not
otherwise provided for. This covers
items such as receivers’ certificates, real
estate mortgages executed or assumed,
assessments for public improvements,
notes and unsecured certificates of
indebtedness not owned by associate
companies, receipts outstanding for
long-term debt, and other obligations
maturing more than one year from date
of issue or assumption.
(b) Separate accounts must be
maintained for each class of obligation,
and records must be maintained to show
for each class all details as to date of
obligation, date of maturity, interest
dates and rates, security for the
obligation, and other similar items.
§ 367.2250 Account 225, Unamortized
premium on long-term debt.
(a) This account must include the
excess of the cash value of consideration
received over the face value upon the
issuance or assumption of long-term
debt securities.
(b) Amounts recorded in this account
must be amortized over the life of each
respective issue under a plan that will
distribute the amount equitably over the
life of the security. The amortization
must be on a monthly basis, with the
related amounts credited to account
429, Amortization of premium on
debt—Credit (§ 367.4290). (See General
Instructions in § 367.16.)
§ 367.2260 Account 226, Unamortized
discount on long-term debt—Debit.
(a) This account must include the
excess of the face value of long-term
debt securities over the related cash
value of consideration received, related
to the issue or assumption of all types
and classes of debt.
(b) Amounts recorded in this account
must be amortized over the life of the
respective issues under a plan that will
distribute the amount equitably over the
life of the securities. The amortization
must be on a monthly basis, with the
related amounts charged to account 428,
Amortization of debt discount and
expense (§ 367.4280). (See General
Instructions in § 367.16.)
Other Noncurrent Liabilities
§ 367.2270 Account 227, Obligations under
capital lease—Non-current.
This account must include the portion
not due within one year, of the
obligations recorded for the amounts
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applicable to leased property recorded
as assets in account 101.1, Property
under capital leases (§ 367.1011).
§ 367.2300 Account 230, Asset retirement
obligations.
(a) This account must include the
amount of liabilities for the recognition
of asset retirement obligations related to
service company property. This account
must be credited for the amount of the
liabilities for asset retirement
obligations with amounts charged to the
appropriate property account to record
the related asset retirement costs.
(b) The service company must charge
the accretion expense to account 411.10,
Accretion expense (§ 367.4116), and
credit account 230, Asset retirement
obligations (§ 367.2300).
(c) This account must be debited with
amounts paid to settle the asset
retirement obligations recorded in this
account.
(d) The service company must clear
from this account any gains or losses
resulting from the settlement of asset
retirement obligations in accordance
with the instructions prescribed in the
General Instructions in § 367.22.
Current and Accrued Liabilities
§ 367.2310
Account 231, Notes payable.
This account must include the face
value of all notes, drafts, acceptances, or
other similar evidences of indebtedness,
payable on demand or within a time not
exceeding one year from date of issue,
to other than associate companies.
§ 367.2320
payable.
Account 232, Accounts
This account must include all
amounts payable by the service
company within one year, that are not
provided for in other accounts.
(a) This account must include
amounts owing to associate companies
on notes, drafts, acceptances, or other
similar evidences of indebtedness, and
open accounts payable on demand or
not more than one year from date of
issue or creation.
(b) Exclude from this account notes
and accounts that are includible in
account 223, Advances from associate
companies (§ 367.2230).
sroberts on PROD1PC70 with PROPOSALS
§ 367.2340 Account 234, Accounts payable
to associate companies.
(a) This account must include
amounts owing to associate companies
on notes, drafts, acceptances, or other
similar evidences of indebtedness, and
open accounts payable on demand or
not more than one year from date of
issue or creation.
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(b) Do not include liability for taxes
assessed directly against the service
company that is accounted for as part of
the service company’s own tax expense.
§ 367.2360
§ 367.2420 Account 242, Miscellaneous
current and accrued liabilities.
Account 236, Taxes accrued.
(a) This account must be credited
with the amount of taxes accrued during
the accounting period, corresponding
debits being made to the appropriate
accounts for tax charges. The credits
may be based upon estimates, but from
time to time during the year as the facts
become known, the amount of the
periodic credits must be adjusted so as
to include as nearly as can be
determined in each year the related
applicable taxes. Any amount
representing a prepayment of taxes
applicable to the period subsequent to
the date of the balance sheet, must be
shown under account 165, Prepayments
(§ 367.1650).
(b) If accruals for taxes are found to
be insufficient or excessive, corrections
must be made through current tax
accruals.
(c) Accruals for taxes must be based
upon the net amounts payable after
credit for any discounts, and must not
include any amounts for interest on tax
deficiencies or refunds. Interest received
on refunds must be credited to account
419, Interest and dividend income
(§ 367.4190), and interest paid on
deficiencies must be charged to account
431, Other interest expense (§ 367.4310).
(d) The records supporting the entries
to this account must be kept so as to
show for each class of taxes, the amount
accrued, the basis for the accrual, the
accounts to which charged, and the
amount of tax paid.
§ 367.2370
§ 367.2330 Account 233, Notes payable to
associate companies.
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(b) Exclude from this account notes
and accounts that are included in
account 223, Advances from associate
companies (§ 367.2230).
Account 237, Interest accrued.
This account must include the
amount of interest accrued but not
matured on all liabilities of the service
company not including, however,
interest that is added to the principal of
the debt on which it is incurred.
Supporting records must be maintained
so as to show the amount of interest
accrued on each obligation.
§ 367.2380
declared.
Account 238, Dividends
This account must include the
amount of dividends that have been
declared but not paid. Dividends must
be credited to this account when they
become a liability.
§ 367.2410
payable.
Account 241, Tax collections
(a) This account must include the
amount of taxes collected by the service
company through payroll deductions or
otherwise pending transmittal of the
taxes to the proper taxing authority.
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This account must include the
amount of all other current and accrued
liabilities not provided for in accounts
231 through 243 (§§ 367.2310 through
367.2430), appropriately designated and
supported so as to show the nature of
each liability.
§ 367.2430 Account 243, Obligations under
capital leases—current.
This account must include the
portion, due within one year, of the
obligations recorded for the amounts
applicable to leased property recorded
as assets in account 101.1, Property
under capital leases (§ 367.1011).
Deferred Credits
§ 367.2530
credits.
Account, 253, Other deferred
This account must include advance
billings and receipts and other deferred
credit items, not provided for elsewhere,
including amounts which cannot be
entirely cleared or disposed of until
additional information has been
received.
§ 367.2550 Account 255, Accumulated
deferred investment tax credits.
This account must be credited with
all investment tax credits deferred by
companies that have elected to follow
deferral accounting, partial or full,
rather than recognizing in the income
statement the total benefits of the tax
credit as realized. After this election, a
company may not transfer amounts from
this account, except as authorized in
this account and in accounts 411.4,
Investment tax credit adjustments,
service company property (§ 367.4114)
or 411.5, Investment tax credit
adjustments, other income and
deductions (§ 367.4115), or with
approval of the Commission.
§ 367.2820 Account 282, Accumulated
deferred income taxes—Other property.
(a) This account must include the tax
deferrals resulting from adoption of the
principle of comprehensive inter-period
income tax allocation described in the
General Instructions in § 367.17 that are
related to all property other than
accelerated amortization property.
(b) This account must be credited and
accounts 410.1, Provision for deferred
income taxes, operating income
(§ 367.4101), or 410.2, Provision for
deferred income taxes, Other income
and deductions (§ 367.4102), as
appropriate, must be debited with tax
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effects related to property described in
paragraph (a) of this section where
taxable income is lower than pretax
accounting income due to differences
between the periods in which revenue
and expense transactions affect taxable
income and the periods in which they
enter into the determination of pretax
accounting income.
(c) This account must be debited, and
accounts 411.1, Provision for deferred
income taxes—credit, operating income
(§ 367.4111), or 411.2, Provision for
deferred income taxes—credit, other
income and deductions (§ 367.4112), as
appropriate, must be credited with tax
effects related to property described in
paragraph (a) of this section where
taxable income is higher than pretax
accounting income due to differences
between the periods in which revenue
and expense transactions affect taxable
income and the periods in which they
enter into the determination of pretax
accounting income.
(d) The service company is restricted
in its use of this account to the purposes
described in paragraphs (a) through (c)
of this account. It must not transfer the
balance in this account or any related
portion to retained earnings or make any
other use of the balance except as
provided in paragraph (a) through (c) of
this account without prior approval of
the Commission. Upon the disposition
by sale, exchange, transfer,
abandonment or premature retirement
of property on which there is a related
balance, this account must be charged
with an amount equal to the related
income tax expense, if any, arising from
the disposition and accounts 411.1,
Income taxes deferred in prior years—
Credit (§ 367.4111), or 411.2, Income
taxes deferred in prior years—Credit,
other income and deductions
(§ 367.4112), must be credited. When
property is disposed of by transfer to a
wholly-owned subsidiary, the related
balance in this account also must be
transferred. When the disposition
relates to retirement of an item or items
under a group method of depreciation
where there is no tax effect in the year
of retirement, no entries are required in
this account if it can be determined that
the related balance must be retained to
offset future group item tax deficiencies.
sroberts on PROD1PC70 with PROPOSALS
§ 367.2830 Account 283, Accumulated
deferred income taxes—Other.
(a) This account must include all
credit tax deferrals resulting from the
adoption of the principles of
comprehensive inter-period income tax
allocation described in the General
Instructions in § 367.17 other than those
deferrals that are includible in accounts
and account 282, Accumulated deferred
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Jkt 208001
income taxes—Other property
(§ 367.2820).
(b) This account must be credited, and
accounts 410.1 Provision for deferred
income taxes, operating income
(§ 367.4101), or 410.2 Provision for
deferred income taxes, other income
and deductions (§ 367.4102), as
appropriate, must be debited with tax
effects related to items described in
paragraph (a) of this account where
taxable income is lower than pretax
accounting income due to differences
between the periods in which revenue
and expense transactions affect taxable
income and the periods in which they
enter into the determination of pretax
accounting income.
(c) This account must be debited, and
accounts 411.1, Provision for deferred
income taxes—Credit, operating income
(§ 367.4111), or 411.2, Provision for
deferred income taxes—Credit, other
income and deductions (§ 367.4112), as
appropriate, must be credited with tax
effects related to items described in
paragraph (a) of this account where
taxable income is higher than pretax
accounting income due to differences
between the periods in which revenue
and expense transactions affect taxable
income and the periods in which they
enter into the determination of pretax
accounting income.
(d) Records with respect to entries to
this account, as described in paragraphs
(a) through (c) of this account, and the
account balance, must be maintained so
as to show the factors of calculation
with respect to each annual amount of
the item or class of items.
(e) The service company is restricted
in its use of this account to the purposes
described in paragraphs (a) through (c)
of this account. It must not transfer the
balance in the account or any portion of
the account to retained earnings or to
any other account or make any use of
the account except as provided in the
text of this account, without prior
approval of the Commission. Upon the
disposition by sale, exchange, transfer,
abandonment or premature retirement
of items on which there is a related
balance herein, this account must be
charged with an amount equal to the
related income tax effect, if any, arising
from the disposition and accounts
411.1, Provision for deferred income
taxes—Credit, operating income
(§ 367.4111), or 411.2, Provision for
deferred income taxes—Credit, other
income and deductions (§ 367.4112), as
appropriate, must be credited.
(f) When property is disposed of by
transfer to a wholly-owned subsidiary,
the related balance in this account also
must be transferred. When the
disposition relates to retirement of an
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item or items under a group method of
depreciation where there is no tax effect
in the year of retirement, no entries are
required in this account if it can be
determined that the related balance
must be retained to offset future group
item tax deficiencies.
Subpart G—Service Company Property
Chart of Accounts
§ 367.3010
Account 301, Organization.
(a) This account must include all fees
paid to federal or state governments for
the privilege of incorporation and
expenditures incident to organizing the
corporation, partnership, or other
enterprise and putting it into readiness
to do business
(b) This account must include the
following items:
(1) Cost of obtaining certificates
authorizing the service company to
engage in its business.
(2) Fees and expenses for
incorporation.
(3) Fees and expenses for mergers or
consolidations.
(4) Office expenses incident to
organizing the service company.
(5) Stock and minute books and
corporate seal.
(c) This account must not include any
discounts upon securities issued or
assumed; nor may it include any costs
incident to negotiating loans, selling
bonds or other evidences of debt or
expenses in connection with the
authorization, issuance or sale of capital
stock.
(d) Exclude from this account and
include in the appropriate expense
account, the cost of preparing and filing
papers in connection with the extension
of the term of incorporation unless the
first organization costs have been
written off. When charges are made to
this account for expenses incurred in
mergers, consolidations, or
reorganizations, amounts previously
included in this account or in similar
accounts in the books of the companies
concerned must be excluded from this
account.
§ 367.3030 Account 303, Miscellaneous
intangible property.
(a) This account must include the cost
of patent rights, licenses, privileges, and
other intangible property necessary or
valuable in the conduct of service
company operations and not specifically
chargeable to any other account.
(b) When any item included in this
account is retired or expires, the related
book cost must be credited to this
account and charged to account 426.5,
Other deductions (§ 367.4265), or
account 111, Accumulated provision for
amortization of property (§ 367.1110).
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(c) This account must be maintained
in a manner so that the service company
can furnish full information with
respect to the amounts included in this
account.
§ 367.3890
rights.
Account 389, Land and land
This account must include the cost of
land and land rights used for service
company purposes, the cost of which is
not properly includible in other land
and land rights accounts. (See Service
Company Property Instructions in
§ 367.55.)
§ 367.3900 Account 390, Structures and
improvements.
This account must include the cost in
place of structures and improvements
used for service company purposes, the
cost of which is not properly includible
in other structures and improvements
accounts (See Service Company
Property Instructions in § 367.56).
§ 367.3910 Account 391, Office furniture
and equipment.
(a) This account must include the cost
of office furniture and equipment
owned by the service company and
devoted to service company operations,
and not permanently attached to
buildings, except the cost of the
furniture and equipment that the service
company elects to assign to other
property accounts on a functional basis.
(b) This account must include the
following items:
(1) Bookcases and shelves.
(2) Desks, chairs, and desk equipment.
(3) Drafting-room equipment.
(4) Filing, storage, and other cabinets.
(5) Floor covering.
(6) Library and library equipment.
(7) Mechanical office equipment, such
as accounting machines, typewriters,
and other similar items.
(8) Safes.
(9) Tables.
sroberts on PROD1PC70 with PROPOSALS
§ 367.3920 Account 392, Transportation
equipment.
(a) This account must include the cost
of transportation vehicles used for
service company purposes.
(b) This account must include the
following items:
(1) Airplanes.
(2) Automobiles.
(3) Bicycles.
(4) Electrical vehicles.
(5) Motor trucks.
(6) Motorcycles.
(7) Repair cars or trucks.
(8) Tractors and trailers.
(9) Other transportation vehicles.
§ 367.3930 Account 393, Stores
equipment.
(a) This account must include the cost
of equipment used for the receiving,
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shipping, handling, and storage of
materials and supplies.
(b) This account must include the
following items:
(1) Chain falls.
(2) Counters.
(3) Cranes (portable).
(4) Elevating and stacking equipment
(portable).
(5) Hoists.
(6) Lockers.
(7) Scales.
(8) Shelving.
(9) Storage bins.
(10) Trucks, hand and power driven.
(11) Wheelbarrows.
§ 367.3940 Account 394, Tools, shop and
garage equipment.
(a) This account must include the cost
of tools, implements, and equipment
used in construction, repair work,
general shops and garages and not
specifically provided for or includible
in other accounts.
(b) This account must include the
following items:
(1) Air compressors.
(2) Anvils.
(3) Automobile repair shop
equipment.
(4) Battery charging equipment.
(5) Belts, shafts and countershafts.
(6) Boilers.
(7) Cable pulling equipment.
(8) Concrete mixers.
(9) Drill presses.
(10) Derricks.
(11) Electric equipment.
(12) Engines.
(13) Forges.
(14) Furnaces.
(15) Foundations and settings
specially constructed for equipment in
this account and not expected to outlast
the equipment for which provided.
(16) Gas producers.
(17) Gasoline pumps, oil pumps and
storage tanks.
(18) Greasing tools and equipment.
(19) Hoists.
(20) Ladders.
(21) Lathes.
(22) Machine tools.
(23) Motor-driven tools.
(24) Motors.
(25) Pipe threading and cutting tools.
(26) Pneumatic tools.
(27) Pumps.
(28) Riveters.
(29) Smithing equipment.
(30) Tool racks.
(31) Vises.
(32) Welding apparatus.
(33) Work benches.
§ 367.3950 Account 395, Laboratory
equipment.
(a) This account must include the cost
installed of laboratory equipment used
for general laboratory purposes.
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(b) This account must include the
following items:
(1) Ammeters.
(2) Balances and scales.
(3) Barometers.
(4) Calorimeters-bomb, flow,
recording types, and other similar items.
(5) Current batteries.
(6) Electric furnaces.
(7) Frequency changers.
(8) Galvanometers.
(9) Gas burning equipment.
(10) Gauges.
(11) Glassware, beakers, burettes, and
other similar items.
(12) Humidity testing apparatus.
(13) Inductometers.
(14) Laboratory hoods.
(15) Laboratory standard millivolt
meters.
(16) Laboratory standard volt meters.
(17) Laboratory tables and cabinets.
(18) Meter-testing equipment.
(19) Millivolt meters.
(20) Motor generator sets.
(21) Muffles.
(22) Oil analysis apparatus.
(23) Panels.
(24) Phantom loads.
(25) Piping.
(26) Portable graphic ammeters,
voltmeters, and wattmeters.
(27) Portable loading devices.
(28) Potential batteries.
(29) Potentiometers.
(30) Rotating standards.
(31) Specific gravity apparatus.
(32) Standard bottles for meter prover
testing.
(33) Standard cell, reactance, resistor,
and shunt.
(34) Stills.
(35) Sulphur and ammonia apparatus.
(36) Switchboards.
(37) Synchronous timers.
(38) Tar analysis apparatus.
(39) Testing panels.
(40) Testing resistors.
(41) Thermometers-indicating and
recording.
(42) Transformers.
(43) Voltmeters.
(44) Other testing, laboratory, or
research equipment not provided for
elsewhere.
(45) Other items of equipment for
testing gas, fuel, flue gas, water,
residuals, and other similar items.
§ 367.3960 Account 396, Power operated
equipment.
(a) This account must include the cost
of power operated equipment used in
construction or repair work exclusive of
equipment includible in other accounts.
Include, also, the tools and accessories
acquired for use with the equipment
and the vehicle on which the equipment
is mounted.
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(b) This account must include the
following items:
(1) Air compressors, including driving
unit and vehicle.
(2) Back filling machines.
(3) Boring machines.
(4) Bulldozers.
(5) Cranes and hoists.
(6) Diggers.
(7) Engines.
(8) Pile drivers.
(9) Pipe cleaning machines.
(10) Pipe coating or wrapping
machines.
(11) Tractors—Crawler type.
(12) Trenchers.
(13) Other power operated equipment.
(b) It is intended that this account
include only the large units that are
generally self-propelled or mounted on
movable equipment.
sroberts on PROD1PC70 with PROPOSALS
§ 367.3970 Account 397, Communication
equipment.
(a) This account must include the cost
installed of telephone, telegraph, and
wireless equipment for general use in
connection with service company
operations.
(b) This account must include the
following items:
(1) Amplifiers.
(2) Antennae.
(3) Booths.
(4) Cables.
(5) Carrier terminal equipment.
(6) Conductors.
(7) Distributing boards.
(8) Extension cords.
(9) Gongs.
(10) Hand sets, manual and dial.
(11) Insulators.
(12) Intercommunicating sets.
(13) Loading coils.
(14) Microwave equipment.
(15) Operators’ desks.
(16) Paraboloids.
(17) Poles and fixtures used wholly
for telephone or telegraph wire.
(18) Power supply equipment.
(19) Radio transmitting and receiving
sets.
(20) Reflectors.
(21) Repeaters.
(22) Remote control equipment and
lines.
(23) Sending keys.
(24) Storage batteries.
(25) Switchboards.
(26) Telautograph circuit connections.
(27) Telegraph receiving sets.
(28) Telephone and telegraph circuits.
(29) Testing instruments.
(30) Towers.
(31) Underground conduit used
wholly for telephone or telegraph wires
and cable wires.
§ 367.3980 Account 398, Miscellaneous
equipment.
(a) This account must include the cost
of equipment, apparatus, and other
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similar items, used in the service
company’s operations, that is not
included in any other account of this
system of accounts.
(b) This account must include the
following items:
(1) Hospital and infirmary equipment.
(2) Kitchen equipment.
(3) Employees’ recreation equipment.
(4) Radios.
(5) Restaurant equipment.
(6) Soda fountains.
(7) Operators’ cottage furnishings.
(8) Other miscellaneous equipment.
§ 367.3990
property.
Account 399, Other tangible
This account must include the cost of
tangible service company property not
provided for elsewhere.
§ 367.3991 Account 399.1, Asset
retirement costs for service company
property.
This account must include asset
retirement cost on service company
property.
Subpart H—Income Statement Chart of
Accounts
Service Company Operating Income
§ 367.4000
revenues.
Account 400, Operating
There must be shown under this
caption the total amount included in the
service company operating revenue
accounts 457 through 459 (§§ 367.4570
through 367.4590).
§ 367.4010
expense.
Account 401, Operation
There must be shown under this
caption the total amount included in the
service company operation expense
accounts 500 through 589 (§§ 367.5000
through 367.5890), 800 through 881
(§§ 367.8000 through 367.8810) and 901
through 931 (§§ 367.9010 through
367.9310).
§ 367.4020
expense.
Account 402, Maintenance
There must be shown under this
caption the total amount included in the
service company maintenance expense
accounts 500 through 598 (§§ 367.5000
through 367.5890), 800 though 894
(§§ 367.8000 through 367.8810), and 935
(§ 367.9350).
§ 367.4030
expense.
Account 403, Depreciation
(a) This account must include the
amount of depreciation for all service
company property, the cost of which is
included in accounts 390 through 399.1
(§§ 367.3900 through 367.3991). Provide
subaccounts by each class of service
company property owned or leased
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except the depreciation expense that is
charged to clearing accounts or to
account 416, Costs and expenses of
merchandising, jobbing and contract
work (§ 367.4160).
(b) The service company must keep
the records of property and property
retirements that will reflect the service
life of property that has been retired and
aid in estimating probable service life by
mortality, turnover, or other appropriate
methods; and also the records that will
reflect the percentage of salvage and
costs of removal for property retired
from each account, or related
subaccount, for depreciable property.
(c) Depreciation expenses applicable
to transportation equipment, shop
equipment, tools, work equipment,
power operated equipment and other
general equipment may be charged to
clearing accounts as necessary in order
to obtain a proper distribution of
expenses between construction and
operation.
§ 367.4031 Account 403.1, Depreciation
expense for asset retirement costs.
This account must include the
depreciation expense for asset
retirement costs included in service
company property.
§ 367.4040 Account 404, Amortization of
limited-term property.
This account must include
amortization charges applicable to
amounts included in the service
company property’s accounts for
limited-term franchises, licenses, patent
rights, limited-term interests in land,
and expenditures on leased property
where the service life of the
improvements is terminable by action of
the lease. The charges to this account
must be sufficient to distribute the book
cost of each investment as evenly as
may be over the period of its benefit.
(See account 111, Accumulated
provision for amortization of service
company property (§ 367.1110).)
§ 367.4050 Account 405, Amortization of
other property.
(a) When authorized by the
Commission, this account must include
charges for amortization of intangible or
other property that does not have a
definite or terminable life and that is not
subject to charges for depreciation
expense.
(b) This account must be supported in
sufficient detail to show the
amortization applicable to each
investment being amortized, together
with the book cost of the investment
and the period over which it is being
written off.
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§ 367.4081 Account 408.1, Taxes other
than income taxes, operating income.
§ 367.4114 Account 411.4, Investment tax
credit adjustments, service company
property.
This account must include those
taxes, other than income taxes, that
relate to service company operating
income. This account must be
maintained so as to allow ready
identification of the various classes of
taxes.
This account must include the
amount of those investment tax credit
adjustments that relate to service
company property.
§ 367.4115 Account 411.5, Investment tax
credit adjustments, other.
§ 367.4082 Account 408.2, Taxes other
than income taxes, other income and
deductions.
This account must include those
taxes, other than income taxes, that
relate to other income and deductions.
§ 367.4091 Account 409.1, Income taxes,
operating income.
This account must include the
amount of those local, state and Federal
income taxes that relates to service
company operating income.
§ 367.4092 Account 409.2, Income taxes,
other income and deductions.
This account must include the
amount of those local, state and Federal
income taxes (both positive and
negative), that relate to other income
and deductions.
§ 367.4093 Account 409.3, Income taxes,
extraordinary items.
This account must include the
amount of those local, state and Federal
income taxes (both positive and
negative), that relate to extraordinary
items.
§ 367.4101 Account 410.1, Provision for
deferred income taxes, operating income.
This account must include the
amounts of those deferrals of taxes and
allocations of deferred taxes that relate
to service company operating income.
§ 367.4102 Account 410.2, Provision for
deferred income taxes, other income and
deductions.
This account must include the
amounts of those deferrals of taxes and
allocations of deferred taxes that relate
to other income and deductions.
§ 367.4111 Account 411.1, Provision for
deferred income taxes—Credit, operating
income.
sroberts on PROD1PC70 with PROPOSALS
This account must include the
amounts of those allocations of deferred
taxes and deferrals of taxes, credit, that
relate to service company operating
income.
§ 367.4112 Account 411.2, Provision for
deferred income taxes—Credit, other
income and deductions.
This account must include the
amounts of those allocations of deferred
taxes and deferrals of taxes, credit, that
relate to other income and deductions.
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This account must include the
amount of those investment tax credit
adjustments not properly included in
other accounts.
§ 367.4116
expense.
Account 411.10, Accretion
This account must be charged for
accretion expense on the liabilities
associated with asset retirement
obligations included in account 230,
Asset retirement obligations
(§ 367.2300), related to service company
property.
§ 367.4150 Account 415, Revenues from
merchandising, jobbing and contract work.
(a) These accounts shall include
respectively, all revenues derived from
the sale of merchandise and jobbing or
contract work, including any profit or
commission accruing to the service
company on jobbing work performed by
it as agent under contracts whereby it
does jobbing work for another for a
stipulated profit or commission, and all
expenses incurred in such activities.
Interest related income from installment
sales must be recorded in Account 419,
Interest and Dividend income
(§ 367.4190).
(b) Records in support of this account
must be so kept as to permit ready
summarization of revenues by such
major items as are feasible.
(c) This account must include
revenues from the sale of merchandise
and from jobbing and contract work,
and discounts and allowances made in
settlement of bills for merchandise and
jobbing work.
(d) Related taxes must be recorded in
account 408.2, Taxes other than income
taxes, other income and deductions
(§ 367.4082), or account 409.2, Income
taxes, other income and deductions
(§ 367.4092), as appropriate.
§ 367.4160 Account 416, Costs and
expenses of merchandising, jobbing and
contract work.
(a) This account must include the
following labor items:
(1) Canvassing and demonstrating
appliances in homes and other places
for the purpose of selling appliances.
(2) Demonstrating and selling
activities in sales rooms.
(3) Installing appliances on customer
premises where the work is done only
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for purchasers of appliances from the
utility.
(4) Installing wiring, piping, or other
property work, on a jobbing or contract
basis.
(5) Preparing advertising materials for
appliance sales purposes.
(6) Receiving and handling customer
orders for merchandise or for jobbing
services.
(7) Cleaning and tidying sales rooms.
(8) Maintaining display counters and
other equipment used in merchandising.
(9) Arranging merchandise in sales
rooms and decorating display windows.
(10) Reconditioning repossessed
appliances.
(11) Bookkeeping and other clerical
work in connection with merchandise
and jobbing activities.
(12) Supervising merchandise and
jobbing operations.
(b) This account must include the
following materials and expenses items:
(1) Advertising in newspapers,
periodicals, radio, television, and other
similar items.
(2) Cost of merchandise sold and of
materials used in jobbing work.
(3) Stores expenses on merchandise
and jobbing stocks.
(4) Fees and expenses of advertising
and commercial artists’ agencies.
(5) Printing booklets, dodgers, and
other advertising data.
(6) Premiums given as inducement to
buy appliances.
(7) Light, heat and power.
(8) Depreciation on equipment used
primarily for merchandise and jobbing
operations.
(9) Rent of sales rooms or of
equipment.
(10) Transportation expense in
delivery and pick-up of appliances by
the utility’s facilities or by others.
(11) Stationery and office supplies
and expenses.
(12) Losses from uncollectible
merchandise and jobbing accounts.
(c) Records in support of this account
shall be so kept as to permit ready
summarization of costs and expenses by
such major items as are feasible.
(d) Related taxes must be recorded in
account 408.2, Taxes other than income
taxes, other income and deductions
(§ 367.4082), or account 409.2, Income
taxes, other income and deductions
(§ 367.4092), as appropriate.
§ 367.4171 Account 417.1, Expenses of
non-utility related operations.
(a) This account will include
expenses incurred in providing services
to non-utility companies where the
revenues from which are included in
Account 459, Services rendered to nonutility companies (§ 367.4590).
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Expenses related to providing customer,
sales or administrative and general
services to non-utility companies will
initially be recorded in the 900 series of
accounts and transferred to Account
417.1 (§ 367.4171), through credit to
Account 922, Administrative expenses
transferred—Credit (§ 367.9220). The
cost of other services provided to nonutility companies will be charged
directly to Account 417.1 (§ 367.4171).
(b) Related taxes must be recorded in
account 408.1, Taxes other than income
taxes, operating income (§ 367.4081), or
account 409.1, Income taxes, operating
income (§ 367.4091).
§ 367.4181 Account 418.1, Equity in
earnings of subsidiary companies.
This account must include the service
company’s equity in the earnings or
losses of subsidiary companies for the
year.
sroberts on PROD1PC70 with PROPOSALS
§ 367.4190 Account 419, Interest and
dividend income.
(a) This account must include interest
revenues on securities, loans, notes,
advances, special deposits, tax refunds
and all other interest-bearing assets, and
dividends on stocks of other companies,
whether the securities on which the
interest and dividends are received are
carried as investments or included in
sinking or other special fund accounts.
(b) This account may include the pro
rata amount necessary to extinguish
(during the interval between the date of
acquisition and the date of maturity) the
difference between the cost to the
service company and the face value of
interest-bearing securities. The amounts
credited or charged must be
concurrently included in the accounts
in which the securities are carried.
(c) Where significant in amount,
expenses, excluding operating taxes and
income taxes, applicable to security
investments and to interest and
dividend revenues on the account must
be charged in this account.
(d) Related taxes must be recorded in
account 408.2, Taxes other than income
taxes, other income and deductions
(§ 367.4082), or account 409.2 Income
taxes, other income and deductions
(§ 367.4092).
(e) Interest accrued, the payment of
which is not reasonably assured,
dividends receivable that have not been
declared or guaranteed, and interest or
dividends upon reacquired securities
issued or assumed by the service
company must not be credited to this
account.
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§ 367.4191 Account 419.1, Allowance for
other funds used during construction.
less increase in cash surrender value of
policies).
This account must include concurrent
credits for allowance for other funds
used during construction.
§ 367.4263
§ 367.4210 Account 421, Miscellaneous
income or loss.
This account must include all revenue
and expense items except taxes properly
includible in the income account and
not provided for elsewhere. Related
taxes must be recorded in account
408.2, Taxes other than income taxes,
other income and deductions
(§ 367.4082), or account 409.2, Income
taxes, other income and deductions
(§ 367.4092).
§ 367.4211 Account 421.1, Gain on
disposition of property.
This account must be credited with
the gain on the sale, conveyance,
exchange, or transfer of service or other
property to another. Income taxes on
gains recorded in this account must be
recorded in account 409.2, Income
taxes, other income and deductions
(§ 367.4092).
§ 367.4212 Account 421.2, Loss on
disposition of property.
This account must be charged with
the loss on the sale, conveyance,
exchange or transfer of service or other
property to another. The reduction in
income taxes relating to losses recorded
in this account must be recorded in
account 409.2 Income taxes, other
income and deductions (§ 367.4092).
§ 367.4250 Account 425, Miscellaneous
amortization.
(a) This account must include
amortization charges not includible in
other accounts which are properly
deductible in determining the income of
the service company before interest
charges. Charges included in this
account, if significant in amount, must
be in accordance with an orderly and
systematic amortization program.
(b) This account must include the
following items:
(1) Amortization of intangibles
included in service company property.
(2) Other miscellaneous amortization
charges authorized to be included in
this account by the Commission.
§ 367.4261
Account 426.1, Donations.
This account must include all
payments or donations for charitable,
social or community welfare purposes.
§ 367.4262
Account 426.2, Life insurance.
This account must include all
payments for life insurance of officers
and employees where the service
company is beneficiary (net premiums
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Account 428.3, Penalties.
This account must include payments
by the service company for penalties or
fines for violation of any regulatory
statutes by the service company or its
officials.
§ 367.4264 Account 426.4, Expenditures
for certain civic, political and related
activities.
(a) This account must include
expenditures for the purpose of
influencing public opinion with respect
to the election or appointment of public
officials, referenda, legislation, or
ordinances (either with respect to the
possible adoption of new referenda,
legislation or ordinances or repeal or
modification of existing referenda,
legislation or ordinances) or approval,
modification, or revocation of
franchises; or for the purpose of
influencing the decisions of public
officials.
(b) This account must not include
expenditures that are directly related to
appearances before regulatory or other
governmental bodies in connection with
an associate utility company’s existing
or proposed operations.
§ 367.4265 Account 426.5, Other
deductions.
This account must include other
miscellaneous expenses that are not
properly included in service company
operations.
§ 367.4270
term debt.
Account 427, Interest on long-
(a) This account must include the
amount of interest on outstanding longterm debt issued or assumed by the
service company, the liability for which
is included in account 224, Other longterm debt (§ 367.2240).
(b) This account must be kept or
supported so as to show the interest
accruals on each class and series of
long-term debt.
(c) This account must not include
interest on nominally issued or
nominally outstanding long-term debt,
including securities assumed.
§ 367.4280 Account 428, Amortization of
debt discount and expense.
(a) This account must include the
amortization of unamortized debt
discount and expense on outstanding
long-term debt. Amounts charged to this
account must be credited concurrently
to accounts 181, Unamortized debt
expense (§ 367.1810), and 226,
Unamortized discount on long-term
debt—Debit (§ 367.2260).
(b) This account must be kept or
supported so as to show the debt
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discount and expense on each class and
series of long-term debt.
§ 367.4290 Account 429, Amortization of
premium on debt—Credit.
(a) This account must include the
amortization of unamortized net
premium on outstanding long-term debt.
Amounts credited to this account must
be charged concurrently to account 225,
Unamortized premium on long-term
debt (§ 367.2250).
(b) This account must be kept or
supported so as to show the premium
on each class and series of long-term
debt.
(c) This account must include the
following items:
(1) Loss relating to investments in
securities written-off or written-down.
(2) Loss on sale of investments.
(3) Loss on reacquisition, resale or
retirement of service company’s debt
securities.
(4) Preliminary survey and
investigation expenses related to
abandoned projects, when not writtenoff to the appropriate operating expense
account.
§ 367.4300 Account 430, Interest on debt
to associate companies.
This account must include interest
accrued on amounts included in
account 223, Advances from associate
companies (§ 367.2230), and account
233, Notes payable to associate
companies (§ 367.2330). The records
supporting the entries to this account
must be kept so as to show to whom the
interest is to be paid, the period covered
by the accrual, the rate of interest and
the principal amount of the advances or
other obligations on which the interest
is accrued. Separate subaccounts must
be maintained for each related debt
account.
§ 367.4310
expense.
Account 431, Other interest
This account must include all interest
charges not provided for elsewhere.
§ 367.4320 Account 432, Allowance for
borrowed funds used during construction—
Credit.
sroberts on PROD1PC70 with PROPOSALS
This account must include concurrent
credits for allowance for borrowed
funds used during construction.
Subpart I—Retained Earnings
Accounts
§ 367.4330 Account 433, Balance
transferred from income.
This account must include the net
credit or debit transferred from income
for the year.
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§ 367.4340
income.
Account 434, Extraordinary
This account must be credited with
gains of unusual nature and infrequent
occurrence, that would significantly
distort the current year’s income
computed before extraordinary items, if
reported other than as extraordinary
items. Income tax relating to the
amounts recorded in this account must
be recorded in account 409.3, Income
taxes, extraordinary items (§ 367.4093).
(See General Instructions in § 367.8.)
§ 367.4350 Account 435, Extraordinary
deductions.
This account must be debited with
losses of unusual nature and infrequent
occurrence that would significantly
distort the current year’s income
computed before extraordinary items, if
reported other than as extraordinary
items. Income tax relating to the
amounts recorded in this account must
be recorded in account 409.3, Income
taxes, extraordinary items (§ 367.4093).
(See General Instructions in § 367.8.)
§ 367.4360 Account 436, Appropriations of
retained earnings.
This account must include
appropriations of retained earnings as
follows:
(a) Appropriations required under
terms of mortgages, orders of courts,
contracts, or other agreements.
(b) Appropriations required by action
of regulatory authorities.
(c) Other appropriations made at
option of the service company for
specific purposes.
§ 367.4370 Account 437, Dividends
declared—preferred stock.
(a) This account must include
amounts declared payable out of
retained earnings as dividends on
actually outstanding preferred or prior
lien capital stock issued by the service
company.
(b) Dividends must be segregated for
each class and series of preferred stock
as to those payable in cash, stock, and
other forms. If not payable in cash, the
medium of payment must be described
with sufficient detail to identify it.
§ 367.4380 Account 438, Dividends
declared—common stock.
(a) This account must include
amounts declared payable out of
retained earnings as dividends on
actually outstanding common capital
stock issued by the service company.
(b) Dividends must be segregated for
each class of common stock as to those
payable in cash, stock and other forms.
If not payable in cash, the medium of
payment must be described with
sufficient detail to identify it.
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§ 367.4390 Account 439, Adjustments to
retained earnings.
(a) This account must, with prior
Commission approval, include
significant non-recurring transactions
accounted for as prior period
adjustments, as follows:
(1) Correction of an error in the
financial statements of a prior year.
(2) Adjustments that result from
realization of income tax benefits of
reacquisition operating loss carry
forwards of purchased subsidiaries. All
other items of profit and loss recognized
during a year must be included in the
determination of net income for that
year.
(b) Adjustments, charges, or credits
due to losses on reacquisition, resale or
retirement of the company’s own capital
stock must be included in this account.
Subpart J—Operating Revenue Chart
of Accounts
§ 367.4570 Account 457, Services
rendered to associate utility companies.
This account must include amounts
billed to associate utility companies for
services rendered at cost. (See accounts
457.1 through 457.3 in §§ 367.4571
through 367.4573). Overbillings or
underbillings arising from adjustments
of estimated costs to actual costs must
be cleared through this account and
concurrent adjustments made to other
accounts involved.
§ 367.4571 Account 457.1, Direct costs
charged to associate utility companies.
This account must include those
direct costs that can be identified
through a work order system as being
applicable to services performed for
associate utility companies. This
account must not include any
compensation for use of equity capital
or inter-company interest on
indebtedness.
§ 367.4572 Account 457.2, Indirect costs
charged to associate utility companies.
This account must include recovery of
those indirect costs that cannot be
separately identified to a single or group
of associate companies and therefore
must be allocated. Only journal or
memorandum entries should be
prepared monthly, by departments, for
all such cost accumulated and billed to
customers. Amounts billed to associate
utility companies must be included in
this account. This account must not
include any compensation for use of
equity capital or inter-company interest
on indebtedness.
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§ 367.4573 Account 457.3, Compensation
for use of capital-associate utility
companies.
367.4583) and General Instructions in
§ 367.23.)
This account must include only the
portion of compensation for use of
equity capital and inter-company
interest on indebtedness before income
taxes that is properly allocable to
services rendered to each associate
utility company.
§ 367.4590 Account 459, Services
rendered to non-utility companies.
§ 367.4580 Account 458, Services
rendered to non-associate utility
companies.
§ 367.4591 Account 459.1, Direct costs
charged to non-utility companies.
This account must include amounts
billed for services rendered to nonassociate utility companies. (See
accounts 458.1 through 458.4
(§§ 367.4581 through 367.4584).)
§ 367.4581 Account 458.1, Direct costs
charged to non-associate utility companies.
This account must include those
direct costs that can be identified
through a work order system as being
applicable to services performed for
non-associate utility companies. This
account must not include any
compensation for use of equity capital
or interest on indebtedness.
This account must include recovery of
those indirect costs of services
performed for non-associate utility
companies that cannot be specifically
assigned and therefore must be
allocated. This account must not
include any compensation for use of
equity capital or inter-company interest
on indebtedness.
§ 367.4583 Account 458.3, Compensation
for use of capital—Non-associate utility
companies.
This account must include only the
portion of compensation for use of
equity capital and inter-company
interest on indebtedness before income
taxes that is properly allocable to
services rendered to non-associate
utility companies. A statement to
support the basis for the compensation
and how it was calculated must be
attached to a separate journal entry,
ledger system, or memorandum file.
sroberts on PROD1PC70 with PROPOSALS
§ 367.4584 Account 458.4, Excess or
deficiency on servicing non-associate utility
companies.
This account must include the
amount by which the aggregate price
received for services rendered to nonassociate utility companies differs from
the sum of the total direct and indirect
costs and compensation for use of
capital which are properly allocable to
such services. (See accounts 458.1
through 458.3 (§§ 367.4581 through
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This account must include those
direct costs that can be identified
through a work order system as being
applicable to services performed for
associate and non-associate companies
except utility companies. This account
must not include any compensation for
use of equity capital or interest on
indebtedness.
§ 367.4592 Account 459.2, Indirect costs
charged to non-utility companies.
§ 367.4582 Account 458.2, Indirect costs
charged to non-associate utility companies.
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This account must include amounts
billed for services rendered to nonutility companies. (See accounts 459.1
through 459.4 (§§ 367.4591 through
367.4594).)
This account must include recovery of
those indirect costs of services
performed for associate and nonassociate companies except utility
companies that cannot be separately
identified and therefore must be
allocated. This account must exclude
amounts billed to associate and nonassociate utility companies. This
account must not include any
compensation for use of equity capital
or inter-company interest on
indebtedness.
§ 367.4593 Account 459.3, Compensation
for use of capital—non-utility companies.
This account must include only the
portion of compensation for use of
equity capital and inter-company
interest on indebtedness before income
taxes that is properly allocable to
services rendered to associate and nonassociate companies except utility
companies. A statement to support the
basis for the compensation and how it
was calculated must be attached to a
separate journal entry, ledger system, or
memorandum file.
§ 367.4594 Account 459.4, Excess or
deficiency on servicing non-associate nonutility companies.
This account must include the
amount by which the aggregate price
received for services rendered to nonassociate companies except utility
companies differs from the sum of the
total direct and indirect costs and
compensation for use of capital which
are properly allocable to such services.
(See Accounts 459.1 through 459.3
(§§ 367.4591 through 367.4593) and
General Instructions (§ 367.23).)
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Subpart K—Operation and
Maintenance Expense Chart of
Accounts
§ 367.5000 Accounts 500–598, Electric
operation and maintenance accounts.
Service companies must use accounts
500 through 598 in part 101 of this
chapter.
§ 367.8000 Accounts 800–894, Gas
operation and maintenance accounts.
Service companies must use accounts
800 through 894 in part 201 of this
chapter.
§ 367.9010
Account 901, Supervision.
This account must include the cost of
labor and expenses incurred in the
general direction and supervision of
customer accounting and collecting
activities. Direct supervision of a
specific activity must be charged to
account 902, Meter reading expenses
(§ 367.9020), or account 903, Customer
records and collection expenses
(§ 367.9030), as appropriate. (See
Operating Expense Instructions in
§ 367.80.)
§ 367.9020
expenses.
Account 902, Meter reading
(a) This account must include the cost
of labor, materials used and expenses
incurred in reading customer meters,
and determining consumption when
performed by employees engaged in
reading meters.
(b) This account must include the
following labor items:
(1) Addressing forms for obtaining
meter readings by mail.
(2) Changing and collecting meter
charts used for billing purposes.
(3) Inspecting time clocks, checking
seals, and other similar items, when
performed by meter readers and the
work represents a minor activity
incidental to regular meter reading
routine.
(4) Reading meters, including demand
meters, and obtaining load information
for billing purposes. Exclude and charge
to account 586, Meter expenses
(§ 367.5860), account 878, Meter and
house regulator expenses (§ 367.8780),
or to account 903, Customer records and
collection expenses (§ 367.9030), as
applicable, the cost of obtaining meter
readings, first and final, if incidental to
the operation of removing or resetting,
sealing, or locking, and disconnecting or
reconnecting meters.
(5) Computing consumption from
meter reader’s book or from reports by
mail when done by employees engaged
in reading meters.
(6) Collecting from prepayment
meters when incidental to meter
reading.
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(7) Maintaining record of customers’
keys.
(8) Computing estimated or average
consumption when performed by
employees engaged in reading meters.
(c) This account must include the
following materials and expenses items:
(1) Badges, lamps, and uniforms.
(2) Demand charts, meter books and
binders and forms for recording
readings, but not the cost of preparation.
(3) Postage and supplies used in
obtaining meter readings by mail.
(4) Transportation, meals, and
incidental expenses.
sroberts on PROD1PC70 with PROPOSALS
§ 367.9030 Account 903, Customer records
and collection expenses.
(a) This account must include the cost
of labor, materials used and expenses
incurred in work on customer
applications, contracts, orders, credit
investigations, billing and accounting,
collections and complaints.
(b) This account must include the
following labor items:
(1) Receiving, preparing, recording
and handling routine orders for service,
disconnections, transfers or meter tests
initiated by the customer, excluding the
cost of carrying out the orders, that is
chargeable to the account appropriate
for the work called for by the orders.
(2) Investigations of customers’ credit
and keeping of records pertaining to the
investigations, including records of
uncollectible accounts written off.
(3) Receiving, refunding or applying
customer deposits and maintaining
customer deposit, line extension, and
other miscellaneous records.
(4) Checking consumption shown by
meter readers’ reports where incidental
to preparation of billing data.
(5) Preparing address plates and
addressing bills and delinquent notices.
(6) Preparing billing data.
(7) Operating billing and bookkeeping
machines.
(8) Verifying billing records with
contracts or rate schedules.
(9) Preparing bills for delivery, and
mailing or delivering bills.
(10) Collecting revenues, including
collection from prepayment meters
unless incidental to meter-reading
operations.
(11) Balancing collections, preparing
collections for deposit, and preparing
cash reports.
(12) Posting collections and other
credits or charges to customer accounts
and extending unpaid balances.
(13) Balancing customer accounts and
controls.
(14) Preparing, mailing, or delivering
delinquent notices and preparing
reports of delinquent accounts.
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(15) Final meter reading of delinquent
accounts when done by collectors
incidental to regular activities.
(16) Disconnecting and reconnecting
service because of nonpayment of bills.
(17) Receiving, recording, and
handling of inquiries, complaints, and
requests for investigations from
customers, including preparation of
necessary orders, but excluding the cost
of carrying out such orders, which is
chargeable to the account appropriate
for the work called for by the orders.
(18) Statistical and tabulating work on
customer accounts and revenues, but
not including special analyses for sales
department, rate department, or other
general purposes, unless incidental to
regular customer accounting routines.
(19) Preparing and periodically
rewriting meter reading sheets.
(20) Determining consumption and
computing estimated or average
consumption when performed by
employees other than those engaged in
reading meters.
(c) This account must include the
following materials and expenses items:
(1) Address plates and supplies.
(2) Cash overages and shortages.
(3) Commissions or fees to others for
collecting.
(4) Payments to credit organizations
for investigations and reports.
(5) Postage.
(6) Transportation expenses (Major
only), including transportation of
customer bills and meter books under
centralized billing procedure.
(7) Transportation, meals, and
incidental expenses.
(8) Bank charges, exchange, and other
fees for cashing and depositing
customers’ checks.
(9) Forms for recording orders for
services removals, and other similar
forms.
(10) Rent of mechanical equipment.
(d) The cost of work on meter history
and meter location records is chargeable
to account 586, Meter expenses
(§ 367.5860) or account 878, Meter and
house regulator expenses (§ 367.8780).
§ 367.9040
accounts.
Account 904, Uncollectible
This account must be charged with
amounts sufficient to provide for losses
from uncollectible service company
revenues. Concurrent credits must be
made to account 144, Accumulated
provision for uncollectible accounts—
Credit (§ 367.1440). Losses from
uncollectible accounts also must be
charged to account 144 (§ 367.1440).
§ 367.9050 Account 905, Miscellaneous
customer accounts expenses.
(a) This account must include the cost
of labor, materials used and expenses
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incurred not provided for in other
accounts.
(b) This account must include the
following labor items:
(1) General clerical and stenographic
work.
(2) Miscellaneous labor.
(c) This account must include the
following materials and expenses items:
(1) Communication service.
(2) Miscellaneous office supplies and
expenses and stationery and printing
other than those specifically provided
for in accounts 902 and 903
(§§ 367.9020 and 367.9030).
§ 367.9070
Account 907, Supervision.
This account must include the cost of
labor and expenses incurred in the
general direction and supervision of
customer service activities, the object of
which is to encourage safe, efficient and
economical use of the associate utility
company’s service. Direct supervision of
a specific activity within customer
service and informational expense
classification must be charged to the
account wherein the costs of such
activity are included. (See Operating
Expense Instructions in § 367.80.)
§ 367.9080 Account 908, Customer
assistance expenses.
(a) This account must include the cost
of labor, materials used and expenses
incurred in providing instructions or
assistance to customers, the object of
which is to encourage safe, efficient and
economical use of the associate utility
company’s service.
(b) This account must include the
following labor items:
(1) Direct supervision of department.
(2) Processing customer inquiries
relating to the proper use of electric
equipment, the replacement of such
equipment and information related to
the equipment.
(3) Advice directed to customers as to
how they may achieve the most efficient
and safest use of electric equipment.
(4) Demonstrations, exhibits, lectures,
and other programs designed to instruct
customers in the safe, economical or
efficient use of electric service, and/or
oriented toward conservation of energy.
(5) Engineering and technical advice
to customers, the object of which is to
promote safe, efficient and economical
use of the associate utility company’s
service.
(c) This account must include the
following materials and expenses items:
(1) Supplies and expenses pertaining
to demonstrations, exhibits, lectures,
and other programs.
(2) Loss in value on equipment and
appliances used for customer assistance
programs.
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(3) Office supplies and expenses.
(4) Transportation, meals, and
incidental expenses.
(d) Do not include in this account
expenses that are provided for
elsewhere, such as accounts 416, Costs
and expenses of merchandising, jobbing
and contract work (§ 367.4160), 587,
Customer installations expenses
(§ 368.5870), 879, Customer installations
expenses (§ 367.8790), and 912,
Demonstrating and selling expenses
(§ 367.9120).
sroberts on PROD1PC70 with PROPOSALS
§ 367.9090 Account 909, Informational and
instructional advertising expenses.
(a) This account must include the cost
of labor, materials used and expenses
incurred in activities which primarily
convey information as to what the
associate utility company urges or
suggests customers should do in
utilizing service to protect health and
safety, to encourage environmental
protection, to utilize their equipment
safely and economically, or to conserve
energy.
(b) This account must include the
following labor items:
(1) Direct supervision of informational
activities.
(2) Preparing informational materials
for newspapers, periodicals, billboards,
and other similar forms of
advertisement, and preparing and
conducting informational motion
pictures, radio and television programs.
(3) Preparing informational booklets,
bulletins, and other similar forms of
advertisement, used in direct mailings.
(4) Preparing informational window
and other displays.
(5) Employing agencies, selecting
media and conducting negotiations in
connection with the placement and
subject matter of information programs.
(c) This account must include the
following materials and expenses items:
(1) Use of newspapers, periodicals,
billboards, radio, and other similar
forms of advertisement, for
informational purposes.
(2) Postage on direct mailings to
customers exclusive of postage related
to billings.
(3) Printing of informational booklets,
dodgers, bulletins, and other similar
items.
(4) Supplies and expenses in
preparing informational materials for
the associate utility company.
(5) Office supplies and expenses.
(d) Exclude from this account and
charge to account 930.2, Miscellaneous
general expenses, the cost of publication
of stockholder reports, dividend notices,
bond redemption notices, financial
statements, and other notices of a
general corporate character. Also
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exclude all expenses of a promotional,
institutional, goodwill or political
nature, that are included in accounts
913, Advertising expenses (§ 367.9130),
930.1, General advertising expenses
(§ 367.9301), and 426.4, Expenditures
for certain civic, political, and related
expenses (§ 367.4264).
(e) Entries relating to informational
advertising included in this account
must contain or refer to supporting
documents that identify the specific
advertising message. If references are
used, copies of the advertising message
must be readily available.
§ 367.9100 Account 910, Miscellaneous
customer service and informational
expenses.
(a) This account must include the cost
of labor, materials used and expenses
incurred in connection with customer
service and informational activities that
are not includible in other customer
information expense accounts.
(b) This account must include the
following labor items:
(1) General clerical and stenographic
work not assigned to specific customer
service and informational programs.
(2) Miscellaneous labor.
(c) This account must include the
following materials and expenses items:
(1) Communication service.
(2) Printing, postage and office
supplies expenses.
§ 367.9110
Account 911, Supervision.
This account must include the cost of
labor and expenses incurred in the
general direction and supervision of
sales activities, except merchandising.
Direct supervision of a specific activity,
such as demonstrating, selling, or
advertising, must be charged to the
account wherein the costs of such
activity are included. (See Operating
Expense Instructions in § 367.80.)
§ 367.9120 Account 912, Demonstrating
and selling expenses.
(a) This account must include the cost
of labor, materials used and expenses
incurred in promotional, demonstrating,
and selling activities, except by
merchandising, the object of which is to
promote or retain the use of utility
services by present and prospective
customers.
(b) This account must include the
following labor items:
(1) Demonstrating uses of utility
services.
(2) Conducting cooking schools,
preparing recipes, and related home
service activities.
(3) Exhibitions, displays, lectures, and
other programs designed to promote use
of utility services.
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(4) Experimental and development
work in connection with new and
improved appliances and equipment,
prior to general public acceptance.
(5) Solicitation of new customers or of
additional business from old customers,
including commissions paid employees.
(6) Engineering and technical advice
to present or prospective customers in
connection with promoting or retaining
the use of utility services.
(7) Special customer canvasses when
their primary purpose is the retention of
business or the promotion of new
business.
(c) This account must include the
following materials and expenses items:
(1) Supplies and expenses pertaining
to demonstration and experimental and
development activities.
(2) Booth and temporary space rental.
(3) Loss in value on equipment and
appliances used for demonstration
purposes.
(4) Transportation, meals, and
incidental expenses.
§ 367.9130
expenses.
Account 913, Advertising
(a) This account must include the cost
of labor, materials used and expenses
incurred in advertising designed to
promote or retain the use of utility
service, except advertising the sale of
merchandise by the utility company.
(b) This account must include the
following labor items:
(1) Direct supervision of department.
(2) Preparing advertising material for
newspapers, periodicals, billboards, and
other similar forms of advertisement,
and preparing and conducting motion
pictures, radio and television programs.
(3) Preparing booklets, bulletins, and
other similar forms of advertisement,
used in direct mail advertising.
(4) Preparing window and other
displays.
(5) Clerical and stenographic work.
(6) Investigating advertising agencies
and media and conducting negotiations
in connection with the placement and
subject matter of sales advertising.
(c) This account must include the
following materials and expenses items:
(1) Advertising in newspapers,
periodicals, billboards, radio, and other
similar forms of advertisement, for sales
promotion purposes, but not including
institutional or goodwill advertising
included in account 930.1, General
advertising expenses.
(2) Materials and services given as
prizes or otherwise in connection with
civic lighting contests, canning, or
cooking contests, bazaars, and other
similar materials and services, in order
to publicize and promote the use of
utility services.
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(3) Fees and expenses of advertising
agencies and commercial artists.
(4) Novelties for general distribution.
(5) Postage on direct mail advertising.
(6) Premiums distributed generally,
such as recipe books, and other similar
items, when not offered as inducement
to purchase appliances.
(7) Printing booklets, dodgers,
bulletins, and other similar forms of
advertisement.
(8) Supplies and expenses in
preparing advertising material.
(9) Office supplies and expenses.
(d) The cost of advertisements which
set forth the value or advantages of
utility service without reference to
specific appliances or, if reference is
made to appliances invites the reader to
purchase appliances from his dealer or
refer to appliances not carried for sale
by the utility company, must be
considered sales promotion advertising
and charged to this account. However,
advertisements that are limited to
specific makes of appliances sold by the
utility company and prices, terms, and
other similar items, without referring to
the value or advantages of utility
service, must be considered as
merchandise advertising and the cost
must be charged to account 416, Costs
and expenses of merchandising, jobbing
and contract work.
(e) Advertisements that substantially
mention or refer to the value or
advantages of utility service, together
with specific reference to makes of
appliances sold by the utility company
and the price, terms, and other similar
items, and designed for the joint
purpose of increasing the use of utility
service and the sales of appliances, must
be considered as a combination
advertisement and the costs must be
distributed between this account and
account 416 (§ 367.4160) on the basis of
space, time, or other proportional
factors.
(f) Exclude from this account and
charge to account 930.2, Miscellaneous
general expenses (§ 367.9302), the cost
of publication of stockholder reports,
dividend notices, bond redemption
notices, financial statements, and other
notices of a general corporate character.
Exclude also all institutional or
goodwill advertising. (See account
930.1, General advertising expenses
(§ 367.9301).)
§ 367.9160 Account 916, Miscellaneous
sales expenses.
(a) This account must include the cost
of labor, materials used and expenses
incurred in connection with sales
activities, except merchandising, which
are not includible in other sales expense
accounts.
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(b) This account must include the
following labor items:
(1) General clerical and stenographic
work not assigned to specific functions.
(2) Special analysis of customer
accounts and other statistical work for
sales purposes not a part of the regular
customer accounting and billing
routine.
(3) Miscellaneous labor.
(c) This account must include the
following materials and expenses items:
(1) Communication service.
(2) Printing, postage, and office
supplies and expenses applicable to
sales activities, except those chargeable
to account 913, Advertising expenses
(§ 367.9130).
§ 367.9200 Account 920, Administrative
and general salaries.
(a) This account must include
salaries, wages, bonuses and other
consideration for services, with the
exception of director’s fees paid directly
to officers and employees of the service
company.
(b) This account must be supported by
time records and appropriately
referenced to detailed records
subdividing salaries and wages by
departments or other functional
organization units.
§ 367.9210 Account 921, Office supplies
and expenses.
(a) This account must include office
supplies and expenses incurred in
connection with the general
administration of service company
operations assignable to specific
administrative or general departments
and not specifically provided for in
other accounts. This includes the
expenses of the various administrative
and general departments, the salaries
and wages of which are included in
account 920 (§ 367.9200).
(b) This account may be subdivided in
accordance with a classification
appropriate to the departmental or other
functional organization of the service
company. The following items must be
included in this account:
(1) Automobile service, including
charges through clearing account.
(2) Bank messenger and service
charges.
(3) Books, periodicals, bulletins and
subscriptions to newspapers,
newsletters, tax service, and other
similar items.
(4) Building service expenses for
customer accounts, sales, and
administrative and general purposes.
(5) Communication service expenses
to include telephone, telegraph, wire
transfer, micro-wave, and other similar
items.
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(6) Cost of individual items of office
equipment used by general departments
which are of small value or short life.
(7) Membership fees and dues in
trade, technical, and professional
associations paid by a utility for
employees. (Company memberships
must be included in account 930.2 in
§ 367.9302.)
(8) Office supplies and expenses.
(9) Payment of court costs, witness
fees, and other expenses of legal
department.
(10) Postage, printing and stationery.
(11) Meals, traveling, entertainment
and incidental expenses.
(c) Records must be so maintained to
permit ready analysis by item showing
the nature of the expense and identity
of the person furnishing the service.
§ 367.9220 Account 922, Administrative
expenses transferred—Credit.
This account must be credited with
administrative expenses recorded in
accounts 920 and 921 (§§ 367.9200 and
367.9210) that are transferred to
construction costs or to other accounts.
(See Service Company Property
Instructions in § 367.51.) Also, this
account must be credited with the
amount of operating expenses related to
services provided to non-utility
companies and account 417.1, Expenses
of non-utility company related
operations (§ 367.4171), must be
debited.
§ 367.9230 Account 923, Outside services
employed.
(a) This account must include the fees
and expenses of professional
consultants and others for general
services with the exception of fees and
expenses for outside services of account
928, Regulatory commission expense
(§ 367.9280), and account 930.1, General
advertising expenses (§ 367.9301).
Separate subaccounts must be provided
for auditing, legal, engineering,
management consulting fees and any
other fees for professional or outside
services.
(b) Records must be maintained so as
to permit ready analysis showing nature
of service, identity of the person
furnishing the service, affiliation to the
service company, and, if allocated to
more than one company, the specific
method of allocation.
§ 367.9240 Account 924, Property
insurance.
(a) This account must include the cost
of insurance or reserve accruals to
protect the service company against
losses and damages to owned or leased
property used in service company
operations. It also must include the cost
of labor and related supplies and
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expenses incurred in property insurance
activities.
(b) Recoveries from insurance
companies or others for property
damages must be credited to the account
charged with the cost of the damage. If
the damaged property has been retired,
the credit must be to the appropriate
account for accumulated provision for
depreciation.
(c) Records must be kept so as to show
the amount of coverage for each class of
insurance carried, the property covered,
and the applicable premiums. Any
dividends distributed by mutual
insurance companies must be credited
to the accounts to which the insurance
premiums were charged. The following
items must be included in this account:
(1) Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
(2) Special costs incurred in procuring
insurance.
(3) Insurance inspection service.
(4) Insurance counsel, brokerage fees,
and expenses.
(d) The cost of insurance or reserve
accruals capitalized must be charged to
construction either directly or by
transfer to construction work orders
from this account.
(e) The cost of insurance or reserve
accruals for the following classes of
property must be charged as indicated.
(1) Materials and supplies and stores
equipment, to account 163, Stores
expense undistributed (§ 367.1630), or
appropriate materials account.
(2) Transportation and other general
equipment to appropriate clearing
accounts that may be maintained.
(3) Merchandise and jobbing property,
to account 416, Costs and expenses of
merchandising, jobbing and contract
work (§ 367.4160).
(f) The cost of labor and related
supplies and expenses of administrative
and general employees who are only
incidentally engaged in property
insurance work may be included in
accounts 920 and 921 (§§ 367.9200 and
367.9210), as appropriate.
sroberts on PROD1PC70 with PROPOSALS
§ 367.9250
damages.
Account 925, Injuries and
(a) This account must include the cost
of insurance or reserve accruals to
protect the service company against
injuries and damages claims of
employees or others, losses of such
character not covered by insurance, and
expenses incurred in settlement of
injuries and damages claims. It also
must include the cost of labor and
related supplies and expenses incurred
in injuries and damages activities.
(b) Reimbursements from insurance
companies or others for expenses
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charged to this account because of
injuries and damages and insurance
dividends or refunds must be credited
to this account. The following items
must be included in this account:
(1) Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, and other similar
items.
(2) Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
(3) Fees and expenses of claim
investigators.
(4) Payment of awards to claimants for
court costs and attorneys’ services.
(5) Medical and hospital service and
expenses for employees as the result of
occupational injuries, or resulting from
claims of others.
(6) Compensation payments under
workmen’s compensation laws.
(7) Compensation paid while
incapacitated as the result of
occupational injuries. (See paragraph (c)
of this section.)
(8) Cost of safety, accident prevention
and similar educational activities.
(c) Payments to or on behalf of
employees for accident or death
benefits, hospital expenses, medical
supplies or for salaries while
incapacitated for service or on leave of
absence beyond periods normally
allowed, when not the result of
occupational injuries, must be charged
to account 926, Employee pensions and
benefits (§ 367.9260). (See also
paragraph (e) of account 926
(§ 367.9260).)
(d) The cost of injuries and damages
or reserve accruals capitalized must be
charged to construction directly or by
transfer to construction work orders
from this account.
(e) Exclude the time and expenses of
employees (except those engaged in
injuries and damages activities) spent in
attendance at safety and accident
prevention educational meetings, if
occurring during the regular work
period.
(f) The cost of labor and related
supplies and expenses of administrative
and general employees who are only
incidentally engaged in injuries and
damages activities may be included in
accounts 920 and 921 (§§ 367.9200 and
367.9210), as appropriate.
§ 367.9260 Account 926, Employee
pensions and benefits.
(a) This account must include
pensions paid to, or on behalf of, retired
employees, or accruals to provide for
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pensions, or payments for the purchase
of annuities for this purpose, when the
service company has definitely, by
contract, committed itself to a pension
plan under which the pension funds are
irrevocably devoted to pension
purposes, and payments for employee
accident, sickness, hospital, and death
benefits, or insurance related to this
account. Include, also, expenses
incurred in medical, educational or
recreational activities for the benefit of
employees, and administrative expenses
in connection with employee pensions
and benefits.
(b) The service company must
maintain a complete record of accruals
or payments for pensions and be
prepared to furnish full information to
the Commission of the plan under
which it has created or proposes to
create a pension fund and a copy of the
declaration of trust or resolution under
which the pension plan is established.
(c) Records in support of this account
must be kept so that the total pensions
expense, the total benefits expense, the
administrative expenses included in
this account, and the amounts of
pensions and benefits expenses
transferred to construction or other
accounts will be readily available. The
following items must be included in this
account:
(1) Payment of pensions under a nonaccrual or non-funded basis.
(2) Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
(3) Group and life insurance
premiums (credit dividends received).
(4) Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
(5) Payments for accident, sickness,
hospital, and death benefits or
insurance.
(6) Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed, when not the result of
occupational injuries, or in excess of
statutory awards.
(7) Expenses in connection with
educational and recreational activities
for the benefit of employees.
(d) The cost of labor and related
supplies and expenses of administrative
and general employees who are only
incidentally engaged in employee
pension and benefit activities may be
included in accounts 920 and 921
(§§ 367.9200 and 367.9210), as
appropriate.
(e) Salaries paid to employees during
periods of non-occupational sickness
may be charged to the appropriate labor
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account rather than to employee
benefits.
§ 367.9280 Account 928, Regulatory
commission expense.
(a) This account must include all
expenses, properly included in service
company operating expenses, incurred
by the service company in connection
with formal cases before regulatory
commissions, or other regulatory bodies,
on its own behalf or on behalf of
associate companies, including
payments made to a regulatory
commission for fees assessed to the
service company for pay and expenses
of such commission, its officers, agents
and employees, and for filings or reports
made under regulations of regulatory
commissions. The service company
must be prepared to show the cost of
each formal case. The following items
must be included in this account:
(1) Salaries, fees, retainers, and
expenses of counsel, solicitors,
attorneys, accountants, engineers,
clerks, attendants, witnesses, and others
engaged in the prosecution of, or
defense against petitions or complaints
presented to regulatory bodies.
(2) Office supplies and expenses,
payments to public service or other
regulatory commissions, stationery and
printing, traveling expenses, and other
expenses incurred directly in
connection with formal cases before
regulatory commissions.
(b) Exclude from this account and
include in other appropriate operating
expense accounts, expenses incurred in
the improvement of service, additional
inspection, or rendering reports, which
are made necessary by the rules and
regulations, or orders, of regulatory
bodies.
sroberts on PROD1PC70 with PROPOSALS
§ 367.9301 Account 930.1, General
advertising expenses.
(a) This account must include the cost
of labor, materials used, and expenses
incurred in advertising and related
activities, the cost of which by their
content and purpose are not provided
for elsewhere.
(b) This account must include the
following labor items:
(1) Supervision.
(2) Preparing advertising material for
newspapers, periodicals, billboards, and
other similar items, and preparing or
conducting motion pictures, radio and
television programs.
(3) Preparing booklets, bulletins, and
other similar forms of advertisement,
used in direct mail advertising.
(4) Preparing window and other
displays.
(5) Clerical and stenographic work.
(6) Investigating and employing
advertising agencies, selecting media
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and conducting negotiations in
connection with the placement and
subject matter of advertising.
(c) This account must include the
following materials and expenses items:
(1) Advertising in newspapers,
periodicals, billboards, radio, and other
similar forms of advertisement.
(2) Advertising matter such as posters,
bulletins, booklets, and related items.
(3) Fees and expenses of advertising
agencies and commercial artists.
(4) Postage and direct mail
advertising.
(5) Printing of booklets, dodgers,
bulletins, and other related items.
(6) Supplies and expenses in
preparing advertising materials.
(7) Office supplies and expenses.
(d) Properly includible in this account
is the cost of advertising activities on a
local or national basis of a good will or
institutional nature, which is primarily
designed to improve the image of the
associate utility company or the
industry, including advertisements
which inform the public concerning
matters affecting the associate utility
company’s operations, such as, the cost
of providing service, the associate utility
company’s efforts to improve the quality
of service, the company’s efforts to
improve and protect the environment,
and other similar forms of
advertisement. Entries relating to
advertising included in this account
must contain or refer to supporting
documents which identify the specific
advertising message. If references are
used, copies of the advertising message
must be readily available.
(e) Exclude from this account and
include in account 426.4, Expenditures
for certain civic, political and related
activities (§ 367.4264), expenses for
advertising activities that are designed
to solicit public support or the support
of public officials in matters of a
political nature.
§ 367.9302 Account 930.2, Miscellaneous
general expenses.
(a) This account must include the cost
of expenses incurred in connection with
the general management of the service
company not provided for elsewhere.
(b) This account must include labor
items including miscellaneous labor not
elsewhere provided for.
(c) This account must include the
following expenses items:
(1) Industry association dues for
company memberships.
(2) Contributions for conventions and
meetings of the industry.
(3) Research, development, and
demonstration expenses not charged to
other operation and maintenance
expense accounts on a functional basis.
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(4) Communication service not
chargeable to other accounts.
(5) Trustee, registrar, and transfer
agent fees and expenses.
(6) Stockholders meeting expenses.
(7) Dividend and other financial
notices.
(8) Printing and mailing dividend
checks.
(9) Directors’ fees and expenses.
(10) Publishing and distributing
annual reports to stockholders.
(11) Public notices of financial,
operating and other data required by
regulatory statutes, not including,
however, notices required in connection
with security issues or acquisitions of
property.
(d) Records must be maintained so as
to permit ready analysis by item
showing the nature of the expense and
identity of the person furnishing the
service.
§ 367.9310
Account 931, Rents.
This account must include rents,
including taxes, paid for the property of
others used, occupied or operated in
connection with service company
functions. Provide subaccounts for
major groupings such as office space,
warehouses, other structure, office
furniture, fixtures, computers, data
processing equipment, microwave and
telecommunication equipment,
airplanes, automobiles, and other
similar groupings of property. The cost,
when incurred by the lessee, of
operating and maintaining leased
property, must be charged to the
accounts appropriate for the expense as
if the property were owned.
§ 367.9350 Account 935, Maintenance of
structures and equipment.
This account must include materials
used and expenses incurred in the
maintenance of property owned, the
cost of which is included in accounts
390 through 399 (§§ 367.3900 through
367.3990), and of property leased from
others. Provide subaccounts by major
classes of structures and equipment,
owned and leased.
6. Part 368 is added to read as follows:
PART 368—PRESERVATION OF
RECORDS OF HOLDING COMPANIES
AND SERVICE COMPANIES
Sec.
368.1 Promulgation.
368.2 General instructions.
368.3 Schedule of records and periods of
retention.
Authority: 42 U.S.C. 16451–16463.
§ 368.1
Promulgation.
This part is prescribed and
promulgated as the regulations
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governing the preservation of records by
any holding company and by any
service company within a holding
company system subject to the
jurisdiction of the Commission under
the PUHCA 2005.
sroberts on PROD1PC70 with PROPOSALS
§ 368.2
General instructions.
(a) Scope of this part. (1) The
regulations in this part apply to all
books of account and other records
prepared, maintained or held by any
agent or employee on behalf of the
company. The specification in the
schedule in § 368.3 of a record related
to a type of transaction includes all
documents and correspondence, not
redundant or duplicative of other
records retained, needed to explain or
verify the transaction.
(2) Company means a service
company or a holding company as
defined in § 367.1 of this chapter. Public
utilities, licensees, and natural gas
companies must continue to use parts
125 and 225 of this chapter.
(3) Any company subject to this
regulation, that, as agent, operator,
lessor or otherwise, maintains or has
possession of any records relating to the
operation, property or obligations of a
public utility, licensee, or natural gas
company, as defined in the Federal
Power Act, the Natural Gas Act, or the
laws of any state within which the
public utility, licensee, or natural gas
company operates, must comply with
the laws or regulations as to record
retention and destruction which would
apply to the records if they were records
of the public utility, licensee, or natural
gas company as codified in parts 125
and 225 of the Commission’s
regulations.
(4) The regulations in this part should
not be construed as excusing
compliance with other lawful
requirements of any other governmental
body, Federal or State, prescribing other
record keeping requirements or for
preservation of records longer than
those prescribed in this part.
(5) To the extent that any Commission
regulations may provide for a different
record retention period, the records
must be retained for the longer of the
retention periods.
(6) Records, other than those listed in
the schedule, may be destroyed at the
option of the company. However,
records that are used in lieu of those
listed must be preserved for the periods
prescribed for the records used for
substantially similar purposes.
Additionally, retention of records
pertaining to added services, functions,
plant, and other similar service, the
establishment of which cannot be
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presently foreseen, must conform to the
principles embodied in this section.
(7) Notwithstanding the provisions of
the records retention schedule in this
section, the Commission may, upon the
request of the company, authorize a
shorter period of retention for any
record listed in the schedule upon a
showing by the company that
preservation of the record for a longer
period is not necessary or appropriate,
in the public interest or for the
protection of investors or consumers.
(b) Designation of supervisory official.
Each company subject to these record
retention regulations must designate one
or more officials to supervise the
preservation or authorized destruction
of its records.
(c) Protection and storage of records.
The company must provide reasonable
protection from damage by fire, flood,
and other hazards for records required
by these record retention regulations to
be preserved and, in the selection of
storage space, safeguard such records
from unnecessary exposure to
deterioration from excessive humidity,
dryness, or lack of proper ventilation.
(d) Index of records. At each site or
location where company records are
kept or stored, the records must be
arranged, filed, and currently indexed
so that records may be readily identified
and made available for inspection by
authorized representatives of any
regulatory agency concerned, including
the Commission.
(e) Record storage media. Each
company has the flexibility to select its
own storage media subject to the
following conditions.
(1) The storage media must have a life
expectancy at least equal to the
applicable record retention period
provided in § 368.3 unless there is a
quality transfer from one media to
another with no loss of data.
(2) Each company is required to
implement internal control procedures
that assure the reliability of, and ready
access to, data stored on machine
readable media. Internal control
procedures must be documented by a
responsible supervisory official.
(3) Each transfer of data from one
media to another must be verified for
accuracy and documented. Software and
hardware required to produce readable
records must be retained for the same
period the media format is used.
(f) Destruction of records. At the
expiration of the retention period, the
company may use any appropriate
method to destroy records. Precautions
should be taken, however, to macerate
or otherwise destroy the legibility of
records, the content of which is
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forbidden by law to be divulged to
unauthorized persons.
(g) Premature destruction or loss of
records. When records are destroyed or
lost before the expiration of the
prescribed period of retention, a
certified statement listing, as far as may
be determined, the records destroyed
and describing the circumstances of
accidental or other premature
destruction or loss must be filed with
the Commission within 90 days from
the date of discovery of the destruction.
(h) Schedule of records and periods of
retention. The schedule of records
retention periods constitutes a part of
these record retention regulations. The
schedule prescribes the periods of time
that designated records must be
preserved. Plant records related to
public utilities and licensees and
natural gas companies must be retained
in accordance with §§ 125.3 and 225.3
of this chapter.
(i) Retention periods designated
‘‘Destroy at option’’. ‘‘Destroy at option’’
constitutes authorization for destruction
of records at managements’ discretion if
the destruction does not conflict with
other legal retention requirements or
usefulness of the records in satisfying
pending regulatory actions or directives.
‘‘Destroy at option after audit’’ requires
retention until the company has
received an opinion from its
independent accountants with respect
to the financial statements including the
transactions to which the records relate.
(j) Records of services performed by
associate companies. Holding
companies and service companies must
assure the availability of records of
services performed by and for public
utilities and licensees and natural gas
companies with supporting cost
information for the periods indicated in
§§ 125.3 and 225.3 of this chapter as
necessary to be able to readily furnish
detailed information as to the nature of
the transaction, the amounts involved,
and the accounts used to record the
transactions.
(k) Rate case. Notwithstanding the
minimum retention periods provided in
these regulations, the company must
retain the appropriate records to support
the costs and adjustments proposed in
any rate case.
(l) Pending complaint litigation or
governmental proceedings.
Notwithstanding the minimum
requirements, if a company is involved
in pending litigation, complaint
procedures, proceedings remanded by
the court, or governmental proceedings,
it must retain all relevant records.
(m) Life or mortality study data. Life
or mortality study data for depreciation
purposes must be retained for 25 years
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or for 10 years after property is retired,
whichever is longer.
§ 368.3 Schedule of records and periods of
retention.
SCHEDULE OF RECORDS AND PERIODS OF RETENTION
Item No. and description
Retention period
Corporate and General
1. Reports to stockholders: Annual reports or statements to stockholders.
2. Organizational documents:
(a) Minute books of stockholders, directors’ and directors’ committee meetings.
(b) Title, franchises, and licenses: Copies of formal orders of regulatory commissions served upon the company.
(1) Certificates of incorporation, or equivalent agreements and
amendments thereto.
(2) Deeds, leases and other title papers (including abstracts of
title and supporting data), and contracts and agreements related to the acquisition or disposition of property or investments.
3. Contracts and agreements: Contracts, including amendments and
agreements (except contracts provided for elsewhere):
(a) Service contracts, such as for management, consulting, accounting, legal, financial or engineering services.
(b) Memoranda essential to clarify or explain provisions of contracts and agreements.
(c) Card or book records of contracts, leases, and agreements
made, showing dates of expirations and of renewals, memoranda of receipts, and payments under such contracts.
(d) Contracts and other agreements relating to services performed
in connection with construction of property (including contracts
for the construction of property by others for the company and
for supervision and engineering relating to construction work).
4. Accountants’ and auditors’ reports:
(a) Reports of examinations and audits by accountants and auditors not in the regular employ of the company (such as reports
of public accounting firms and commission accountants).
(b) Internal audit reports and working papers ...................................
Information Technology Management
5. Automatic data processing records (retain original source data used
as input for data processing and data processing report printouts for
the applicable periods prescribed elsewhere in the schedule): Software program documentation and revisions thereto.
sroberts on PROD1PC70 with PROPOSALS
General Accounting Records
6. General and subsidiary ledgers:
(a) Ledgers:
(1) General ledgers ....................................................................
(2) Ledgers subsidiary or auxiliary to general ledgers except
ledgers provided for elsewhere.
(b) Indexes:
(1) Indexes to general ledgers ...................................................
(2) Indexes to subsidiary ledgers except ledgers provided for
elsewhere.
(c) Trial balance sheets of general and subsidiary ledgers ..............
7. Journals: General and subsidiary ........................................................
8. Journal vouchers and journal entries including supporting detail:
(a) Journal vouchers and journal entries ..........................................
(b) Analyses, summarization, distributions, and other computations
which support journal vouchers and journal entries:
(1) Charging property accounts .................................................
(2) Charging all other accounts .................................................
9. Cash books: General and subsidiary or auxiliary books .....................
10. Voucher registers: Voucher registers or similar records when used
as a source document.
11. Vouchers:
(a) Paid and canceled vouchers (one copy-analysis sheets showing detailed distribution of charges on individual vouchers and
other supporting papers).
(b) Original bills and invoices for materials, services, etc., paid by
vouchers.
(c) Paid checks and receipts for payments of specific vouchers .....
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5 years.
5 years or termination of the corporation’s existence, whichever occurs
first.
6 years after final non-appealable order.
Life of corporation.
6 years after property or investment is disposed of unless delivered to
transferee.
All contracts, related memoranda, and revisions should be retained for
4 years after expiration or until the conclusion of any contract disputes pertaining to such contracts, whichever is later.
For same period as contract to which they relate.
For the same periods as contracts to which they relate.
All contracts, related memoranda, and revisions should be retained for
4 years after expiration or until the conclusion of any contract disputes or governmental proceedings pertaining to such contracts,
whichever is later.
5 years after the date of the report.
5 years after the date of the report.
Retain as long as it represents an active viable program or for periods
prescribed for related output data, whichever is shorter.
10 years.
10 years.
10 years.
10 years.
2 years.
10 years.
10 years.
25 years. See §§ 125.2(g) and 225.2(g) of this chapter for public utilities and licensees and natural gas companies.
6 years.
5 years after close of fiscal year.
5 years. See §§ 125.2(g) and 225.2(g) of this chapter for public utilities
and licensees and natural gas companies.
5 years. See §§ 125.2(g) and 225.2(g) of this chapter for public utilities
and licensees and natural gas companies.
5 years. See §§ 125.2(g) and 225.2(g) of this chapter for public utilities
and licensees and natural gas companies.
5 years.
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SCHEDULE OF RECORDS AND PERIODS OF RETENTION—Continued
Item No. and description
Retention period
(d) Authorization for the payment of specific vouchers ....................
(e) Lists of unaudited bills (accounts payable), list of vouchers
transmitted, and memoranda regarding changes in audited bills.
(f) Voucher indexes ...........................................................................
(g) Purchases and stores records related to disbursement vouchers.
Insurance
12. Insurance records:
(a) Records of insurance policies in force, showing coverage, premiums paid, and expiration dates.
(b) Records of amounts recovered from insurance companies in
connection with losses and of claims against insurance companies, including reports of losses, and supporting papers.
(c) Records of self-insurance against:
(1) Losses from fire and casualty ..............................................
(2) Damage to property of others, and ......................................
(3) personal injuries ...................................................................
(d) Inspectors’ reports and reports of condition of property .............
Maintenance
13. Maintenance work orders and job orders:
(a) Authorizations for expenditures for maintenance work to be
covered by work orders, including memoranda showing the estimates of costs to be incurred.
(b) Work order sheets to which are posted in detail the entries for
labor, material, and other charges in connection with maintenance, and other work pertaining to company operations.
(c) Summaries of expenditures on maintenance and job orders and
clearances to operating other accounts (exclusive of property accounts).
5 years. See §§ 125.2(g) and 225.2(g) of this chapter for public utilities
and licensees and natural gas companies.
Destroy at option.
Destroy at option.
5 years.
Destroy at option after expiration of such policies.
6 years. See §§ 125.2(g) and 225.2(g) of this chapter for public utilities
and licensees and natural gas companies.
6 years after date of last accounting entry with respect thereto.
6 years after date of last accounting entry with respect thereto.
6 years after date of last accounting entry with respect thereto.
Destroy when superseded.
5 years.
5 years.
5 years.
Property, Depreciation and Investments
14. Property records, excluding documents included in Item 2(a)(2):
(a) Ledgers of property accounts including land and other detailed
ledgers showing the cost of property by classes.
(b) Continuing property inventory ledger, book or card records
showing description, location, quantities, cost, etc., of physical
units (or items) of property owned.
(c) Operating equipment records. .....................................................
25 years. See §§ 125.2(g) and 225.2(g) of this chapter for public utilities and licensees and natural gas companies.
25 years. See §§ 125.2(g) and 225.2(g) of this chapter for public utilities and licensees and natural gas companies.
(d) Office furniture and equipment records .......................................
property or
(e) Automobiles, other vehicles and related garage equipment
records.
(f) Aircraft and airport equipment records .........................................
(g) Other property records not defined elsewhere ............................
sroberts on PROD1PC70 with PROPOSALS
15. Construction work in progress ledgers, work orders, and supplemental records:
(a) Construction work in progress ledgers ........................................
(b) Work orders sheets to which are posted in summary form or in
detail the entries for labor, materials, and other charges for property additions and the entries closing the work orders to property
records at completion.
(c) Authorizations for expenditures for additions to property, including memoranda showing the detailed estimates of cost, and the
bases therefore (including original and revised or subsequent
authorizations).
(d) Requisitions and registers of authorizations for property expenditures.
(e) Completion or performance reports showing comparison between authorized estimates and actual expenditures for property
additions.
(f) Analysis or cost reports showing quantities of materials used,
unit costs, number of man-hours etc., in connection with completed construction project.
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3 years after disposition, termination of lease, or write-off of
investment.
3 years after disposition, termination of lease or write-off of
investment.
3 years after disposition, termination of lease or write-off of
investment.
3 years after disposition, termination of lease or write-off of
investment.
3 years after disposition, termination of lease or write-off of
investment.
5 years after clearance to property account,
tory records are maintained; otherwise 5
tired.
5 years after clearance to property account,
tory records are maintained; otherwise 5
tired.
5 years after clearance to property account.
5 years after clearance to property account.
5 years after clearance to property account.
5 years after clearance to property account.
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property or
property or
property or
property or
provided continuing invenyears after property is reprovided continuing invenyears after property is re-
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SCHEDULE OF RECORDS AND PERIODS OF RETENTION—Continued
Item No. and description
Retention period
(g) Records and reports pertaining to progress of construction
work, the order in which jobs are to be completed, and similar
records which do not form a basis of entries to the accounts.
16. Retirement work in progress ledgers, work orders, and supplemental records:
(a) Work order sheets to which are posted the entries for removal
costs, materials recovered, and credits to property accounts for
cost of property retirement.
(b) Authorizations for retirement of property, including memoranda
showing the basis for determination to be retired and estimates
of salvage and removal costs.
(c) Registers of retirement work ........................................................
17. Summary sheets, distribution sheets, reports, statements, and papers directly supporting debits and credits to property accounts not
covered by construction or retirement work orders and their supporting records.
18. Appraisals and valuations:
(a) Appraisals and valuations made by the company of its properties or investments or of the properties or investments of any
associated companies. (Includes all records essential thereto.).
(b) Determinations of amounts by which properties or investments
of the company or any of its associated companies will be either
written up or written down as a result of:
(1) Mergers or acquisitions ........................................................
sroberts on PROD1PC70 with PROPOSALS
(2) Asset impairments ................................................................
(3) Other bases ..........................................................................
19. Production maps, geological maps, reproductions, including aerial
photographs, showing the location of all facilities the subject matter
of which falls within the work orders of the company.
20. Engineering records, drawings, supporting data to include diagrams, profiles, photographs, field-survey notes, plot plans, detail
drawings, and records of engineering studies that are part of or performed by the company within the work order system.
21. Records of building space occupied by various departments of the
company.
22. Contracts relating to property:
(a) Contracts relating to acquisition or sale of property ...........................
(b) Contracts and other agreements relating to services performed in
connection with construction of property (including contracts for the
construction of property by others for the company and for supervision and engineering relating to construction work).
23. Records pertaining to reclassification of property accounts to conform to prescribed systems of accounts including supporting papers
showing the bases for such reclassifications.
24. Records of accumulated provisions for depreciation and depletion
of property and amortization of intangible property and supporting
computation of expense:
(a) Detailed records or analysis sheets segregating the accumulated depreciation according to the classification of property.
(b) Records reflecting the service life of property and the percentage of salvage and cost of removal for property retired from
each account for depreciable company property.
25. Investment records:
(a) Records of investment in associate companies ..........................
(b) Records of other investments, including temporary investments
of cash.
Purchase and Stores
26. Procurement:
(a) Agreements entered into for the acquisition of goods or the
performance of services. Includes all forms of agreements such
as but not limited to: Letters of intent, exchange of correspondence, master agreements, term contracts, rental agreements,
and the various types of purchase orders:
(1) For goods or services relating to property construction ......
(2) For other goods or services .................................................
(b) Supporting documents including accepted and unaccepted bids
or proposals (summaries of unaccepted bids or proposals may
be kept in lieu of originals) evidencing all relevant elements of
the procurement.
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22:18 May 15, 2006
Jkt 208001
PO 00000
Frm 00047
Fmt 4701
Destroy at option.
5 years after the property is retired.
5 years after the property is retired.
5 years.
5 years.
3 years after appraisal.
10 years after completion of transaction or as ordered by the Commission.
10 years after recognition of asset impairment.
10 years after the asset was written up or down.
6 years after completion of work order.
6 years after completion of work order.
6 years.
6 years after property is retired or sold.
6 years after property is retired or sold.
6 years.
25 years.
25 years.
3 years after disposition of investment.
3 years after disposition of investment.
6 years. See §§ 125.2(g) and 225.2(g) of this chapter for public utilities
and licensees and natural gas companies.
6 years.
6 years. See §§ 125.2(g) and 225.2(g) of this chapter for public utilities
and licensees and natural gas companies.
Sfmt 4702
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Federal Register / Vol. 71, No. 94 / Tuesday, May 16, 2006 / Proposed Rules
28511
SCHEDULE OF RECORDS AND PERIODS OF RETENTION—Continued
Item No. and description
Retention period
27. Material ledgers: Ledger sheets of materials and supplies received,
issued, and on hand.
28. Materials and supplies received and issued: Records showing the
detailed distribution of materials and supplies issued during accounting periods.
Revenue Accounting
29. Miscellaneous billing data: Billing department’s copies of contracts
with customers (other than contracts in general files).
30. Revenue summaries: Summaries of monthly revenues according to
classes of service. Including summaries of forfeited discounts and
penalties.
Tax
31. Tax records:
(a) Copies of tax returns and supporting schedules filed with taxing
authorities, supporting working papers, records of appeals of tax
bills, and receipts for payment. See Item 11 for vouchers evidencing disbursements:
(1) Income tax returns ................................................................
(2) Agreements between and schedule of allocation by associate companies of consolidated Federal income taxes.
(b) Other taxes, including State or local property or income taxes.
(1) Property tax returns. .............................................................
(2) Sales and other use taxes ...................................................
(3) Other Taxes ..........................................................................
(c) Filings with taxing authorities to qualify employee benefit plans
(d) Information returns and reports to taxing authorities ..................
Treasury
32. Statements of funds and deposits:
(a) Summaries and periodic statements of cash balances on hand
and with depositories for company or associate.
(b) Requisitions and receipts for funds furnished associates and
others.
(c) Statements of periodic deposits with external fund administrators or trustees.
(d) Statements of periodic withdrawals from external fund ..............
33. Records of deposits with banks and others:
(a) Statements from depositories showing the details of funds received, disbursed, transferred, and balances on deposit, bank
reconcilement papers and statements of interest credits.
(b) Check stubs, registers, or other records of checks issued .........
6 years after the date the records/ledgers were created.
6 years. See §§ 125.2(g) and 225.2(g) of this chapter for public utilities
and licensees and natural gas companies).
5 years.
5 years.
2 years after final tax liability is determined.
2 years after final tax liability is determined.
2
2
2
5
3
years after
Years.
years after
years after
years after
final tax liability is determined.
final tax liability is determined.
discontinuance of plan.
final tax liability is determined.
Destroy at option after completion of audit by independent accountants.
Destroy at option after funds have been returned or accounted for.
Retain records for the most recent 3 years.
Retain records for the most recent 3 years.
Destroy at option after completion of audit by independent accountants.
6 years.
Payroll Records
sroberts on PROD1PC70 with PROPOSALS
34. Payroll records:
(a) Payroll sheets or registers of payments of salaries and wages,
pensions and annuities paid by company or by contractors of its
account.
(b) Records showing the distribution of salaries and wages paid for
each payroll period and summaries or recapitulations of such
distribution.
Miscellaneous
35. Financial, operating and statistical annual reports regularly prepared in the course of business for internal administrative or operating purposes.
36. Budgets and other forecasts (prepared for internal administrative or operating purposes) of estimated future income, receipts
and expenditures in connection with financing, construction and
operations, including acquisitions and disposals of properties or
investments.
37. Periodic or special reports filed by the company on its own behalf
with the Commission or with any other Federal or State rate-regulatory agency, including exhibits or amendments to such reports:
(a) Reports to Federal and State regulatory commissions including
annual financial, operating and statistical reports.
(b) Monthly and quarterly reports of operating revenues, expenses,
and statistics.
VerDate Aug<31>2005
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6 years.
6 years.
5 years.
3 years.
5 years.
5 years.
Sfmt 4702
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28512
Federal Register / Vol. 71, No. 94 / Tuesday, May 16, 2006 / Proposed Rules
SCHEDULE OF RECORDS AND PERIODS OF RETENTION—Continued
Item No. and description
Retention period
38. Advertising: Copies of advertisements by or for the company on behalf of itself or any associate company in newspapers, magazines,
and other publications, including costs and other records relevant
thereto (excluding advertising of appliances, employment opportunities, routine notices, and invitations for bids all of which may be destroyed at option).
7. Part 369 is added to read as follows:
PART 369—STATEMENTS AND
REPORTS (SCHEDULES)
2 years.
verified. Filing on electronic media
pursuant to § 385.2011 of this chapter is
required.
PART 375—THE COMMISSION
Authority: Sections 1261 et seq. Pub. L.
109–58, 119 Stat. 594.
8. The authority citation for part 375
continues to read as follows:
§ 369.1 FERC Form No. 60, Annual report
of service company.
Authority: 5 U.S.C. 551–557; 15 U.S.C.
717–717w, 3301–3432; 16 U.S.C. 791–825r,
2601–2645; 42 U.S.C. 7101–7352.
sroberts on PROD1PC70 with PROPOSALS
(a) Prescription. The Form of Annual
Report for Centralized Service
Companies, designated as FERC Form
No. 60, is prescribed for the reporting
year 2007 and each subsequent year.
(b) Filing requirements—(1) Who must
file. Each centralized service company
(See § 367.2 of this chapter) in a holding
company system must prepare and file
electronically with the Commission the
FERC Form No. 60 pursuant to the
General Instructions set out in the form.
(2) When to file and what to file. (i)
The annual report for the year ending
December 31, 2005 and 2006 must be
filed by May 1, 2006 and May 1, 2007,
respectively. The annual report for each
year thereafter must be filed by April 18
of the subsequent years.
(ii) This report must be filed with the
Commission as prescribed in § 385.2011
of this chapter and as indicated in the
General Instructions set out in the form,
and must be properly completed and
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22:18 May 15, 2006
Jkt 208001
9. In § 375.303, paragraphs (c), (d), (e),
(f), (g) and (h) are revised to read as
follows:
§ 375.303 Delegations to the Chief
Accountant.
*
*
*
*
*
(c) Issue interpretations of the
Uniform System of Accounts for public
utilities and licensees, centralized
service companies, natural gas
companies and oil pipeline companies.
(d) Pass upon any proposed
accounting matters submitted by or on
behalf of jurisdictional companies that
require Commission approval under the
Uniform Systems of Accounts, except
that if the proposed accounting matters
involve unusually large transactions or
unique or controversial features, the
Chief Accountant must present the
matters to the Commission for
consideration.
PO 00000
Frm 00049
Fmt 4701
Sfmt 4702
(e) Pass upon applications to increase
the size or combine property units of
jurisdictional companies.
(f) Accept for filing FERC Form No. 60
and Quarterly Financial Report Form
Nos. 3–Q and 6–Q if such filings are in
compliance with Commission orders or
decisions, and when appropriate, notify
the party of such acceptance. Issue and
sign deficiency letters if the filing fails
to comply with applicable statutory
requirements, and with all applicable
Commission rules, regulations, and
orders for which a waiver has not been
granted.
(g) Deny or grant, in whole or in part,
requests for waiver of the reporting
requirements for the forms under
§§ 141.400, 260.300, 357.4, 366.23 and
369 of this chapter and the filing of
these forms on electronic media under
§ 385.2011 of this chapter.
(h) Deny or grant, in whole or in part,
requests for waiver of the requirements
of parts 352, 356, 367 and 368 of this
chapter, except if the matters involve
unusually large transactions or unique
or controversial features, the Chief
Accountant must present the matters to
the Commission for consideration.
[FR Doc. 06–4043 Filed 5–15–06; 8:45 am]
BILLING CODE 6717–01–P
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16MYP2
]]>Agencies
[Federal Register Volume 71, Number 94 (Tuesday, May 16, 2006)]
[Proposed Rules]
[Pages 28464-28512]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-4043]
Federal Register / Vol. 71, No. 94 / Tuesday, May 16, 2006 / Proposed
Rules
[[Page 28464]]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Parts 366, 367, 368, 369 and 375
[Docket No. RM06-11-000]
Financial Accounting, Reporting and Records Retention
Requirements Under the Public Utility Holding Company Act of 2005
Issued April 24, 2006.
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Notice of proposed rulemaking.
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SUMMARY: In this Notice of Proposed Rulemaking, the Federal Energy
Regulatory Commission (Commission) proposes to amend its regulations to
further implement the Public Utility Holding Company Act of 2005 (PUHCA
2005). Specifically, the Commission is proposing to add a Uniform
System of Accounts for Centralized Service Companies, to add
preservation of records requirements for holding companies and service
companies, to revise Form No. 60, Annual Report for Centralized Service
Companies, to provide for financial reporting consistent with the
proposed Uniform System of Accounts and to provide for electronic
filing of Form No. 60. These changes are proposed to be made effective
January 1, 2007. In addition, the Commission directs staff to hold a
technical conference to provide interested entities an opportunity to
discuss the proposed regulations.
DATES: Comments must be filed on or before June 15, 2006.
ADDRESSES: You may submit comments, identified by Docket No. RM06-11-
000, by one of the following methods:
Agency Web Site: https://ferc.gov. Follow the instructions
for submitting comments via the eFiling link found in the Comment
Procedures Section of the preamble.
Mail: Commenters unable to file comments electronically
must mail or hand deliver an original and 14 copies of their comments
to: Federal Energy Regulatory Commission, Office of the Secretary, 888
First Street, NE., Washington, DC 20426. Please refer to the Comment
Procedures Section of the preamble for additional information on how to
file paper comments.
FOR FURTHER INFORMATION CONTACT:
Rosemary Womack (Technical Information), Division of Audits and
Accounting, Office of Market Oversight and Investigation, Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426. Telephone: (202) 502-8989. E-mail: rosemary.womack@ferc.gov.
Julia A. Lake (Legal Information), Office of the General Counsel--
Energy Markets, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426. Telephone: (202) 502-8370. E-mail:
julia.lake@ferc.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction
1. The Commission proposes to amend its regulations to further
implement the Public Utility Holding Company Act of 2005 (PUHCA 2005).
The Commission is proposing to add a new Uniform System of Accounts for
Centralized Service Companies and new preservation of records
requirements as new Parts 367 and 368, respectively, to the
Commission's regulations; to add Form No. 60, Annual Report for
Centralized Service Companies, as Part 369 to the Commission's
regulations; to revise Form No. 60 to provide for financial reporting
by centralized service companies, i.e., service companies that are not
special purpose companies, consistent with the proposed Uniform System
of Accounts; and to provide for electronic filing of Form No. 60. The
Commission also is proposing conforming changes to its regulations in
Part 366 and corresponding changes to the Chief Accountant's
delegations of authority in Part 375 of the Commission's
regulations.\1\ The Commission proposes to make the revised regulations
effective January 1, 2007. In addition, the Commission directs staff to
hold a technical conference to provide interested entities an
opportunity to discuss the proposed regulations.
---------------------------------------------------------------------------
\1\ See 18 CFR Parts 366 and 375.
---------------------------------------------------------------------------
II. Background
2. On August 8, 2005, the Energy Policy Act of 2005 (EPAct 2005)
\2\ was signed into law. In relevant part, it repealed the Public
Utility Holding Company Act of 1935 (PUHCA 1935) \3\ and enacted the
Public Utility Holding Company Act of 2005 (PUHCA 2005),\4\ which, with
one exception not relevant here, became effective on February 8, 2006
(six months from the date of enactment). On December 8, 2005, the
Commission issued Order No. 667, adding a new Subchapter U and Part 366
to Title 18 of the Code of Federal Regulations to implement PUHCA
2005.\5\
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\2\ Energy Policy Act of 2005, Pub. L. 109-58, 119 Stat. 594
(2005).
\3\ 15 U.S.C. 79a et seq. (2000).
\4\ EPAct 2005 at 1261 et seq.
\5\ Order No. 667, 70 FR 75592 (Dec. 20, 2005), FERC Stats. &
Regs.; Regulations and Preambles 2001-2005 ] 31,197 (2005), order on
reh'g, Order No. 667-A, published elsewhere in this issue of the
Federal Register, FERC Stats. & Regs. ] 31,213 (2006).
---------------------------------------------------------------------------
3. Order No. 667 required that, unless otherwise exempted by
Commission rule or order, holding companies \6\ and service companies
\7\ must maintain and make available to the Commission their books and
records.\8\ In addition, Order No. 667 allowed holding companies and
service companies that did not currently follow the Commission's
records retention requirements to transition to the Commission's
requirements by January 1, 2007. Order No. 667 further provided that
holding companies would not be required to comply with a Uniform System
of Accounts, but that centralized service companies would be required
to do so as of January 1, 2007.
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\6\ As defined in 18 CFR 366.1, holding company means (i) any
company that directly or indirectly owns, controls, or holds, with
power to vote, 10 percent or more of the outstanding voting
securities of a public-utility company or of a holding company of
any public-utility company; and (ii) any person, determined by the
Commission, after notice and opportunity for hearing, to exercise
directly or indirectly (either alone or pursuant to an arrangement
or understanding with one or more persons) such a controlling
influence over the management or policies of any public-utility
company or holding company as to make it necessary or appropriate
for the rate protection of utility customers with respect to rates
that such person be subject to the obligations, duties, and
liabilities imposed by this subtitle upon holding companies.
\7\ As defined in 18 CFR 366.1, service company means any
associate company within a holding company system organized
specifically for the purpose of providing non-power goods or
services or the sale of goods or construction work to any public
utility in the same holding company system.
\8\ Order No. 667 also required traditional, centralized service
companies to file the newly created Form No. 60, Annual Report for
Centralized Service Companies.
---------------------------------------------------------------------------
4. The Commission indicated in Order No. 667 that it would initiate
a separate rulemaking proceeding to address how the Commission's
Uniform Systems of Accounts and records retention requirements in Parts
101, 125, 201 and 225 of its regulations should be modified to adopt or
otherwise integrate the relevant parts of the SEC's Uniform System of
Accounts and records retention rules. The Commission indicated that it
intended to issue a final rule on any appropriate accounting and
records retention requirements modifications before January 1, 2007, so
that service companies would be able to transition to the Commission's
Uniform System of Accounts and records retention requirements and so
that holding companies could transition to
[[Page 28465]]
the Commission's records retention requirements, by that date.
5. As discussed below, this Notice of Proposed Rulemaking proposes
to adopt a Uniform System of Accounts for centralized service
companies, and records retention requirements for holding companies and
service companies, under PUHCA 2005.
III. Discussion
6. In Order No. 667, the Commission prescribed uniform accounting
requirements for centralized service companies, i.e., service companies
that are not special purpose companies, within holding company systems,
and records retention requirements for both service companies and
holding companies. In that order, the Commission announced its
intention to modify the existing Uniform Systems of Accounts for public
utilities and licensees and natural gas companies in Parts 101 and 201,
respectively, of the Commission's regulations to accommodate
centralized service companies' use of those systems. The Commission
also announced its intention to similarly modify the existing records
retention requirements contained in Parts 125 and 225 of the
Commission's regulations.
7. Since the issuance of Order No. 667, we have examined in greater
depth some of the implementation issues associated with revising the
Commission's existing Uniform Systems of Accounts and records retention
requirements for public utilities and licensees and for natural gas
companies to cover service companies and holding companies. After
taking into consideration the overall framework of the Commission's
regulations and the range of changes that would be required to the
Uniform Systems of Accounts and records retention requirements, we have
concluded that modifying the existing accounting and records retention
requirements to accommodate service companies and holding companies
would make understanding and applying the accounting and records
retention requirements difficult for users of the systems. Instead, the
Commission proposes to adopt a separate Uniform System of Accounts for
centralized service companies, i.e., service companies that are not
special purpose companies, and separate records retention requirements
for service companies and holding companies. While these new
regulations appear lengthy, we believe the detail will actually make it
simpler and easier for service companies and holding companies to
comply with our requirements.
8. In developing the proposed regulations, we were guided by three
overarching objectives: (1) The new accounting and records retention
requirements should mirror the existing requirements contained in Parts
101, 201, 125 and 225 of the Commission's regulations for public
utilities and licensees and natural gas companies to the maximum extent
practicable, but should exclude provisions that are not relevant; (2)
the new accounting requirements should allow for the consolidation of
service company financial information with the financial information of
associate public utilities and licensees and natural gas companies as
needed for stockholder and SEC reporting; and (3) the new Uniform
System of Accounts for centralized service companies should include
requirements that reflect aspects of business operations that are
unique to such service companies.
A. Proposed Uniform System of Accounts
9. The Commission proposes to add as Part 367 of the Commission's
regulations a Uniform System of Accounts for Centralized Service
Companies. The proposed Uniform System of Accounts for Centralized
Service Companies conforms, to the maximum extent practicable, to the
Commission's existing Uniform Systems of Accounts for public utilities
and licensees and for natural gas companies as set forth in Parts 101
and 201, respectively, of the Commission's regulations. As explained
more fully below, however, there are a number of instances in which the
existing requirements contained in Parts 101 and 201 of the
Commission's regulations need to be revised or modified to reflect the
unique business characteristics of centralized service companies. In
some instances, the revisions simply change a word, e.g., substituting
``service company'' property for ``utility'' property.\9\ In other
instances, the changes were more significant. The sections that follow
identify and explain the basis for the more significant revisions and
modifications to the accounting requirements contained in Parts 101 and
201 of the Commission's regulations that we believe are appropriate or
necessary to reflect the unique business characteristics of centralized
service companies in the proposed Uniform System of Accounts for
Centralized Service Companies.
---------------------------------------------------------------------------
\9\ For purposes of discussion, when revisions to an instruction
or account are limited to such word changes we consider it as
adopting the affected instruction or account in total.
---------------------------------------------------------------------------
1. Definitions and Instructions
10. The Commission proposes to adopt most of the definitions
contained in Parts 101 and 201 of the Commission's regulations.
Additionally, the Commission proposes to adopt the definitions
contained in the SEC's Uniform System of Accounts for direct cost,
indirect cost, non-associate company, and work order system. The
Commission also proposes to incorporate definitions for construction,
electric utility company, gas utility company, goods, holding company
system, natural gas company, public utility, public-utility company,
service and service company from Sec. 366.1 of the Commission's
regulations. The definitions adopted from the SEC's Uniform System of
Accounts and Sec. 366.1 of the Commission's regulations are necessary
to facilitate understanding other instructions not contained in Parts
101 and 201 of the Commission's regulations as they should be applied
to centralized service companies, i.e., service companies that are not
special purpose companies.
11. Consistent with the instructions in Parts 101 and 201 of the
Commission's regulations, we propose to adopt instructions grouped into
four categories: General Instructions, Service Company Property
Instructions, Operating Expense Instructions and Special Instructions.
These instructions include most of the instructions contained in Parts
101 and 201 of the Commission's regulations and in the SEC's Uniform
System of Accounts. We propose to adopt instructions in the SEC's
Uniform System of Accounts because they provide instructions relevant
to certain transactions and events of a centralized service company,
that are not specifically addressed in the instructions for Parts 101
and 201 of the Commission's regulations. The instructions we propose to
adopt in the Special Instructions category include many of the
instructions for groups of accounts, which are embedded in the text to
the accounts in Parts 101 and 201 of the Commission's regulations.
Instructions not adopted from Parts 101 and 201 of the Commission's
regulations and the SEC's Uniform System of Accounts are considered
irrelevant to centralized service company operations or duplicative of
other instructions. Additionally, many of the instructions from Parts
101 and 201 are modified for centralized service company operations.
The more significant additions, deletions and modifications to the
instructions contained in Parts 101 and 201 of the Commission's
regulations are discussed below.
[[Page 28466]]
12. The instructions found in both Parts 101 and 201 of the
Commission's regulations contain provisions for implementing the
ratemaking principle of original cost. Under this principle, companies
are required to record utility property in the plant in service
accounts at the cost to the person who first devoted the property to
public service. Although public utilities and natural gas companies
frequently enter into property transactions in which the original cost
concept is at issue, centralized service companies are expected to have
few, if any, transactions in which that is the case. Moreover,
centralized service companies can now provide centralized services to
both utility and non-utility entities. In this context, the original
cost accounting rules that exist for public utilities and natural gas
companies would be difficult to apply to centralized service companies.
Therefore, the proposed instructions in the Uniform System of Accounts
for Centralized Service Companies do not contain the requirements that
would otherwise be needed to implement the original cost concept. In
proposed Sec. 367.50,\10\ Service company property to be recorded at
cost, and Sec. 367.53,\11\ Service company property purchased or sold,
we propose to modify Electric and Gas Plant Instructions Nos. 2 and 5,
respectively, to require centralized service company property to be
recorded at the cost of acquisition rather than its original cost. The
instructions to proposed Sec. 367.53 also require centralized service
companies to file journal entries with the Commission when acquired
property is at a purchase price of $10 million or more and has been
previously devoted to public service.\12\ This filing requirement
provides the Commission and others the opportunity to monitor
transactions involving property previously devoted to public service.
---------------------------------------------------------------------------
\10\ Proposed 18 CFR 367.50 is adopted from Electric Plant
Instructions No. 2, Electric plant to be recorded at cost, and Gas
Plant Instructions No. 2, Gas plant to be recorded at cost.
\11\ Proposed 18 CFR 367.53 is adopted from Electric Plant
Instructions No. 5, Electric plant purchased or sold, and Gas Plant
Instructions No. 5, Gas plant purchased or sold.
\12\ The $10 million threshold is consistent with the threshold
for certain transactions subject to section 203 of the Federal Power
Act, as amended by section 1289 of the Energy Policy Act of 2005.
See Order No. 669, 71 FR 1348 (Jan. 6, 2006), FERC Stats. & Regs. ]
31,200 (2005).
---------------------------------------------------------------------------
13. We propose to adopt in Sec. 367.23 an instruction for
transactions with non-associate companies from the SEC's Uniform System
of Accounts (17 CFR Sec. 265.01-2). This instruction requires that
profits and losses on transactions with non-associate companies be
recorded in Account 458.4, Excess or deficiency on servicing non-
associate utility companies (Sec. 367.4584), and Account 459.4, Excess
or deficiency on servicing non-associate non-utility companies (Sec.
367.4594), as appropriate. The instruction also requires centralized
service companies to determine the sum of the closing balances, at the
end of each calendar year, in Account 458.4 (Sec. 367.4584) and
Account 459.4 (Sec. 367.4594). If the sum of the closing balances of
these accounts combine to a net credit, the amount of the net credit
must be deducted from amounts reimbursable by associate companies as
compensation for use of capital invested in the centralized service
company. By following this instruction, service companies will be
required to channel net profits from transactions with non-associate
companies to the associate companies within the holding company system.
The Commission believes this requirement is appropriate and reasonable
because centralized service companies should be not-for-profit in
nature and provide services to associate companies at cost.\13\
Therefore, profits received outside of the holding company system
should be used to reduce the cost of providing service to associate
companies within the holding company system.
---------------------------------------------------------------------------
\13\ Not-for-profit as used here does not preclude a reasonable
return on equity capital. In addition, in Order No. 667, the
Commission allowed centralized service companies to continue to sell
non-power goods and services to affiliated utilities ``at-cost.''
Order No. 667, FERC Stats. & Regs. ] 31,197 at P 14.
---------------------------------------------------------------------------
14. We propose to adopt instructions from Parts 101 and 201 of the
Commission's regulations on extraordinary items \14\ with certain
modifications in proposed Sec. 367.8. Under the instructions contained
in Parts 101 and 201, an item can be accounted for as extraordinary,
without prior Commission approval if the item is more than five percent
of income before extraordinary items. We do not view this stipulation
as practical for centralized service companies because service
companies typically have little or no income. Therefore, we propose to
eliminate this threshold requirement to recognize an extraordinary
item, but will require centralized service companies to seek Commission
approval to record all extraordinary items.
---------------------------------------------------------------------------
\14\ See General Instructions No. 7, Extraordinary items, in
Parts 101 and 201 of the Commission's regulations.
---------------------------------------------------------------------------
15. In proposed Sec. 367.16, we propose to adopt, in part,
instructions for accounting for long-term debt from Parts 101 and 201
of the Commission's regulations.\15\ We are not adopting instructions
pertaining to the rate principle of amortizing gains and losses on the
reacquisition of long-term debt because centralized service companies
are not rate regulated and such gains and losses should be recognized
immediately in income.
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\15\ See General Instructions No. 17, Long-term debt: Premium,
discount and expense and gain or loss on reacquisition, in Parts 101
and 201 of the Commission's regulations.
---------------------------------------------------------------------------
16. In proposed Sec. 367.58, we propose to adopt instructions for
maintaining a work order system for all construction and retirements of
service company property from Parts 101 and 201 of the Commission's
regulations.\16\ Additionally, in proposed Sec. 367.31, the Commission
proposes to adopt instructions from the SEC's Uniform System of
Accounts for maintaining work order systems for accumulating
reimbursable costs and charges to customers.\17\ The Commission
believes it is necessary to adopt this additional instruction from the
SEC's Uniform System of Accounts because this specific instruction is
appropriate for this proposed Uniform System of Accounts and is not
provided for in the instructions contained in Parts 101 and 201 of the
Commission's regulations.
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\16\ See Electric (Gas) Plant Instructions No. 11, Work order
and property record system required in Parts 101 and 201 of the
Commission's regulations.
\17\ See 17 CFR 256.00-1(f), 256.03(c).
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17. We note that there appears to be a regulatory gap vis-[aacute]-
vis Commission jurisdiction as it relates to service companies with
electric utility company affiliates and natural gas company affiliates
in PUHCA 2005. As a result of the definitions for holding company,
holding company system, natural gas company, public-utility company,
electric utility company and gas utility company in PUHCA 2005 section
1262, it appears that the Commission can regulate holding companies
with electric utility company affiliates as to their books, accounts,
memoranda, and other records. On the other hand, it appears that PUHCA
2005 would not grant the Commission authority to require service
companies that have only natural gas company affiliates to comply with
the Commission's financial accounting and reporting and records
retention requirements; this is in contrast to holding companies with
gas utility company affiliates, i.e., holding companies with natural
gas local distribution company affiliates.\18\
[[Page 28467]]
Companies with only natural gas company affiliates would not be a
holding company under PUHCA 2005. The Commission is seeking comments on
how we should deal with this apparent regulatory gap under PUHCA 2005,
e.g., what, if any, action the Commission might take under the Natural
Gas Act. Commenters are invited to address (1) whether there is, in
fact, a regulatory gap, (2) if there is a regulatory gap, whether there
is a need to address the gap, and, (3) if so, how the Commission should
address this gap under the Natural Gas Act.
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\18\ In PUHCA 2005 section 1262, a holding company is any
company that directly or indirectly owns, controls, or holds, with
power to vote, 10 percent or more of the outstanding voting
securities of a public-utility company or of a holding company of
any public utility company. A public-utility company is an electric
utility company or a gas utility company. An electric utility
company is any company that owns or operates facilities used for the
generation, transmission, or distribution of electric energy for
sale. A gas utility company is any company that owns or operates
facilities used for distribution at retail of natural or
manufactured gas, i.e., a natural gas local distribution company.
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2. Balance Sheet Accounts
18. The Commission proposes to adopt in the new Uniform Systems of
Accounts for Centralized Service Companies most of the balance sheet
accounts contained in Parts 101 and 201 of the Commission's
regulations, and primary property Accounts 301 (Sec. 367.3010), 303
(Sec. 367.3030) and 389 to 399.1 (Sec. Sec. 367.3890 to 367.3991).
Accounts not adopted are considered not applicable to centralized
service companies. In most instances, the non-applicability of those
accounts to centralized service companies is apparent from the account
instructions and further discussion as to the reason for not adopting
them is not necessary. However, a few warrant comment.
19. The Commission does not propose to adopt Accounts 102, Electric
and Gas plant purchased or sold, 114, Electric and Gas plant
acquisition adjustments, and 116, Other electric and gas plant
acquisition adjustments, because, as discussed above, property acquired
will be included in Account 101, Service company property (Sec.
367.1010), at acquisition cost as opposed to original cost. As a
result, these accounts are not necessary for centralized service
companies.
20. In addition, we are not adopting Accounts 118, Other utility
plant, and 121, Non-utility property. These accounts are used by public
utilities and natural gas companies to record the cost of property used
exclusively in providing other utility services, e.g., water, railway,
etc., or non-utility services. In the Commission's view, the corollary
use of these accounts by centralized service companies would be to
record in these accounts the cost of property used exclusively in
providing services to non-utility customers or a non-service business
activity. While we believe it is important that such investments be
identified and disclosed, we feel that it can be done more
appropriately by the use of a schedule as opposed to adopting a
separate account. Therefore, we propose to include Schedule III-A,
Summary of Service Company Property and Accumulated Provision for
Depreciation and Amortization, in revised Form No. 60.
3. Income Statement Accounts
21. The Commission proposes to incorporate income statement
accounts contained in Parts 101 and 201 of the Commission's
regulations. We modified the accounts related to expenses for non-
utility companies\19\ and revenue accounts. The additions, deletions
and modifications to the income statement accounts contained in Parts
101 and 201 that are proposed for inclusion in the Uniform System of
Accounts for Centralized Service Companies are discussed further below.
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\19\ A non-utility company is defined in proposed 18 CFR Sec.
367.1 as ``a company that is not a utility company.''
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22. The Commission is proposing to include in the Uniform System of
Accounts for Centralized Service Companies the same instructions
covering income tax accounting presently contained in Parts 101 and 201
of the Commission's regulations. We are aware that those instructions
need to be revised to reflect the liability method of accounting for
income taxes that all other Commission jurisdictional companies now
follow.\20\ However, the changes needed to integrate the liability
method of accounting for income taxes into the Uniform Systems of
Accounts and other Commission regulations are expected to be complex
and should be taken up in a separate proceeding.\21\ Until that
proceeding can be undertaken, centralized service companies and all
other Commission jurisdictional companies should account for income
taxes using the same rules as modified by an Accounting Guidance Letter
dated April 23, 1993. This will, in our view, facilitate the
preparation of consolidated financial statements.
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\20\ See Accounting Guidance Letter AI93-50-000, Accounting for
Income Taxes, (April 23, 1993).
\21\ Regulations Implementing Tax Normalization for Certain
Items Reflecting Timing Differences in the Recognition of Expenses
or Revenues for Ratemaking and Income Tax Purposes, Order No. 144,
FERC Stats. & Regs. ] 30,254 (1981).
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23. We do not propose to include the following accounts, as
contained in Parts 101 and 201 of the Commission's regulations, because
we do not anticipate centralized service companies having transactions
that give rise to the use of these accounts:
Account 404.1, Amortization and depletion of producing
natural gas land and land rights.
Account 404.2, Amortization of underground storage land
and land rights.
Account 406, Amortization of electric plant acquisition
adjustments.
Account 407, Amortization of property losses, unrecovered
plant and regulatory study costs.
Account 407.2, Amortization of conversion expense.
Account 407.3, Regulatory debits.
Account 407.4, Regulatory credits.
Account 411.6, Gains from disposition of utility plant.
Account 411.7, Losses from disposition of utility plant.
Account 411.8, Gains from disposition of allowances.
Account 411.9, Losses from disposition of allowances.
Account 412, Revenues from electric plant leased to
others.
Account 413, Expenses of electric plant leased to others.
Account 414, Other utility operating income.
Account 417, Revenues from non-utility operations.
Account 418, Non-operating rental income.
Account 420, Investment tax credits.
Account 428.1, Amortization of loss on reacquired debt.
Account 429.1, Amortization of gain on reacquired debt--
Credit.
24. We propose to add Account 417.1, Expenses of non-utility
company related operations (Sec. 367.4171). This account will include
expenses incurred in providing services to non-utility companies where
the revenues from which are included in Account 459, Services rendered
to non-utility companies (Sec. 367.4590). Expenses related to
providing customer, sales or administrative and general services to
non-utility companies will initially be recorded in the 900 series of
accounts and transferred to Account 417.1 (Sec. 367.4171), through
credits to Account 922, Administrative expenses transferred--Credit
(Sec. 367.9220). The cost of other services provided to non-utility
companies will be charged directly to Account 417.1 (Sec. 367.4171).
25. We propose to add the following retained earnings accounts:
Account 433, Balance transferred from income (Sec.
367.4330).
Account 436, Appropriations of retained earnings (Sec.
367.4360).
[[Page 28468]]
Account 437, Dividends declared-preferred stock (Sec.
367.4370).
Account 438, Dividends declared--common stock (Sec.
367.4380).
Account 439, Adjustments to retained earnings (Sec.
367.4390).
26. We propose to adopt retained earnings Accounts 215,
Appropriated retained earnings (Sec. 367.2150), and 216,
Unappropriated retained earnings (Sec. 367.2160), as balance sheet
accounts to track changes in the retained earnings accounts. We also
propose to revise Form No. 60 to reflect the use of these accounts.
27. We do not propose adopting the following operating revenue
accounts, contained in Parts 101 and 201 of the Commission's
regulations:
Account 440, Residential sales.
Account 442, Commercial and industrial sales.
Account 444, Public street and highway lighting.
Account 445, Other sales to public authorities (Major
only).
Account 446, Sales to railroads and railways (Major only).
Account 447, Sales for resale.
Account 448, Interdepartmental sales.
Account 449, Other sales (Non-major only).
Account 449.1, Provision for rate refunds.
Account 450, Forfeited discounts.
Account 451, Miscellaneous service revenues.
Account 453, Sales of water and water power.
Account 454, Rent from electric property.
Account 455, Interdepartmental rents.
Account 456, Other electric revenues.
Account 480, Residential sales.
Account 481, Commercial and industrial sales.
Account 482, Other sales to public authorities.
Account 483, Sales for resale.
Account 484, Interdepartmental sales.
Account 485, Intracompany transfers.
These accounts are for recording revenues from the sale of
electricity or gas and transmission or transportation service.
Transactions of this nature would not be entered into by centralized
service companies. However, we propose to adopt new revenue control
Accounts 457, Services rendered to associate utility companies (Sec.
367.4570), 458, Services rendered to non-associate utility companies
(Sec. 367.4580) and 459, Services rendered to non-utility companies
(Sec. 367.4590).\22\ Each of these revenue control accounts will have
a corresponding subaccount or direct labor account (Accounts 457.1,
458.1 and 459.1 in Sec. Sec. 367.4571, 367.4581 and 367.4591),
indirect labor account (Accounts 457.2, 458.2 and 459.2 in Sec. Sec.
367.4572, 367.4582 and 367.4592) and an account for compensation for
use of capital (Accounts 457.3, 458.3 and 459.3 in Sec. Sec. 367.4573,
367.3593 and 367.4593). This differs slightly from the SEC's Uniform
System of Accounts, which provided control accounts for aggregating
revenues between associate and non-associate companies only. However,
the SEC's requirements were developed under PUHCA 1935, which
restricted registered holding companies and their associated companies
to utility operations or directly related business interests. With the
repeal of the PUHCA 1935 and the elimination of the distinction between
registered and exempt holding companies,\23\ these restrictions no
longer apply. As a consequence, we expect that centralized service
companies may provide an increasing amount of services to non-utility
companies. As an aid to monitoring the potential for cross
subsidization, we believe that it is important to have accounts that
aggregate financial information in a way that separately identifies and
measures this activity. We propose including revenue Accounts 458.4,
Excess or deficiency on servicing non-associate utility companies
(Sec. 367.4584, and 459.4, Excess or deficiency on servicing non-
associate non-utility companies (Sec. 367.4594). These accounts are
necessary to monitor and ensure that centralized service companies
comply with the requirements that profits from services provided to
non-associate companies are used to reduce the billings of associate
companies and to ensure that losses are not automatically passed on to
associate companies.
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\22\ A control account includes the total of the related
subaccounts.
\23\ Order No. 667 states, ``[a]lthough, as also discussed
below, we will provide certain exemptions from PUHCA 2005, we will
not re-create the PUHCA 1935 distinction between ``exempt'' and
``registered'' holding companies.'' Order No. 667, FERC Stats. &
Regs. ] 31,197 at P 10.
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28. We propose to include in the Uniform System of Accounts for
Centralized Service Companies all of the 500 series of electric
operation and maintenance expense accounts presently contained in Part
101 of the Commission's regulations and all of the 800 series of gas
operation and maintenance accounts contained in Part 201 of the
Commission's regulations. Service companies use these accounts when
providing utility-related services to utility companies. However, to
avoid unnecessary duplication and to ensure that symmetry is maintained
between the Uniform Systems of Accounts, we propose to direct service
companies to use the 500 and 800 series of accounts contained in Parts
101 and 201 of the Commission's regulations instead of including all of
the 500 and 800 series of accounts in the Uniform System of Accounts
for Centralized Service Companies.
29. We propose to include in the Uniform System of Accounts for
CentralizedService Companies all of the 900 series of expense accounts
presently contained in Parts 101 and 201 of the Commission's
regulations, except the following accounts:
Account 906, Customer service and informational expenses
(Non-major only).
Account 917, Sales expenses (Non-major only).
Account 927, Franchise requirements.
Account 929, Duplicate charges--Credit.
Account 933, Transportation expenses (Non-major)
Accounts 906, 917 and 933 are non-major. Accounts 927 and 929
relate to utility sales of electricity. We could not cross reference
the 900 series accounts as we did for the 500 or 800 series of accounts
because the individual account instructions in Part 101 differ from the
counterpart instructions in Part 201. In order to eliminate confusion
that might be caused by the differences, we modified the text of these
accounts and propose to adopt them, as modified, as part of the Uniform
System of Accounts for Centralized Service Companies.
B. Proposed Records Retention Requirements
30. The Commission proposes to establish, as Part 368 of the
Commission's regulations, records retention requirements for holding
companies and service companies. We stress that, consistent with Order
No. 667, while the proposed Uniform System of Accounts applies only to
centralized service companies, i.e., service companies that are not
special purpose companies, the proposed records retention requirements
apply to all holding companies and service companies. The records
retention requirements proposed generally are based on the requirements
contained in Sec. Sec. 125.3 and 225.3 of the Commission's
regulations, with certain modifications considered appropriate for
holding companies and service companies.
[[Page 28469]]
These modifications implement reduced retention periods for certain
holding company and service company records where the retention periods
were longer under the SEC's requirements than the retention periods
applicable to similar records in Sec. Sec. 125.3 and 225.3 of the
Commission's regulations. In addition, the modifications incorporate
certain records retention requirements that were not part of the
Commission's regulations in Sec. Sec. 125.3 and 225.3 of the
Commission's regulations.
31. To the extent that the Commission's retention periods differ
from other regulatory agency requirements, holding companies and
service companies should retain records for the longer of the required
retention periods.
C. Proposed Statements of Reports (Schedules)
32. The Commission proposes to add as Part 369 of the Commission's
regulations instructions for filing the Form No. 60. The instructions
propose to require centralized service companies to prepare and file
electronically with the Commission an annual report by April 18 for the
previous calendar year. Also, the instructions require service
companies that do not file Form No. 60 to file annually a narrative
description of their functions.
D. Proposed Revised FERC Form No. 60
33. The proposed changes, if adopted, will require revising the
existing schedules in the Form No. 60 filed with the Commission.
Revised Form No. 60 is included in Appendix A to this Notice of
Proposed Rulemaking. We plan to develop submission software to provide
for electronic filing of revised Form No. 60 similar to the software
used for electronic filing of the Commission's other annual reporting
forms, i.e., Form No. 1 and Form No. 2.
34. The proposed revisions to revised Form No. 60 include:
(1) The title of the form is changed to ``Annual Report of
Centralized Service Companies''.
(2) The format of the schedules is revised consistent with Annual
Report Form Nos. 1 and 2 (Form Nos. 1 and 2). Instructions have been
added to schedules, where necessary, because they are non-existent in
the current Form No. 60. A new cover page is added similar to the cover
page for Form Nos. 1 and 2.
(3) Two instructional pages are added to replace existing
instructions. This is consistent with Form Nos. 1 and 2. General
Information Item No. III is added to indicate how Form No. 60 is to be
submitted. General Instruction No. II is added to indicate that amounts
should be reported in whole dollars. The current Form No. 60
instruction allows reporting in whole dollars, thousands of dollars and
millions of dollars. This revision is necessary for consistency.
General Instruction No. IV is added consistent with the adoption of
submission software. General Instruction No. VII is added to indicate
the process of how resubmissions are to be filed.
(4) Page 1 is revised consistent with Form Nos. 1 and 2 and a
telephone number and an e-mail address for contact person designated to
respond to questions about Form No. 60 has been added. There currently
is no contact information except for a correspondence address. A
Corporate Officer Certification has been added the same as for Forms 1
and 2 and the Signature Clause page has been deleted.
(5) The filing date for Form No. 60 is changed to April 18 from May
1. April 18 filing date is consistent with the due date for most of the
Commission's annual report forms that contain financial information.
(6) Schedule I, Comparative Balance Sheet, is revised to include
the balance sheet accounts proposed to be adopted herein.
(7) Schedule II, Service Company Property, is revised to include
the property accounts proposed to be adopted in this NOPR.
(8) Schedule III-A, Summary of Service Company Property and
Accumulated Provision for Depreciation and Amortization, is added to
distinguish service company property devoted exclusively to utility-
related operations and property devoted exclusively to non-utility
operations.
(9) Schedule XI, Proprietary Capital, is revised to include a
statement of retained earnings.
(10) Schedule XV, Comparative Income Statement, is revised to
include the income statement accounts proposed to be adopted herein.
(11) Schedule XV-A, Schedule of Utility Company Operating Expenses
is added to disclose operating expenses which were only summarized in
Schedule XV, Comparative Income Statement.
(12) Schedule, Analysis of Billing Associate Companies--Account
457, is revised to only include associate utility companies. This is
consistent with proposed Account 457.
(13) Schedule, Analysis of Billing Non-associate Companies--Account
458, is revised to only include non-associate utility companies. This
is consistent with proposed Account 458.
(14) A new schedule, Analysis of Billing Non-Utility Companies--
Account 459, is added to Form No. 60. This is consistent with proposed
Account 459.
(15) Schedule XVI--Analysis of Charges for Service--Associate and
Non-associate Companies, is revised to reflect the breakdown of utility
companies and non-utility companies proposed for Accounts 457, 458 and
459.
(16) Schedule XVII, Expense Distribution by Department or Service
Function, is revised by adding all income statement accounts.
D. Proposed Conforming Revisions to Parts 366 and 375
35. The Commission proposes to revise Sec. Sec. 366.21(b),
366.22(a)(1) and (b)(1) and 366.23(a) of the Commission's regulations
to conform to the new accounting, and records retention and reporting
requirements proposed in this notice of proposed rulemaking.
36. The Commission also proposes to revise Sec. 375.303(c), (d),
(e), (f), (g) and (h) of the Commission's regulations to update the
delegations to give to the Chief Accountant or the Chief Accountant's
designee certain authorities related to service company financial
accounting and reporting matters. These authorities are similar to
those that the Chief Accountant has for public utilities and licensees,
natural gas companies and oil pipeline companies.
E. Technical Conference
37. In addition to providing an opportunity to comment on the
regulations proposed in this Notice of Proposed Rulemaking, the
Commission directs staff to hold a technical conference regarding the
proposed Uniform System of Accounts, the records retention requirements
and revised Form No. 60 to provide interested entities an opportunity
to discuss the proposed regulations following the close of the comment
period for this Notice of Proposed Rulemaking. Entities are invited to
include a separate list of subjects they would like discussed at this
technical conference in their comments.\24\
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\24\ This technical conference is distinct from the technical
conference announced in Order No. 667. This technical conference
will address the specific details associated with the proposed
Uniform System of Accounts, records retention requirements and
revised Form No. 60. The conference announced in Order No. 667, on
the other hand, will address other issues identified in the PUHCA
2005 and FPA section 203 final rules and rehearing orders on those
rules.
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[[Page 28470]]
IV. Information Collection Statement
38. The following collections of information contained in this
proposed rule have been submitted to the Office of Management and
Budget (OMB) for review under section 3507(d) of the Paperwork
Reduction Act of 1995.\25\ The Commission solicits comments on the
Commission's need for this information, whether the information will
have practical utility, the accuracy of the provided burden estimates,
ways to enhance the quality, utility and clarity of the information to
be collected or retained, and any suggested methods for minimizing
respondents' burden, including the use of automated information
techniques.
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\25\ 44 U.S.C. 3507(d).
Estimated Annual Burden
----------------------------------------------------------------------------------------------------------------
Number of
Data collection Number of Number of hours per Total annual
respondents responses response hours
----------------------------------------------------------------------------------------------------------------
FERC form No. 60................................ 38 38 10 380
FERC-555A (new)................................. 300 .............. 1,080 324,000
---------------------------------------------------------------
Totals...................................... .............. .............. .............. 324,380
----------------------------------------------------------------------------------------------------------------
Total Annual Hours for Collection (Reporting and Recordkeeping) =
324,380.
Information Collection Costs: The Commission seeks comments on the
costs to comply with the requirements. It has projected the average
annualized costs for all respondents to be the following:
FERC Form 60 = 380 hours at $120 an hour (an average of 3 staff at
$40 an hour) = $45,600.
FERC-555A = The Commission projects an annualized average cost of
all respondents as 324,000 hours at $68 an hour ($17 an hour, an
average of 4 staff) = $22,032,000 (staffing) + $6,696,000 (storage) =
$28,728,000. These costs assume that the average office storage space
cost is $7,440 for retaining records on-site. (Usually records after
the initial years are transferred to off-site where the storage costs
drop to $925 (on average). As these requirements are being approved for
an initial three year period, the assumption was made that during that
period the records would be retained on-site.) These costs used as an
example 120 cubic feet (20 four drawer file cabinets) and include the
cubic feet of storage plus the cost of floor space plus the costs for
records storage cartons. Greater savings can be accomplished if
documents are stored electronically, i.e., one file cabinet (four
drawer) (10,000 pages on average) = 500 MegaBytes (MByte) = one CD ROM.
The Commission seeks comments on the costs to comply with these
requirements. Total costs (reporting and recordkeeping) = $9,908,880.
OMB regulations \26\ require OMB to approve certain information
collection requirements imposed by agency rule. The Commission is
submitting notification of this proposed rule to OMB. These information
collection requirements are mandatory requirements.
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\26\ 5 CFR 1320.11.
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Title: Annual Report for Centralized Service Companies (Form No.
60) and Preservation of Records for Service Companies Subject to PUHCA
2005 (555A).
Action: Proposed Collections.
OMB Control Nos.: 1902-0215 (Form No. 60) and new FERC-555A (To Be
Determined).
Respondents: Businesses or other for profit.
Frequency of Responses: Annually (Form No. 60) and recordkeeping
(555A).
Necessity of the Information: This proposed rule implements certain
provisions of Title XII of the Energy Policy Act of 2005, by adding
financial accounting requirements and reporting by centralized service
companies and the establishment of recordkeeping requirements for both
holding companies and service companies. Section 1275(b) provides for
Commission review and authorization of cost allocations for non-power
goods or services provided by service companies. In Order No. 667, the
Commission prescribed, for an initial transition period, uniform
financial accounting and reporting requirements for centralized service
companies' requirements within holding companies and record retention
requirements for both service companies and holding companies and that
the modification of the Commission's Uniform System of Accounts and
records retention requirements would be implemented later. However,
upon further review, the decision was made to implement a new Uniform
System of Accounts and records retention requirements to ensure a
smoother transition for service companies and holding companies. The
Commission has developed standardized accounting rules. These rules,
contained in the new Uniform System of Accounts for Centralized Service
Companies, are generally consistent with the accounting standards that
must be followed by commercial enterprises. Timely reporting of the
information is critical to monitoring the industry to ensure that
practices are not discriminatory and that appropriate rates are
charged. The official records maintained by the regulated companies are
in accordance with schedules already set by the Commission in its
regulations and already used by companies as the basis for required
filings and reports with the Commission. In addition, the records will
be used by the Commission's audit staff during compliance reviews and
special analyses as deemed necessary by the Commission. The additional
financial transparency required by these requirements will aid the
Commission in meeting its oversight and market monitoring obligations
and will benefit the public both as ratepayers and investors.
Internal Review: The Commission has reviewed the proposed
accounting and records retention requirements and made a preliminary
determination that these requirements are necessary to implement Title
XII of the Energy Policy Act of 2005. By adapting relevant parts of the
SEC's Uniform System of Accounts and records retention rules to the
Commission's Uniform System of Accounts and records retention
requirements, facilitates the Commission's need to conduct
examinations, audits and verification of this information for the
protection of utility customers with respect to jurisdictional rates.
These requirements conform to the Commission's plan for efficient
information collection, communication and management within
[[Page 28471]]
the energy industry. The Commission has assured itself, by means of
internal review, that there is specific, objective support for the
burden estimates associated with the information requirements.
Interested persons may obtain information on the reporting
requirements by contacting the following: Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426 [Attention:
Michael Miller, Office of the Executive Director, Phone (202) 502-8415,
fax: (202) 273-0873, e-mail: michael.miller@ferc.gov].
For submitting comments concerning the collection(s) of information
and the associated burden estimate(s), please send your comments to the
contact listed above and to the Office of Management and Budget, Office
of Information and Regulatory Affairs, Washington, DC 20503 [Attention:
Desk Officer for the Federal Energy Regulatory Commission, phone (202)
395-4650, fax: (202) 295-7285, e-mail: oira_submission@omb.eop.gov].
V. Environmental Analysis
39. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human environment.\27\ The
Commission has categorically excluded certain actions from this
requirement as not having a significant effect on the human
environment. Included in the exclusion are rules that carry out
legislation, involve information gathering, analyses and dissemination,
and involve accounting.\28\ These proposed rules, if finalized, carry
out EPAct 2005, involve information gathering and analysis, and involve
accounting, and, therefore, fall under these exclusions. Consequently,
no environmental consideration is necessary.
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\27\ Regulations Implementing the National Environmental Policy
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs.
1986-1990 ] 30,783 (1987).
\28\ 18 CFR 380.4(a)(3), (a)(5), (a)(16).
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VI. Regulatory Flexibility Act Certification
40. The Regulatory Flexibility Act of 1980 (RFA) requires
rulemakings to contain either a description and analysis of the effect
that the rule will have on small entities or a certification that the
rule will not have a significant economic impact on a substantial
number of small entities.\29\ Most holding companies to which the rules
proposed herein, if finalized, would not fall within the RFA's
definition of small entity.\30\ Consequently, the rules proposed
herein, if finalized, will not have a ``significant economic impact on
a substantial number of small entities.''
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\29\ 5 U.S.C. 603 (2000).
\30\ 5 U.S.C. 601(3)(2000), citing to section 3 of the Small
Business Act, 15 U.S.C. 632 (2000). Section 3 of the Small Business
Act defines a ``small business concern'' as a business that is
independently owned and operated and that is not dominant in its
field of operation. 15 U.S.C. 632 (2000). The Small Business Size
Standards component of the North American Industry Classification
System (NAICS) defines, for example, a small electric utility as one
that, including its affiliates, is primarily engaged in the
generation, transmission, and/or distribution of electric energy for
sale and whose total electric output for the preceding fiscal year
did not exceed four million MWh. NAICS defines a natural gas
pipeline company as one that transports natural gas and whose annual
receipts (total income plus cost of goods sold) did not exceed $6.5
million dollars for the preceding year. 13 CFR 121.201.
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VII. Comment Procedures
41. The Commission invites interested persons to submit comments on
the matters and issues proposed in this notice to be adopted, including
any related matters or alternative proposals that commenters may wish
to discuss. Comments are due on or before June 15, 2006. Comments must
refer to Docket No. RM06-11-000, and must include the commenter's name,
the organization he or she represents, if applicable, and his or her
address.
42. Comments may be filed electronically via the eFiling link on
the Commission's website at https://www.ferc.gov. The Commission accepts
most standard word processing formats, and commenters may attach
additional files with supporting information in certain other file
formats. Commenters filing electronically do not need to make a paper
filing.
43. Commenters who are not able to file comments electronically
must send an original and 14 copies of their comments to: Federal
Energy Regulatory Commission, Office of the Secretary, 888 First
Street, NE., Washington, DC 20426.
44. All comments will be placed in the Commission's public files
and may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commenters on this notice of
proposed rulemaking are not required to serve copies of their comments
on other commenters.
VIII. Document Availability
45. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through the Commission's home page https://www.ferc.gov and in
the Commission's Public Reference Room during normal business hours
(8:30 a.m. to 5 p.m. Eastern time) at 888 First Street, NE., Room 2A,
Washington, DC 20426.
46. From the Commission's home page on the Internet, this
information is available in the Commission's document management
system, eLibrary. The full text of this document is available on
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or
downloading. To access this document in eLibrary, type the docket
number excluding the last three digits of this document in the docket
number field.
47. User assistance is available for eLibrary and the Commission's
website during normal business hours. For assistance, please contact
FERC Online Support at 1-866-208-3676 (toll free) or 202-502-6652 (e-
mail at FERCOn-lineSupport@ferc.gov), or the Public Reference Room at
202-502-8371, TTY 202-502-8659 (e-mail at
public.referenceroom@ferc.gov).
List of Subjects
18 CFR Part 366
Electric power, Natural gas, Reporting and recordkeeping
requirements.
18 CFR Part 367
Electric power, Natural gas, Uniform System of Accounts, Reporting
and recordkeeping requirements.
18 CFR Part 368
Electric power, Natural gas, Reporting and recordkeeping
requirements.
18 CFR Part 369
Electric power, Natural gas, Reporting and recordkeeping
requirements.
18 CFR Part 375
Authority delegations (Government agencies), Seals and insignia,
Sunshine Act.
By direction of the Commission.
Magalie R. Salas,
Secretary.
In consideration of the foregoing, the Commission proposes to amend
parts 366 and 375 and to add parts 367, 368 and 369, Chapter I, Title
18 of the Code of Federal Regulations, as follows:
PART 366--PUBLIC UTILITY HOLDING COMPANY ACT OF 2005
1. The authority citation for part 366 continues to read as
follows:
Authority: Pub. L. 109-58, 1261 et seq., 119 Stat. 594, 972 et
seq.
2. In Sec. 366.21, paragraph (b) is revised to read as follows:
[[Page 28472]]
Sec. 366.21 Accounts and records for holding companies.
* * * * *
(b) Unless otherwise exempted or granted a waiver by Commission
rule or order pursuant to Sec. Sec. 366.3 and 366.4 of this chapter,
beginning January 1, 2007, all holding companies must comply with the
Commission's records retention requirements for holding companies and
service companies as prescribed in part 368 of this chapter. Until
December 31, 2006, holding companies registered under the Public
Utility Holding Company Act of 1935 (15 U.S.C. 79a et seq.) may follow
either the Commission's records retention rules for public utilities
and licensees or for natural gas companies, as appropriate (parts 125
and 225 of this chapter), or the Securities and Exchange Commission's
record retention rules in 17 CFR part 257.
* * * * *
3. In Sec. 366.22, paragraphs (a)(1) and (b)(1) are revised to
read as follows:
Sec. 366.22 Accounts and records of service companies.
(a) Records retention requirements--(1) General. Unless otherwise
exempted or granted a waiver by Commission rule or order pursuant to
Sec. Sec. 366.3 and 366.4 of this chapter, beginning January 1, 2007,
every service company must maintain and make available to the
Commission such books, accounts, memoranda, and other records in such
manner and preserve them for such periods as the Commission prescribes
in part 368 of this chapter, in sufficient detail to permit
examination, audit, and verification, as necessary and appropriate for
the protection of utility customers with respect to jurisdictional
rates.
* * * * *
(b) Accounting requirements--(1) General. Unless otherwise exempted
or granted a waiver by Commission rule or order pursuant to Sec. Sec.
366.3 and 366.4 of this chapter, beginning January 1, 2007, every
centralized service company (See Sec. 367.2 of this chapter) must
maintain and make available to the Commission such books, accounts,
memoranda, and other records as the Commission prescribes in part 367
of this chapter, in sufficient detail to permit examination, audit, and
verification, as necessary and appropriate for the protection of
utility customers with respect to jurisdictional rates. Every such
service company must maintain and make avail
