Arizona Administrative Code
Title 14 - PUBLIC SERVICE CORPORATIONS; CORPORATIONS AND ASSOCIATIONS; SECURITIES REGULATION
Chapter 2 - CORPORATION COMMISSION - FIXED UTILITIES
Article 1 - GENERAL PROVISION
Section R14-2-102 - Treatment of Depreciation

Universal Citation: AZ Admin Code R 14-2-102

Current through Register Vol. 30, No. 38, September 20, 2024

A. The following definitions shall apply in this Section unless the context otherwise requires:

1. "Accumulated depreciation" means the summation of the annual provision for depreciation from the time that the asset is first devoted to public service.

2. "Cost of removal" means the cost of demolishing, dismantling, removing, tearing down, or abandoning of physical assets, including the cost of transportation and handling incidental thereto.

3. "Depreciation" means an accounting process which will permit the recovery of the original cost of an asset less its net salvage over the service life.

4. "Depreciation rate" means the percentage rate applied to the original cost of an asset to yield the annual provision for depreciation.

5. "Net salvage" means the salvage value of property retired less the cost of removal.

6. "Original cost" means the cost of property at the time it was first devoted to public service.

7. "Property retired" means assets which have been removed, sold, abandoned, destroyed, or which for any cause have been withdrawn from service and books of account.

8. "Salvage value" means the amount received for assets retired, less any expenses incurred in selling or preparing the assets for sale; or if retained, the amount at which the material recoverable is chargeable to materials and supplies, or other appropriate accounts.

9. "Service life" means the period between the date an asset is first devoted to public service and the date of its retirement from service.

B. All public service corporations shall maintain adequate accounts and records related to depreciation practices, subject to the following:

1. Annual depreciation accruals shall be recorded.

2. A separate reserve for each account or functional account shall be maintained.

3. The cost of depreciable plant adjusted for net salvage shall be distributed in a rational and systemic manner over the estimated service life of such plant.

4. Public service corporations having less than $250,000 in annual revenue shall not be required to maintain depreciation records by separate accounts but shall make annual composite accruals to accumulated depreciation for total depreciable plant.

C. Requests for depreciation rate changes and methods for estimating depreciation rates shall be as follows:

1. If a public service corporation seeks a change in its depreciation rates, it shall submit a request for such as part of a rate application in accordance with the requirements of R14-2-103.

2. A public service corporation may propose any reasonable method for estimating service lives, salvage values, and cost of removal. The method shall be fully described in a request to change depreciation rates.

3. Data and analyses supporting the change shall be submitted, including engineering data and assessment of the impact and appropriateness of the change for ratemaking purposes.

4. Changed depreciation rates shall not become effective until the Commission authorizes such changes.

D. Upon the motion of any party or upon its own motion, the Commission may determine that good cause exists for granting a waiver from one or more of the requirements of this Section.

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