Accounting Requirements for RUS Electric Borrowers, 30277-30291 [E8-11264]

Agencies

• DEPARTMENT OF AGRICULTURE
• Rural Utilities Service

[Federal Register Volume 73, Number 102 (Tuesday, May 27, 2008)]
[Rules and Regulations]
[Pages 30277-30291]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-11264]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1767

RIN 0572-AC08


Accounting Requirements for RUS Electric Borrowers

AGENCY: Rural Utilities Service, USDA.

ACTION: Final rule.

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SUMMARY: The Rural Utilities Service, an agency delivering the United 
States Department of Agriculture's Rural Development Utilities 
Programs, hereinafter referred to as Rural Development and/or Agency, 
is amending its regulation on accounting policies and procedures for 
Rural Development Electric Programs borrowers as set forth in 7 CFR 
part 1767, Accounting Requirements for Rural Development Electric 
Program Borrowers. This final rule reconciles Part 1767 with the 
Uniform System of Accounts as set forth by the Federal Energy 
Regulatory Commission (FERC); adopts FERC accounting guidance for 
Regional Transmission Organizations, Asset Retirement Obligations with 
modifications, Other Comprehensive Income, and Derivatives and Hedging 
Instruments; amends accounting interpretations for Special Equipment 
Accounting, Storm Damage, Rural Economic Development Loan and Grant 
Program and Consolidated Financial Statements; sets forth an accounting 
interpretation to establish uniform reporting procedures for Accounting 
for Cushion of Credit Accounts, and codifies guidance on records 
retention currently published in Bulletin 180-2. This final rule also 
corrects a number of administrative errors existing within this part. 
The section of the proposed rule that deals with accounting for and 
reporting on Renewable Energy Credits will be addressed in a subsequent 
final rule.

EFFECTIVE DATE: May 27, 2008.

FOR FURTHER INFORMATION CONTACT: Ms. Diana C. Alger, Chief, Technical 
Accounting and Auditing Staff, Program Accounting Services Division, 
Rural Development, STOP 1523, Room 2221, South Building, U.S. 
Department of Agriculture, Washington, DC 20250, telephone number (202) 
720-5227.

SUPPLEMENTARY INFORMATION:

General Discussion

    On July 13, 2007 the Agency published a proposed rule in the 
Federal Register (72 FR 38511) entitled Accounting Requirements for RUS 
Electric Program Borrowers, and the public was invited to submit 
comments on or before September 11, 2007. Comments were received and 
are addressed in the Discussion Comment section of this rule. One issue 
still under consideration is the renewable energy credit market. The 
Agency has determined that it is best to defer any decisions on this 
accounting treatment until further information is available. A separate 
rulemaking will address this issue and will be published in the Federal 
Register at a future date.

Background

    In order to facilitate the effective and economical operation of a 
business enterprise, adequate and reliable financial records must be 
maintained. Accounting records must provide a clear, accurate picture 
of current economic conditions from which management can make informed 
decisions in charting the company's future. The rate regulated 
environment in which an electric utility operates causes an even 
greater need for financial information that is accurate, complete, and 
comparable with that of other electric utilities.
    Rural Development, as a Federal lender and mortgagee, and in 
furthering the objectives of the Rural Electrification Act (RE Act) (7 
U.S.C. 901 et seq.), has a legitimate programmatic interest and a 
substantial financial interest in requiring adequate records to be 
maintained. In order to provide Rural Development with financial 
information that can be analyzed and compared with the operations of 
other borrowers in the Rural Development program, all Rural Development 
borrowers must maintain financial records that utilize uniform accounts 
and uniform accounting policies and procedures. The standard Rural 
Development security instrument, therefore, requires borrowers to 
maintain their books, records, and accounts in accordance with methods 
and principles of accounting prescribed by Rural Development in the 
Rural Development Uniform System of

[[Page 30278]]

Accounts (USoA) for its electric borrowers.
    The Uniform System of Accounts promulgated by the Federal Energy 
Regulatory Commission (FERC) serves as a basis for this part. When new 
or revised accounting guidance is provided by FERC for electric 
utilities, Rural Development must review this guidance within the 
framework of this part for applicability to its borrowers. FERC issued 
Order 627, Accounting and Reporting of Financial Instruments, 
Comprehensive Income, Derivatives and Hedging Activities, on October 
10, 2002. After reviewing Order 627, Rural Development has determined 
that this guidance shall be adopted with minor modification. Order 627 
established Account 219, Accumulated Other Comprehensive Income, an 
account number already in use in this part and identified as Other 
Margins and Equities. Therefore, Rural Development is establishing 
Account 209, Accumulated Other Comprehensive Income, and modify Section 
1767.15(w) Accounting for Other Comprehensive Income, accordingly. All 
other accounts and instructions are adopted as set forth in Order 627.
    On April 9, 2003, FERC issued Order 631, Accounting, Financial 
Reporting and Rate Filing Requirements for Asset Retirement 
Obligations. The purpose of this order was the incorporation of the 
requirements of Statement of Financial Accounting Standard No. 143, 
Accounting for Asset Retirement Obligations, issued in June 2001 by the 
Financial Accounting Standards Board. After reviewing Order 631, Rural 
Development has determined to adopt with minor modification. In 
addition to a number of changes in instructions and account 
descriptions to accommodate the prescribed accounting for Asset 
Retirement Obligations, FERC established new accounts to record 
transactions associated with asset retirement obligations. One of the 
new accounts created by Order 631 was Account 403.1, Depreciation 
Expense for Asset Retirement Costs. This account number is already used 
within the mandated subaccounts of 403 to represent Depreciation 
Expense--Steam Production Plant. Therefore, Rural Development is 
establishing Account 403.8, Depreciation Expense--Asset Retirement 
Obligations, and modifies paragraph (C) of the description for Account 
103, Experimental Electric Plant Unclassified, accordingly. All other 
accounts and instructions are being adopted as set forth in Order 631 
with one exception. Rural Development will not require that separate 
subsidiary records be maintained for the amount of accrued cost of 
removal other than legal obligations for the retirement of plant 
recorded in Account 108, Accumulated Provision for Depreciation of 
Electric Utility Plant.
    Order 668, Accounting and Financial Reporting for Public Utilities 
Including Regional Transmission Organizations (RTO), issued by FERC on 
December 16, 2005, and clarifying Order 668-A, Accounting and Financial 
Reporting for Public Utilities Including RTOs, issued by FERC on April 
20, 2006, amended the USoA and established standard accounting guidance 
for RTO costs to provide better comparability between utilities and to 
improve the transparency of financial information pertaining to RTOs 
along with a better understanding of RTO costs. The new accounts 
established by FERC in Order 668 and the instructions is being adopted 
by Rural Development. In 1997, in response to FERC Orders 888 and 889 
on open access, Rural Development revised its USoA to require borrowers 
to allocate employee pensions and benefits expense, as well as payroll 
taxes and insurance costs to the appropriate functional operations, 
maintenance, and administrative expense accounts to which labor charges 
are accrued to make available to management reliable financial 
information concerning the actual cost of products and services it 
provides. To ensure comparable results, Rural Development has modified 
the newly added accounts to accommodate this allocation.
    To ensure that borrowers consistently account for their financial 
operations and to keep pace with the changing environment in which they 
operate, the Rural Development USoA must be revised and updated from 
time to time. Rural Development is, therefore, amending and revising 
several accounting interpretations found in Section 1767.41, Accounting 
Methods and Procedures required of all Rural Development Borrowers. 
Interpretation 119, Special Equipment, is revised to conform to 
guidance provided in a Rural Development letter dated November 14, 
2000, providing guidelines for requesting a waiver from the special 
equipment accounting procedures. Interpretation 136, Storm Damage, is 
revised to provide new guidance on accounting for reimbursements of 
storm damage by the Federal Emergency Management Administration. 
Interpretation 626, Rural Economic Development Loan and Grant Program, 
is revised to include accounting guidance for recording the default on 
the repayment of economic development loans made by borrowers to local 
economic development projects. Interpretation 404, Consolidated 
Financial Statements, is revised to clarify the requirements for 
reporting consolidated subsidiaries on Forms 7, Financial and 
Statistical Reports for Distribution Borrowers, and Form 12, Financial 
and Statistical Reports for Power Supply Borrowers and Electric 
Distribution Borrowers with Generating Facilities. Rural Development is 
also setting forth a new accounting interpretation that establishes 
uniform accounting and reporting procedures for Cushion of Credit 
Accounts which are created by voluntary unscheduled payment by a 
borrower in excess of amounts due and payable.
    Bulletin 180-2, Record Retention Recommendations for Rural 
Development Electric Borrowers, effective June 26, 2003, currently 
provides the Agency's recommendations for record retention. This final 
rule codifies these requirements with modifications in subpart D.
    The final rule contains a number of other revisions to make 
administrative corrections to addresses for submitting requests, 
position titles to update current versions of forms, to change 
publication names, and to correct errors found in the previously 
codified version of this part.

Summary of Comments

    A proposed rule entitled, ``Accounting Requirements for RUS 
Electric Program Borrowers,'' published July 13, 2007, at 72 FR 38511, 
invited interested parties to submit comments on or before September 
11, 2007. The National Rural Electric Cooperative Association (NRECA), 
Southern Maryland Electric Cooperative, Inc, and the National Rural 
Utilities Cooperative Finance Corporation (CFC) submitted comments. No 
comments from any other sources were received. The comments submitted 
by NRECA represent the views of its members. The following paragraphs 
address the various topics that were discussed by the commenters.

Adoption of FERC Order 668

    Comment: CFC concurred with the Agency's adoption of recent FERC 
orders and suggested that the Agency incorporate FERC Order 668-A which 
made technical corrections to the original order and added 
clarification to certain netting concepts found in Order 668.
    Agency Response: The Agency agrees with the recommendation and has 
revised the final rule accordingly.

[[Page 30279]]

Interpretation No. 633, Cushion of Credit

    Comment: NRECA, on behalf of its members, expressed concern for 
what they see as an inappropriate matching of the requirement to record 
interest income from the cushion of credit account in Account 419, 
Interest and Dividend Income, with the requirement that the balance in 
the account be reported as an unapplied payment and netted against 
long-term debt. This commenter suggests that it may be more appropriate 
to record the balance in the cushion of credit account as an investment 
if the requirement remains to record the interest income in Account 
419.
    Agency Response: For purposes of the USoA and for reporting on the 
Forms 7 and 12, the Agency believes that its treatment for cushion of 
credit funds and interest earned is best suited for the substance of 
this transaction. While we recognize that this accounting treatment 
produces results unique to our borrowers, we expect and anticipate 
these results during our financial analysis and factor the results into 
our financial decision making.
    However, a valid argument can be made for an alternative 
presentation on the audited financial statements, particularly if those 
statements are being used to support efforts to secure outside 
financing. Therefore, we revised the final rule to permit presentation 
of the cushion of credit balance as a long-term investment for 
financial statement presentation while maintaining the current 
treatment for Forms 7 and 12 reporting.

Interpretation No. 634, Renewable Energy Credits

    Comment: All three commenters expressed dissatisfaction with the 
accounting guidance provided for Renewable Energy Credits.
    Agency Response: Because of the controversy currently surrounding 
recording renewable energy credits, the lack of authoritative guidance 
from the Federal Energy Regulatory Commission or the Financial 
Accounting Standards Board, and the relative immaturity of the 
renewable energy credit market, the Agency has determined that it is 
best to defer any decisions on this accounting treatment until further 
information is available. The Agency will proceed with this final rule 
and address renewable energy credits in a later rulemaking.

Executive Order 12866

    This final rule has been determined to be not significant for 
purposes of Executive Order 12866, and therefore has not been reviewed 
by the Office of Management and Budget (OMB).

Regulatory Flexibility Act Certification

    Pursuant to 5 U.S.C. 553(a)(2), this final rule is exempt from the 
rulemaking requirements of the Administrative Procedure Act (5 U.S.C. 
551 et seq.), including the requirement to provide prior notice and an 
opportunity for public comment. Because this final rule is not subject 
to a requirement to provide prior notice and an opportunity for public 
comment pursuant to 5 U.S.C. 553, or any other law, the analytical 
requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) 
are inapplicable.

Information Collection and Recordkeeping Requirements

    This final rule contains no new reporting or recordkeeping burdens 
under OMB control number 0572-0003 that would require approval under 
the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

National Environment Policy Act Certification

    The Administrator of RUS has determined that this final rule will 
not significantly affect the quality of the human environment as 
defined by the National Environmental Policy Act of 1969 (42 U.S.C. 
4321 et seq.). Therefore, this action does not require an environmental 
impact statement or assessment.

Catalog of Federal Domestic Assistance

    The program described by this final rule is listed in the Catalog 
of Federal Domestic Assistance Program under numbers 10.850--Rural 
Electrification Loans and Loan Guarantees. This catalog is available on 
a subscription basis from the Superintendent of Documents, the United 
States Government Printing Office, Washington, DC 20402-9325, (202) 
512-1800.

Executive Order 12372

    This final rule is excluded from the scope of Executive Order 
12372, Intergovernmental Consultation, which may require a consultation 
with State and local officials. See the final rule related notice 
entitled, ``Department Programs and Activities Excluded from Executive 
Order 12372'' (50 FR 47034) advising that Rural Development loans and 
loan guarantees were not covered by Executive Order 12372.

List of Subjects in 7 CFR Part 1767

    Electric power, Loan programs--energy, Rural areas, Uniform System 
of Accounts, Administrative practice and procedure, and Agriculture.

0
For the reason set forth in the preamble, Rural Development hereby 
amends 7 CFR chapter XVII as follows:

PART 1767--ACCOUNTING REQUIREMENTS FOR RUS ELECTRIC BORROWERS

0
1. The authority for part 1767 continues to read as follows:

    Authority: 7 U.S.C. 901 et seq.

0
2. Amend Sec.  1767.10 by:
0
a. Revising the definition of Cost of removal to read as set forth 
below;
0
b. Removing the definitions of Capital lease and Operating Lease; and
0
c. Adding the definitions of Form 7; Form 12; Lease Capital; Lease 
Operating; and Regional Market in alphabetical order as set forth 
below.
    The additions and revision read as follows:


Sec.  1767.10  Definitions.

* * * * *
    Cost of removal is the cost of demolishing, dismantling, tearing 
down or otherwise removing electric plant, including the cost of 
transportation and handling incidental thereto. 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 Sec. 1767.15(y).
* * * * *
    Form 7 is the January 2004 revision (or the revision of any other 
date which may be specified) of such Form 7, Financial and Statistical 
Report, or any later revision which shall have been at the time 
prescribed for use by Rural Development.
    Form 12 is the December 2002 revision (or the revision of any other 
date which may be specified) of such Form 12, Operating Report--
Financial, or any later revision which shall have been at the time 
prescribed for use by Rural Development.
* * * * *
    Lease, capital is a lease of property used in utility or nonutility 
operations, which meets one or more of the criteria stated in Sec.  
1767.15(s).
    Lease, operating is a lease of property used in utility or 
nonutility operations, which does not meet any of the criteria stated 
in Sec.  1767.15(s).
* * * * *
    Regional Market is an organized energy market operated by a public 
utility, whether directly or through a

[[Page 30280]]

contractual relationship with another entity.
* * * * *

0
3. In Sec.  1767.12, paragraph (a) is revised to read as follows:


Sec.  1767.12  Accounting system requirements.

    (a) Each Rural Development electric borrower must maintain and keep 
its books of accounts and all other books and records that support the 
entries in such books of accounts in accordance with Sec. Sec.  
1767.13-1767.31.
* * * * *

0
4. In Sec.  1767.13, paragraph (a) is revised to read as set forth 
below, and paragraph (e) is amended by redesignating paragraph (e)(4) 
as (e)(5) and adding a new (e)(4) to read as follows:


Sec.  1767.13  Departures from the prescribed Rural Development uniform 
system of accounts.

    (a) No departures are to be made to the prescribed Rural 
Development USoA without the prior written approval of Rural 
Development. Requests for departures from the Rural Development USoA 
shall be addressed, in writing, to the Assistant Administrator, Program 
Accounting and Regulatory Analysis. (AA-PARA).
* * * * *
    (e) * * *
    (4) A resolution from the borrower's Board of Directors authorizing 
such action; and
* * * * *

0
5. Section 1767.14 is revised to read as follows:


Sec.  1767.14  Interpretations of the Rural Development uniform system 
of accounts.

    To maintain uniformity in accounting, borrowers must submit 
questions concerning interpretations of the Rural Development USoA, in 
writing, to the AA-PARA, for consideration and decision.

(Approved by the Office of Management and Budget under control 
number 0572-0002).

0
6. Amend Sec.  1767.15, as follows:
0
a. Revise paragraphs (a)(4), (a)(6), and (t)(2) to read as set forth 
below;

0
b. Redesignate paragraphs (t)(3) and (t)(4) as (t)(4) and (t)(5), 
respectively, and add a new paragraph (t)(3) to read as set forth 
below; and
0
c. Add new paragraphs (v) through (y) to read as set forth below.
    The additions and revisions read as follows:


Sec.  1767.15  General instructions.

    (a) * * *
    (4) No utility shall destroy any such books or records unless the 
destruction thereof is permitted by the rules and regulations contained 
in subpart D of this part.
* * * * *
    (6) When the utility chooses to recognize the gain in the year of 
reacquisition as a taxable gain, Account 411.1, Provision for Deferred 
Income Taxes--Credit, Utility Operating Income, shall be credited with 
the amount of the related tax effect, such amount to be allocated to 
the periods affected in accordance with the provisions of Account 190, 
Accumulated Deferred Income Taxes.
* * * * *
    (t) * * *
    (2) The utility shall record a capital lease as an asset in Account 
101.1, Property Under Capital Leases, Account 120.6, Nuclear Fuel Under 
Capital Leases or Account 121, Nonutility Property;
    (3) The utility, as a lessee, shall recognize an asset retirement 
obligation arising from the plant under a capital lease unless the 
obligation is recorded as an asset and liability under a capital lease. 
The utility shall record the asset retirement cost by debiting Account 
101.1, Property Under Capital Leases, or Account 120.6, Nuclear Fuel 
Under Capital Leases, or Account 121, Nonutility Property, as 
appropriate, and crediting the liability for the asset retirement 
obligation in Account 230, Asset Retirement Obligations. Asset 
retirement costs recorded in Account 101.1, Account 120.6, or Account 
121 shall be amortized by charging rent expense, or Account 518, 
Nuclear Fuel Expense, or Account 421, Miscellaneous Nonoperating 
Income, 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 Account 230, Asset 
Retirement Obligations, shall be recorded by a charge to Account 
411.10, Accretion Expense, for electric utility plant, and Account 421, 
Miscellaneous Nonoperating Income, for nonutility plant and a credit to 
Account 230, Asset Retirement Obligations.
* * * * *
    (v) Depreciation Accounting. (1) Method. Utilities 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.
    (2) Service lives. Estimated useful service lives of depreciable 
property must be supported by engineering, economic, and other 
depreciation studies.
    (3) Rate. Utilities must use percentage rates of depreciation that 
are based on a method of depreciation that allocates in a systematic 
and rational manner the service value of depreciable property to the 
service life of the property. Where composite depreciation rates are 
used, they should be based on the weighted average estimated useful 
service lives of the depreciable property comprising the composite 
group.
    (w) Accounting for other comprehensive income. (1) Utilities shall 
record items of other comprehensive income in Account 209, Accumulated 
Other Comprehensive Income. Amounts included in this account shall be 
maintained by each category of other comprehensive income. Examples of 
categories of other comprehensive income include foreign currency 
items, minimum pension liability adjustments, unrealized gains and 
losses on available-for-sale type securities and cash flow hedge 
amounts. Supporting records shall be maintained for Account 209 so that 
the cumulative amount of other comprehensive income for each item 
included in this account can be readily identified.
    (2) When an item of other comprehensive income enters into the 
determination of net income in the current or subsequent periods, a 
reclassification adjustment shall be recorded in Account 209 to avoid 
double counting of that amount.
    (3) When it is probable that an item of other comprehensive income 
will be included in the development of cost-of-service rates in 
subsequent periods, that amount of unrealized losses or gains will be 
recorded in Accounts 182.3, Other Regulatory Assets or 254, Other 
Regulatory Liabilities, as appropriate.
    (x) Accounting for derivative instruments and hedging activities. 
(1) Utilities shall recognize derivative instruments as either assets 
or liabilities in the financial statements and measure those 
instruments at fair value, except those falling within recognized 
exceptions. Normal purchases or sales are contracts that provide for 
the purchase or sale of goods that will be delivered in quantities 
expected to be used or sold by the utility over a reasonable period in 
the normal course of business. A derivative instrument is a financial 
instrument or other contract with all of the following characteristics:
    (i) It has one or more underlyings and a notional amount or payment 
provision. Those terms determine the amount of the settlement or 
settlements, and, in some cases, whether or not a settlement is 
required.
    (ii) It requires no initial net investment or an initial net 
investment

[[Page 30281]]

that is smaller than would be required for other types of contracts 
that would be expected to have a similar response to changes in market 
factors.
    (iii) Its terms require or permit net settlement, can readily be 
settled net by a means outside the contract, or provide for delivery of 
an asset that puts the recipient in a position not substantially 
different from net settlement.
    (2) The accounting for the changes in the fair value of derivative 
instruments depends upon its intended use and designation. Changes in 
the fair value of derivative instruments not designated as fair value 
or cash flow hedges shall be recorded in Account 175, Derivative 
instrument assets, or Account 244, Derivative Instrument Liabilities, 
as appropriate, with the gains recorded in Account 421, Miscellaneous 
Nonoperating Income, and losses recorded in Account 426.5, Other 
Deductions.
    (3) A derivative instrument may be specifically designated as a 
fair value or cash flow hedge. A hedge is used to manage risk to price, 
interest rates, or foreign currency transactions. A company shall 
maintain documentation of the hedge relationship at the inception of 
the hedge that details the risk management objective and strategy for 
undertaking the hedge, the nature of the risk being hedged, and how 
hedge effectiveness will be determined.
    (4) If the utility designates the derivative instrument as a fair 
value hedge against exposure to changes in the fair value of a 
recognized asset, liability, or a firm commitment, it shall record the 
change in fair value of the derivative instrument to Account 176, 
Derivatives in Instrument Assets--Hedges, or Account 245, Derivative 
Instrument Liabilities--Hedges, as appropriate, with a corresponding 
adjustment to the subaccount of the item being hedged. The ineffective 
portion of the hedge transaction shall be reflected in the same income 
or expense account that will be used when the hedged item enters into 
the determination of net income. In the case of a fair value hedge of a 
firm commitment a new asset or liability is created. As a result of the 
hedge relationship, the new asset or liability will become part of the 
carrying amount of the item being hedged.
    (5) If the utility designates the derivative instrument as a cash 
flow hedge against exposure to variable cash flows of a probable 
forecasted transaction, it shall record changes in the fair value of 
the derivative instrument in Account 176, Derivative Instrument 
Assets--Hedges, or Account 245, Derivative Instrument Liabilities--
Hedges, as appropriate, with a corresponding amount in Account 209, 
Accumulated Other Comprehensive Income, for the effective portion of 
the hedge. The ineffective portion of the hedge transaction shall be 
reflected in the same account or expense account that will be used when 
the hedged item enters into the determination of net income. Amounts 
recorded in other comprehensive income shall be reclassified into 
earning in the same period or periods that the hedged forecasted item 
enters into the determination of net income.
    (y) Accounting for asset retirement obligations. (1) An asset 
retirement obligation represents a liability for the legal obligation 
associated with the retirement of a tangible long-lived asset that a 
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 shall be stated at the fair value of 
the asset retirement obligation in the period in which the obligation 
is incurred.
    (2) The utility shall initially record a liability for an asset 
retirement obligation in Account 230, Asset Retirement Obligations, and 
charge the associated asset retirement costs to electric utility plant 
(including Accounts 101.1 and 120.6), and nonutility plant, as 
appropriate, related to the plant that gives rise to the legal 
obligation. The asset retirement cost shall be depreciated over the 
useful life of the related asset that gives rise to the obligation. For 
periods subsequent to the initial recording of the asset retirement 
obligation, a utility shall 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, as follows:
    (i) The utility shall record the accretion of the liability by 
debiting Account 411.10, Accretion Expense, for electric utility plant, 
Account 413, Expenses of Electric Plant Leased to Others, for electric 
plant leased to others, and Account 421, Miscellaneous Nonoperating 
Income, for nonutility plant and crediting Account 230, Asset 
Retirement Obligations; and
    (ii) The utility shall recognize any subsequent measurement changes 
of the liability initially recorded in Account 230, Asset Retirement 
Obligation, for each specific asset retirement obligation as an 
adjustment of that liability in Account 230 with the corresponding 
adjustment to electric utility plant, electric plant leased to others, 
and nonutility plant, as appropriate. The utility shall on a timely 
basis monitor any measurement changes of the asset retirement 
obligations.
    (3) Gains or losses resulting from the settlement of asset 
retirement obligations associated with utility plant resulting from the 
difference between the amount of the liability for the asset retirement 
obligation included in Account 230, Asset Retirement Obligations, and 
the actual amount paid to settle the obligation shall be accounted for 
as follows:
    (i) Gains shall be credited to Account 411.6, Gains from 
Disposition of Utility Plant, and;
    (ii) Losses shall be charged to Account 411.7, Losses from 
Disposition of Utility Plant.
    (4) Gains or losses on the settlement of asset retirement 
obligations associated with nonutility plant resulting from the 
difference between the amount of the liability for the asset retirement 
obligation in Account 230, Asset Retirement Obligations, and the amount 
paid to settle the obligation, shall be accounted for as follows:
    (i) Gains shall be credited to Account 421, Miscellaneous 
Nonoperating Income, and;
    (ii) Losses shall be charged to Account 426.5, Other Deductions.
    (5) For purposes of analyses a utility shall 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.

0
7. Amend Sec.  1767.16 as follows:
0
a. Add paragraph (a)(4) to read as set forth below;
0
b. Amend paragraph (c)(17)(i) by revising the value of W to read as set 
forth below; and,
0
c. Add paragraph (c)(21) to read as set forth below;
    The additions and revisions read as follows:


Sec.  1767.16  Electric plant instructions.

    (a) * * *

[[Page 3028]]

    (4) Plant acquired by lease which qualifies as capital lease 
property under Sec. 1767.15(s), Criteria for Classifying Leases, shall 
be recorded in Account 101.1, Property Under Capital Leases, or Account 
120.6, Nuclear Fuel Under Capital Leases, as appropriate.
* * * * *
    (c) * * *
    (17) * * *
    (i) * * *
    W = Average balance in construction work in progress plus nuclear 
fuel in process of refinement, conversion, enrichment, and fabrication, 
less asset retirement costs related to plant under construction.
* * * * *
    (21) Asset retirement. The costs recognized as a result of asset 
retirement obligations incurred during the construction and testing of 
utility plant shall constitute a component of construction costs.
* * * * *

0
8. Amend Sec.  1767.18 as follows:
0
a. In the subject table, under heading Utility Plant, add entries 
108.9, 175, and 176 to read as set forth below;
0
b. Under 101.1 Property Under Capital Leases, revise paragraph C. to 
read as set forth below;
0
c. Under 103 Experimental Electric Plant Unclassified, amend paragraph 
C. by revising the first sentence to read as set forth below;
0
d. Under 108 Accumulated Provision for Depreciation of Electric Utility 
Plant, amend paragraph C. by adding an entry for 108.9 to read as set 
forth below;
0
e. Revise paragraph A. of 121 Nonutility Property to read as set forth 
below;
0
f. Revise paragraph A. of 124 Other Investments to read as set forth 
below;
0
g. Revise 125 Sinking Funds to read as set forth below;
0
h. Revise 126 Depreciation Fund to read as set forth below;
0
i. Revise 128 Other Special Funds to read as set forth below;
0
j. Add Account 175 Derivative Instrument Assets to read as set forth 
below;
0
k. Add Account 176 Derivative Instrument Assets--Hedges to read as set 
forth below.
0
l. Revise paragraph B. of 182.3 Other Regulatory Assets to read as set 
forth below;
    The additions and revisions read as follows:


Sec.  1767.18  Assets and other debits.

* * * * *

Utility Plant

* * * * *
108.9 Accumulated Provision for Depreciation of Asset Retirement 
Costs
175 Derivative Instrument Assets
176 Derivative Instrument Assets--Hedges
* * * * *

101.1 Property Under Capital Leases

* * * * *
    C. Records shall be maintained with respect to each capital 
lease reflection:

(1) Name of lessor, (2) basic details of lease, (3) terminal date, 
(4) original cost or fair market value of property leased, (5) 
future minimum lease payments, (6) executory costs, (7) present 
value of minimum lease payments, (8) the amount representing 
interest and the interest rate used, and (9) expenses paid. Records 
shall also be maintained for plant under a lease, to identify the 
asset retirement obligation and cost originally recognized for each 
lease and the periodic charges and credits made to the asset 
retirement obligations and asset retirement costs.
* * * * *

103 Experimental Electric Plant Unclassified

* * * * *
    C. The depreciation on property in this account shall be charged 
to Account 403.8, Depreciation Expense, for asset retirement costs, 
as appropriate, and credited to Account 108, Accumulated Provision 
for Depreciation of Electric Utility Plant. * * *
* * * * *

108 Accumulated Provision for Depreciation of Electric Utility Plant

* * * * *
    C. Account 108 shall be subaccounted as follows
* * * * *

108.9 Accumulated Provision for Depreciation of Asset Retirement Costs

* * * * *

121 Nonutility Property

    A. This account shall include the book cost of land, structure, 
and equipment or other tangible or intangible property owned by the 
utility, but used in utility service and not properly includible in 
Account 105, Electric Plant Held for Future Use. This account shall 
also include, where applicable, amounts recorded for asset 
retirement costs associated with nonutility plant.
* * * * *

124 Other Investments

    A. This account shall include the book cost of investments in 
securities issued or assumed by nonassociated companies, investment 
advances to such companies, and any investments not accounted for 
elsewhere. This account shall also included 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.)
* * * * *

125 Sinking Funds

    This account shall include the amount of cash and book cost of 
investments held in sinking funds. This account shall also include 
unrealized holding gains and losses on trading and available-for-
sale types of investments. A separate account, with appropriate 
title, shall be kept for each sinking fund. Transfers from this 
account to special deposit accounts, may be as necessary for the 
purpose of paying matured sinking fund obligations, or obligations 
called for redemption but not presented, or the interest thereon.

126 Depreciation Fund

    This account shall include the amount of cash and the book cost 
of investments which have been segregated in a special fund for the 
purpose of identifying such assets with the accumulated provisions 
for depreciation. This account shall also include unrealized holding 
gains and losses on trading and available-for-sale types of security 
investments.

128 Other Special Funds

    This account shall include the amount of cash and book cost of 
investments which have been segregated in special funds for 
insurance, employee pensions, savings, relief, hospital, and other 
purposes not provided for elsewhere. This account shall also include 
unrealized holding gains and losses on trading and available-for-
sale types of security investments. A separate account, with 
appropriate title, shall be kept for each fund.

    Note: Amounts deposited with a trustee under the terms of an 
irrevocable trust agreement for pensions or other employee benefits 
shall not be included in this account.

* * * * *

175 Derivative Instrument Assets

    This account shall include the amounts paid for derivative 
instruments, and the change in the fair value hedges. Account 421, 
Miscellaneous Nonoperating Income, shall be credited or debited, as 
appropriate, with the corresponding amount of the change in the fair 
value of the derivative instrument.

176 Derivative Instrument Assets--Hedges

    A. This account shall include the amounts paid for derivative 
instruments, and the change in the fair value of derivative 
instrument assets designated by the utility as cash flow or fair 
value hedges.
    B. When a utility designates a derivative instrument asset as a 
cash flow hedge it will record the change in the fair value of the 
derivative instrument in this account with a concurrent charge to 
Account 209, Accumulated Other Comprehensive Income, with the 
effective portion of the gain or loss. The ineffective portion of 
the cash flow hedge shall be charged to the same income or expense 
account that will be used when the hedged item enters into the 
determination of net income.
    C. When a utility designates a derivative instrument as a fair 
value hedge it shall record the change in the fair value of the 
derivative instrument in this account with a concurrent charge to a 
subaccount of the

[[Page 30283]]

asset or liability that carries the item being hedged. The 
ineffective portion of the fair value hedge shall be charged to the 
same income or expense account that will be used when the hedged 
item enters into the determination of net income.
* * * * *

182.3 Other Regulatory Assets

* * * * *
    B. The amounts included in this account are to be established by 
those charges which would have been included in net income, or 
accumulated other comprehensive income, determinations in the 
current period under the general requirements of the Uniform System 
of Accounts but for it being probable that such items will be 
included in a different period(s) for purposes of developing the 
rates that the utility is authorized to charge for its utility 
services. When specific identification of the particular source of a 
regulatory asset cannot be made, such as in plant phase-ins, rate 
moderation plans, or rate levelization plans, Account 407.4, 
Regulatory Credits, shall be credited. The amounts recorded in this 
account are generally to be charged, concurrently with the recovery 
of the amounts in rates, to the same account that would have been 
charged if included in income when incurred, except all regulatory 
assets established through the use of Account 407.4 shall be charged 
to Account 407.3, Regulatory Debits, concurrent with the recovery of 
the amounts in rates.
* * * * *


0
9. Amend Sec.  1767.19 as follows:
0
a. In the subject table, under Margins and Equities, add an entry for 
209 to read as set forth below;
0
b. In the subject table, under Long-Term Debt, add an entry for 224.18 
to read as set forth below;
0
c. Add a new entry for 209 Accumulated Other Comprehensive Income to 
read as set forth below;
0
d. In 224 Other Long-Term Debt, paragraph B. subject index, add an 
entry for subaccount 224.18 to read as set forth below;
0
e. Add 224.18 Other Long-Term Debt Grant Funds to read as set forth 
below:
0
f. In 229 Account Accumulated Provision for Rate Refunds, add an entry 
under Current and Accrued Liabilities to read as set forth below;
0
g. Add 230 Asset Retirement Obligations to read as set forth below;
0
h. Add 244 Derivative Instrument Liabilities to read as set forth 
below;
0
i. Add 245 Derivative Instrument Liabilities-Hedges to read as set 
forth below, and
0
j. Revise paragraph B. of 254 Other Regulatory Liabilities to read as 
set forth below.
    The additions and revisions read as follows:


Sec.  1767.19  Liabilities and other credits.

* * * * *

 Liabilities and Other Credits

Margins and Equities

* * * * *

209 Accumulated Other Comprehensive Income

* * * * *

Long-Term Debt

224.18 Other Long-Term Debt--Grant Funds

* * * * *

209 Accumulated Other Comprehensive Income

    A. This account shall include revenues, expenses, gains, and 
losses that are properly includable in other comprehensive income 
during the period. Examples of other comprehensive income include 
foreign currency items, minimum pension liability adjustment, 
unrealized gains and losses on certain investments in debt and 
equity securities, and cash flow hedges. Records supporting the 
entries to this account shall be maintained so that the utility can 
furnish the amount of other comprehensive income for each item 
included in this account.
    B. This account shall also 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 shall be 
maintained to identify the amount of the reclassification 
adjustments from accumulated other comprehensive income to earning 
made during the period.
* * * * *

224 Other Long-Term Debt

* * * * *
    B. * * *

224.18 Other Long-Term Debt--Grant Funds

* * * * *

224.18 Other Long-Term Debt--Grant Funds

    This account shall include the total amount of Rural Development 
grant funds awarded for rural economic development purposes, which 
are subject to repayment at the conclusion of the project. (See Sec. 
1767.41, Interpretation 626, Rural Economic Development Loan and 
Grant Program.)
* * * * *

Current and Accrued Liabilities

* * * * *

230 Asset Retirement Obligations

    A. This account shall include the amount of liabilities for the 
recognition of asset retirement obligations related to electric 
utility plant and nonutility plant that gives rise to the 
obligations. This account shall be credited for the amount of the 
liabilities for asset retirement obligations with amounts charged to 
the appropriate electric utility plant accounts or nonutility plant 
account to record the related asset retirement costs.
    B. The utility shall charge the accretion expense to Account 
411.10, Accretion Expense, for electric utility plant, Account 413, 
Expenses for Electric Plant Leased to Others, for electric plant 
leased to others, or Account 421, Miscellaneous Nonoperating Income, 
for nonutility plant, as appropriate, and credit Account 230, Asset 
Retirement Obligations.
    C. This account shall be debited with amounts paid to settle the 
asset retirement obligations recorded herein.
    D. The utility shall clear from this account any gains or losses 
resulting from the settlement of asset retirement obligations in 
accordance with the instruction prescribed in Sec. 1767.15(y).
* * * * *

244 Derivative Instrument Liabilities

    This account shall include the change in the fair value of all 
derivative instrument liabilities not designated as cash flow or 
fair value hedges. Account 426, Other Deductions, shall be debited 
or credited as appropriate with the corresponding amount of the 
change in the fair value of the derivative instrument.

245 Derivative Instrument Liabilities--Hedges

    A. This account shall include the change in the fair value of 
derivative instrument liabilities designated by the utility as cash 
flow or fair value hedges.
    B. A utility shall record the change in the fair value of a 
derivative instrument liability related to a cash flow hedge in this 
account, with a concurrent charge to Account 209, Accumulated Other 
Comprehensive Income, with the effective portion of the derivative's 
gain or loss. The ineffective portion of the cash flow hedge shall 
be charged to the same income or expense account that will be used 
when the hedged item enters into the determination of net income.
    C. A utility shall record the change in the fair value of a 
derivative instrument liability related to a fair value hedge in 
this account, with a concurrent charge to a subaccount of the asset 
or liability that carries the item being hedged. The ineffective 
portion or the fair value hedge shall be charged to the same income 
or expense account that will be used when the hedged item enters 
into the determination of net income.
* * * * *

254 Other Regulatory Liabilities

* * * * *
    B. The amounts included in this account are to be established by 
those credits which would have been included in net income, or 
accumulated other comprehensive income, determinations in the 
current period under the general requirements of the Uniform System 
of Accounts but for it being probable that: (1) Such items will be 
included in a different period(s) for purposes of developing the 
rates that the utility is authorized to charge for its utility 
services; or (2) refunds to customers, not provided for in other 
accounts, will be required. When specific identification of the 
particular source of the regulatory liability cannot be made or when 
the liability arises from revenues collected

[[Page 30284]]

pursuant to tariffs on file at a regulatory agency, Account 407.3, 
Regulatory Debits, shall be debited. The amounts recorded in this 
account generally are to be credited to the same account that would 
have been credited if included in income when earned except: (1) All 
regulatory liabilities established through the use of Account 407.3 
shall be credited to Account 407.4, Regulatory Credits; and (2) in 
the case of refunds, a cash account or other appropriate account 
should be credited when the obligation is satisfied.
* * * * *


0
10. Amend 1767.20 as follows:
0
a. Revise the introductory text;
0
b. In the table of contents, under Steam Production, add an entry for 
317;
0
c. In the table of contents, under Nuclear Production, add an entry for 
326;
0
d. In the table of contents, under Hydraulic Production, add an entry 
for 337;
0
e. In the table of contents, under Other Production, add an entry for 
347;
0
f. In the table of contents, under Transmission Plant, add an entry for 
359.1;
0
g. In the table of contents, under Distribution Plant, add an entry for 
374;
0
h. In the table of contents, add new title Regional Transmission Market 
Operation Plant, and entries for 380, 381, 382, 383, 384, 385, and 386;
0
i. In the table of contents, under General Plant, add an entry for 
399.1;
0
j. Add a new entry for 317 Asset Retirement costs for Steam Production 
Plant;
0
k. Add a new entry for 326 Retirement Costs for Nuclear Production 
Plant;
0
l. Add a new entry for 337 Asset Retirement costs for Hydraulic 
Production Plant;
0
m. Add a new entry for 347 Asset Retirement Costs for Other Production 
Plant;
0
n. Add a new entry for subaccount 359.1 Asset Retirement Costs for 
Transmission Plant;
0
o. Add a new entry for 374 Asset Retirement Costs for Distribution 
Plant;
0
p. Under new account title Regional Transmission Market Operation 
Plant, add new entries for 380, 381, 382, 383, 384, 385, and 386;
0
q. Add a new entry for subaccount 399.1 Asset Retirement Costs for 
General Plant.
    The revisions and additions read as follows:


Sec.  1767.20  Plant accounts

    The plant accounts identified in this section shall be used by all 
Rural Development borrowers.
* * * * *

Production Plant

Steam Production

* * * * *

317 Asset Retirement Costs for Steam Production Plant

Nuclear Production

* * * * *

326 Asset Retirement Costs for Nuclear Production Plant

Hydraulic Production

* * * * *

337 Asset Retirement Costs for Hydraulic Production Plant

Other Production

* * * * *

347 Asset Retirement Costs for Other Production Plant

Transmission Plant

* * * * *

359.1 Asset Retirement Costs for Transmission Plant

Distribution Plant

* * * * *

374 Asset Retirement Costs for Distribution Plant

Regional Transmission Market Operation Plant

380 Land and Land Rights

381 Structures and Improvements

382 Computer Hardware

383 Computer Software

384 Communication Equipment

385 Miscellaneous Regional Transmission and Market Operation Plant

386 Asset Retirement Costs for Regional Transmission and Market 
Operation Plant

General Plant

* * * * *

399.1 Asset Retirement Costs for General Plant

* * * * *

Production Plant

Steam Production

* * * * *

317 Asset Retirement Costs for Steam Production Plant

    This account shall include asset retirement costs on plant 
included in the steam production function.
* * * * *

Nuclear Production

* * * * *

326 Asset Retirement Costs for Nuclear Production Plant

    This account shall include asset retirement costs on plant 
included in the nuclear production function.
* * * * *

Hydraulic Production

* * * * *

337 Asset Retirement Costs for Hydraulic Production Plant

    This account shall include asset retirement costs on plant 
included in the hydraulic production function.
* * * * *

Other Production

* * * * *

347 Asset Retirement Costs for Other Production Plant

    This account shall include asset retirement costs on plant 
included in the other production function.
* * * * *

Transmission Plant

* * * * *

359.1 Asset Retirement Costs for Transmission Plant

    This account shall include asset retirement costs on plant 
included in the transmission plant function.
* * * * *

Distribution Plant

374 Asset Retirement Costs for Distribution Plant

    This account shall include asset retirement costs on plant 
included in the distribution plant function.

Regional Transmission and Market Operation Plant

380 Land and Land Rights

    This account shall include the cost of land and land rights used 
in connection with regional transmission and market operations.

381 Structures and Improvements

    This account shall include the cost in place of structures and 
improvement used for regional transmission and market operations.

382 Computer Hardware

    This account shall include the cost of computer hardware and 
miscellaneous information technology equipment to provide 
scheduling, system control and dispatching, system planning, 
standards development, market monitoring, and market administration 
activities. Records shall be maintained identifying to the maximum 
extent practicable computer hardware owned and used for:
(1) Scheduling, system control and dispatching, (2) System planning 
and standards development, and (3) Market monitoring and market 
administration activities.

Items

1. Personal computers

[[Page 30285]]

2. Servers
3. Workstations
4. Energy Management System (EMS) hardware
5. Supervisory Control and Data Acquisition (SCADA) system hardware
6. Peripheral equipment
7. Networking components

 383 Computer Software

    This account shall include the cost of off-the-shelf and in-
house developed software purchased and used to provide scheduling, 
system control and dispatching, system planning, standards 
development, market monitoring, and market administration 
activities. Records shall be maintained identifying to the maximum 
extent practicable the cost of software used for:
    (1) Scheduling, system control and dispatching,
    (2) System planning and standards development, and
    (3) Market monitoring and market administration activities.

Items

1. Software licenses
2. User interface software
3. Modeling software
4. Database software
5. Tracking and monitoring software
6. Energy Management System (EMS) software
7. Supervisory Control and Data Acquisition (SCADA) system software
8. Evaluation and assessment system software
9. Operating, planning and transaction scheduling software
10. Reliability applications
11. Market application software

384 Communication Equipment

    This account shall include the cost of communication equipment 
owned and used to acquire or share data and information used to 
control and dispatch the system.

Items

1. Fiber optic cable
2. Remote terminal units
3. Microwave towers
4. Global Positioning System (GPS) equipment
5. Servers
6. Workstations
7. Telephones

385 Miscellaneous Regional Transmission and Market Operation Plant

    This account shall include the cost of regional transmission and 
market operation plant and equipment not provided for elsewhere.

386 Asset Retirement Costs for Regional Transmission and Market 
Operation Plant

    This account shall include asset retirement costs on regional 
transmission and market operations plant and equipment.
* * * * *

General Plant

* * * * *

399.1 Asset Retirement Costs for General Plant

    This account shall include asset retirement costs on plant 
included in the general plant function.
* * * * *

0
11. Section 1767.21 is amended as follows:
0
a. Add account titles for 403.8, 403.9 and 411.10 to read as set forth 
below;
0
b. Add entries for 403.8 and 403.9 under 403 Depreciation Expense to 
read as set forth below;
0
c. Amend 411.6 by designating the current text as paragraph A. and 
adding paragraph B. to read as set forth below;
0
d. Amend 411.7 by designating the current text as paragraph A. and 
adding paragraph B. to read as set forth below; and
0
e. Add an entry for 411.10 to read as set forth below.


Sec.  1767.21  Operating Income.

* * * * *

 Utility Operating Income

* * * * *
403.8 Depreciation Expense-Asset Retirement Costs
403.9 Depreciation Expense-Regional Transmission and Market 
Operation Plant
* * * * *
411.10 Accretion Expense
* * * * *

Utility Operating Income

* * * * *

403 Depreciation Expense

* * * * *
    C. * * *

403.8 Depreciation Expense-Asset Retirement Costs

403.9 Depreciation Expense-Regional Transmission and Market Operation 
Plant

* * * * *

411.6 Gains From Disposition of Utility Plants

* * * * *
    B. The utility shall record in this account gains resulting from 
the settlement of asset retirement obligations related to utility 
plant in accordance with the accounting prescribed in Sec. 
1767.15(y).

411.7 Losses From Disposition of Utility Plant

* * * * *
    B. The utility shall record in this account losses resulting 
from the settlement of asset retirement obligations related to 
utility plant in accordance with the accounting prescribed in Sec. 
1767.15(y).

411.10 Accretion Expense

    This account shall be charged for accretion expense on the 
liabilities associated with asset retirement obligations included in 
Account 230, Asset Retirement Obligations, relating to electric 
utility plant.

0
12. Section 1767.22 is amended as follows:
0
a. Amend Account 421, Miscellaneous Nonoperating Income, by adding 
items (4) through (6) to read as set forth below;
0
b. Amend Account 426.5, Other Deductions, by adding item (6) to read as 
set forth below.


Sec.  1767.22  Other income and deductions.

* * * * *

421 Miscellaneous Nonoperating Income

* * * * *
    4. This account shall include the accretion expense on the 
liability for an asset retirement obligation included in Account 
230, Asset Retirement Obligations, related to nonutility plant.
    5. This account shall include the depreciation expense for asset 
retirement costs related to nonutility plant.
    6. The utility shall record in this account gains resulting from 
the settlement of asset retirement obligations related to nonutility 
plant in accordance with the accounting prescribed in Sec.  
1767.15(y).
* * * * *

426.5 Other Deductions

* * * * *
    6. The utility shall record in this account losses resulting 
from the settlement of asset retirement obligations related to 
nonutility plant in accordance with the accounting prescribed in 
Sec.  1767.15(y).

0
13. Amend Sec.  1767.23 by revising Account 432 to read as follows:


Sec.  1767.23  Interest charges.

* * * * *

432 Allowance for Borrowed Funds Used During Construction--Credit

    This account shall include concurrent credits for allowance for 
borrowed funds used during construction, not to exceed amounts 
computed in accordance with the formula prescribed in Sec.  
1767.16(c)(17).

    Note: This account shall not be recorded in Account 427.3, 
Interest Charged to Construction--Credit.


0
14. Amend Sec.  1767.26 as follows:
0
a. Add 456.1, 457.1, and 457.2 to the subject table to read as set 
forth below;
0
b. Amend 456, Other Electric Revenues, by removing paragraph 5; and 
redesignating paragraph 6 as 5; and
0
c. Add entries for 456.1, 457.1 and 457.2 to read as set forth below. 
The additions read as follows:


Sec.  1767.26  Operating revenue.

* * * * *

[[Page 30286]]

Operating Revenue

Sales of Electricity

* * * * *
456.1 Revenues from Transmission of Electricity of Others
457.1 Regional Transmission Service Revenues
457.2 Miscellaneous Revenue
* * * * *

 456.1 Revenues From Transmission of Electricity of Others

    This account shall include revenues from transmission of 
electricity of others over transmission facilities of the utility.

457.1 Regional Transmission Service Revenues

    This account shall include revenues derived from providing 
scheduling, system control and dispatching services. Include also in 
this account reimbursements for system planning, standards 
development, and market monitoring and market compliance activities. 
Records shall be maintained so as to show: (1) The services supplied 
and revenues received from each customer and (2) the amounts billed 
by tariff or specified rates.

457.2 Miscellaneous Revenues

    This account shall include revenues and reimbursements for costs 
incurred by regional transmission service providers not provided for 
elsewhere. Records shall be maintained so as to show: (1) The 
services supplied and revenues received from each customer, and (2) 
the amounts billed by tariff or specified rates.


0
15. Amend Sec.  1767.27 as follows:
0
a. Add new accounts 561.1 through 561.8 to the subject index 
immediately following entry 560, Operations Supervision and 
Engineering, to read as set forth below;
0
b. Add new accounts 569.1 through 569.4 to the subject index 
immediately following entry 569, Maintenance of Structures, to read as 
set forth below;
0
c. Add new accounts 575.1 through 575.8 to the subject index under a 
new account title Regional Market Expense (Operations) immediately 
following entry 573, Maintenance of Miscellaneous Transmission Plant; 
to read as set forth below;
0
d. Add new accounts 576.1 through 576.5 to the subject index under a 
new account title Regional Market Expense (Maintenance) immediately 
following entry 575.8, Rents, to read as set forth below;
0
e. Amend 555 Purchased Power by adding a note following paragraph B. to 
read as set forth below;
0
f. Amend 556 System Control Load Dispatching by revising the 
introductory text to read as set forth below;
0
g. Remove Account 561 Load Dispatching;
0
h. Add new accounts to descriptions for 561.1 through 561.8 to read as 
set forth below;
0
i. Add new accounts and descriptions for 569.1 through 569.4 to read as 
set forth below;
0
j. Add new accounts and descriptions for 575.1 through 575.8 to read as 
set forth below; and
0
k. Add new accounts and descriptions for 576.1 through 576.5 to read as 
set forth below.
    The additions and revisions read as follows:


Sec.  1767.27  Operation and maintenance expenses.

* * * * *

Transmission Expenses

(Operations)
* * * * *
561.1 Load Dispatch-Reliability
561.2 Load Dispatch-Monitor and Operate Transmission System
561.3 Load Dispatch-Transmission Service and Scheduling
561.4 Scheduling, System Control and Dispatching Services
561.5 Reliability, Planning and Standards Development
561.6 Transmission Service Studies
561.7 Generation Interconnection Studies
561.8 Reliability Planning and Standards Development Services
* * * * *
(Maintenance)
* * * * *
569.1 Maintenance of Computer Hardware
569.2 Maintenance of Computer Software
569.3 Maintenance of Communication Equipment
569.4 Maintenance of Miscellaneous Regional Transmission Plant
* * * * *

Regional Market Expenses

(Operation)
575.1 Operation Supervision
575.2 Day-Ahead and Real-Time Market Administration
575.3 Transmission Rights Market Administration
575.4 Capacity Market Administration
575.5 Ancillary Services Market Administration
575.6 Market Monitoring and Compliance
575.7 Market Administration, Monitoring and Compliance Services
575.8 Rents
(Maintenance)
576.1 Maintenance of Structures and Improvements
576.2 Maintenance of Computer Hardware
576.3 Maintenance of Computer Software
576.4 Maintenance of Communication Equipment
576.5 Maintenance of Miscellaneous Market Operation Plant
* * * * *

555 Purchased Power

* * * * *

    Note: The records supporting this account shall provide 
information pertaining to the purchase of power from renewable 
energy sources.

556 System Control and Load Dispatching

    This account shall include the cost of labor, employee pensions 
and benefits, social security and other payroll taxes, injuries and 
damages, property insurance, property taxes, and expenses incurred 
in load dispatching activities for system control. Utilities having 
an interconnected electric system or operating under a central 
authority which controls the production and dispatching of 
electricity may apportion these costs to this account and 
transmission expense Account 561.1 through 561.4, and Account 581, 
Load Dispatching--Distribution.
* * * * *

561.1 Load Dispatch--Reliability

    This account shall include the cost of labor, employee pensions 
and benefits, social security and other payroll taxes, injuries and 
damages, property insurance, property taxes, materials used, and 
expenses incurred by a regional transmission service provider or 
other transmission provider to manage the reliability coordination 
function as specified by the North American Electric Reliability 
Council (NERC) and individual reliability organizations. These 
activities shall include performing current and next day reliability 
analysis. This account shall include the costs incurred to calculate 
load forecasts, and performing contingency analysis.

561.2 Load Dispatch--Monitor and Operate Transmission System

    This account shall include the cost of labor, employee pensions 
and benefits, social security and other payroll taxes, injuries and 
damages, property insurance, property taxes, materials used, and 
expenses incurred by a regional transmission service provider or 
other transmission provider to monitor, assess and operate the power 
system and individual transmission facilities in real-time to 
maintain safe and reliable operation of the transmission system. 
This account s