New Mexico Administrative Code
Title 17 - PUBLIC UTILITIES AND UTILITY SERVICES
Chapter 12 - WATER SERVICES
Part 720 - UNIFORM SYSTEMS OF ACCOUNTS AND ANNUAL REPORT FORMS FOR WATER UTILITIES
Section 17.12.720.14 - UTILITY PLANT INSTRUCTIONS

Universal Citation: 17 NM Admin Code 17.12.720.14

Current through Register Vol. 35, No. 18, September 24, 2024

A. Utility Plant to be Recorded at Cost:

(1) All amounts included in the accounts for utility plant acquired as an operating unit or system shall be stated at the cost incurred by the person who first devoted the property to utility service, and all other utility plant shall be included in the accounts at the cost incurred by the utility except as otherwise provided in the texts of the intangible plant accounts. Where the term "cost" is used in the detailed plant accounts, it shall have the meaning stated in this paragraph.

(2) When the consideration given for property is other than cash, the value of such consideration shall be determined on a cash basis. In the entry recording such transaction the actual consideration shall be described with sufficient particularity to identify it. The utility shall be prepared to furnish the Commission the particulars of its determination of the cash value of the consideration if other than cash.

(3) When property is purchased under a plan involving deferred payments, no charge shall be made to the utility plant accounts for interest, insurance, or other expenditures occasioned solely by such form of payment.

(4) Utility plant contributed to the utility or constructed by the utility from contributions of cash or its equivalent shall be charged to the utility plant accounts at cost of construction, estimated if not known. There shall be credited to the accounts for accumulated depreciation and amortization the estimated amount of depreciation and amortization applicable to the property at the time of its contribution to the utility. The difference between the amounts included in the utility plant accounts and the accumulated depreciation and amortization shall be credited to account 271, Contribution in Aid of Construction.

B. Components of Construction Cost: The cost of construction of property chargeable to the utility plant accounts shall include, where applicable, the cost of labor, materials and supplies, transportation, work done by others for the utility, injuries and damages incurred in construction work, privileges and permits, special machine service, allowance for funds used during construction, and such portion of general engineering, administrative salaries and expenses, insurance, taxes, and other analogous items as may be properly includable in construction costs.

C. Overhead Construction Costs:

(1) All overhead construction costs, such as engineering, supervision, general office salaries and expenses, construction engineering and supervision by others than the accounting utility, legal expenses, insurance, injuries and damages, relief and pensions, taxes and allowance for funds used during construction shall be charged to particular jobs or units on the basis of the amounts of such overheads reasonably applicable thereto, to the end that each job or unit shall bear its equitable portion of such costs, and that the entire cost of the unit, both direct and overhead, shall be deducted from the plant accounts at the time the property is retired.

(2) As far as practicable, the determination of payroll charges includable in construction overheads shall be based on time card distributions thereof. Where this procedure is impractical, reasonable estimates of amounts to cover assumed overhead costs are permitted.

D. Utility Plant Purchased or Sold: When utility plant constituting an operating unit or system is acquired by purchase, merger, consolidation, liquidation, or otherwise, the Commission shall be contacted for the proper accounting treatment of the transaction.

E. Expenditures on Leased Property:

(1) The cost of substantial initial improvements (including repairs, rearrangements, additions, and betterments) made in the course of preparing for utility service property leased for a period of more than one (1) year and the cost of subsequent substantial additions, replacements, or betterments to such property shall be charged to the utility plant account appropriate for the class of property leased. If the service life of the improvement is terminable by action of the lease, then the cost, less net salvage, of the improvements shall be spread over the life of the lease by charges to account 425, Miscellaneous Amortizations. However, if the service life is not terminated by action of the lease but by depreciation proper, then the cost of the improvements less net salvage shall be accounted for as depreciable plant.

(2) If improvements made to property leased for a period of more than one (1) year are of relatively minor cost, or if the lease is for a period of not more than one (1) year, the cost of the improvements shall be charged to the account in which the rent is included.

F. Land and Land Rights:

(1) The accounts for land and land rights include the cost of land owned in fee by the utility and rights, interests, and privileges held by the utility in land owned by others, such as leaseholds, easements, water and water power rights, diversion rights, submersion rights, rights-of-way, and other like interests in land. Do not include in the accounts for land and land rights and rights-of-way costs incurred in connection with first clearing and grading of land and rights-of-way and the damage costs associated with the construction and installation of plant. Such costs shall be included in the appropriate plant accounts directly benefited.

(2) The cost of buildings and other improvements (other than public improvements) shall not be included in the land accounts. If, at the time of acquisition of an interest in land, such interest extends to buildings or other improvements (other than public improvements) which are then devoted to utility operations, the land and improvements shall be separately appraised and 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 shall be charged and the salvage credited to the account in which the cost of the land is recorded.

(3) When the purchase of land for utility operations requires the purchase of more land than needed for such purposes, the charge to the specific land account shall be based upon the cost of the land purchased less the fair market value of that portion of the land which is not to be used in utility operations. The portion of the cost measured by the fair market value of the land not to be used shall be included, in account 105, Property Held for Future Use, or account 121, Nonutility Property, as appropriate.

(4) The items of cost to be included in the accounts for land and land rights are as follows:
(a) cost, first, of acquisition including mortgages and other liens assumed (but not subsequent interest thereon);

(b) condemnation proceedings, including court and counsel costs;

(c) fees, commissions, and salaries to brokers, agents, and others in connection with the acquisition of the land or land rights;

(d) leases, cost of voiding upon purchase to secure possessions of land;

(e) removing, relocating, or reconstructing property of others, such as buildings, highways, railroads, bridges, cemeteries, churches, telephone and power lines, etc., in order to acquire quiet possession;

(f) 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;

(g) surveys in connection with the acquisition, but not amounts paid for topographical surveys and maps where such costs are attributable to structures or plant equipment erected or to be erected or installed on such land;

(h) taxes assumed, accrued to date of transfer of title;

(i) title, examining, clearing, insuring, and registering in connection with the acquisition and defending against claims relating to the period prior to the acquisition;

(j) appraisals prior to closing title;

(k) filing satisfaction of mortgage;

(l) documentary stamps;

(m) photographs of property at acquisition;

(n) fees and expenses incurred in the acquisition of water rights and grants;

(o) sidewalks and curbs constructed by the utility on public property; and

(p) labor and expenses in connection with securing rights-of-way where performed by company employees and company agents.

G. Structures and Improvements:

(1) The accounts for structures and improvements include the cost of all buildings and facilities to house, support, or safeguard property of persons, including all fixtures permanently attached to and made a part of buildings and which cannot be removed therefrom without cutting into the walls, ceilings, or floors, or without in some way impairing the buildings, and improvements of a permanent nature on or to land. Also include those costs incurred in connection with the first clearing and grading of land and rights-of-way and the damage costs associated with construction and installation of plant.

(2) The cost of specially provided foundations not intended to outlast the machinery or apparatus for which provided and the cost of angle irons, castings, etc., installed at the base of any item of equipment shall be charged to the same account as the cost of the machinery, apparatus, or equipment.

(3) The items of cost to be included in the accounts for structures and improvements are as follows:
(a) architects' plans and specifications including supervision;

(b) athletic field structures and improvements;

(c) boilers, furnaces, piping, wiring, fixtures, and machinery for heating, lighting, signaling, ventilating and air conditioning systems, plumbing, vacuum cleaning systems, incinerator and smoke pipe flues, etc.;

(d) commissions and fees to brokers, agents, architects, and others;

(e) conduit (not to be removed) with its contents;

(f) damages to abutting property during construction;

(g) drainage and sewerage systems;

(h) excavation, including shoring, bracing, bridging, refill, and disposal of excess excavated material, cofferdams around foundation, pumping water from cofferdam during construction, test borings;

(i) fences and fence curbs (not including protective fences isolating items of equipment which shall be charged to the appropriate equipment account).

(j) fire protection systems when forming a part of a structure;

(k) foundations and piers for machinery constructed as a permanent part of a building or other item listed herein;

(l) grading and clearing when directly occasioned by the building of a structure;

(m) intrasite communication system, poles, pole fixtures, wires, and cables;

(n) landscaping, lawns, shrubbery, etc.

(o) leases, voiding upon purchase to secure possession of structures;

(p) leased property, expenditures on;

(q) lighting fixtures and outside lighting system;

(r) painting, first cost;

(s) permanent paving, concrete, brick, flagstone, asphalt, etc., within the property lines;

(t) permits and privileges;

(u) platforms, railings, and gratings when constructed as a part of a structure;

(v) retaining walls except when identified with land;

(w) sidewalks, culverts, curbs, and streets constructed by the utility on its property;

(x) storage facilities constituting a part of a building;

(y) vaults constructed as part of a building; and

(z) water basins or reservoirs.

H. Equipment:

(1) The cost of equipment chargeable to the utility plant accounts, unless otherwise indicated in the text of an equipment account, includes the net purchase price thereof, sales taxes, investigation and inspection expenses necessary to such purchase, expenses of transportation when borne by the utility, labor employed, materials and supplies consumed, and expenses incurred by the utility in unloading and placing the equipment in readiness to operate. Also include those costs incurred in connection with the first clearing and grading of land and rights-of-way and the damage costs associated with construction and installation of plant.

(2) Exclude from equipment accounts hand and other portable tools, which are likely to be lost or stolen or which have relatively small value ($50.00 or less) or short life, unless the correctness of accounting therefor as utility plant is verified by current inventories. Special tools acquired and included in the purchase price of equipment shall be included in the appropriate plant account. Portable drills and similar tool equipment when used in connection with the operation and maintenance of a particular plant or department, such as pumping, transmission, and distribution, etc., or in "stores," shall be charged to the plant account appropriate for their use.

I. Additions and Retirements of Utility Plant:

(1) For the purpose of avoiding undue refinement in accounting for additions to and retirements and replacements of utility plant, all property shall be considered as consisting of (1) retirement units and (2) minor items of property. Each utility shall use the list of retirement units included herein.

(2) The addition and retirement of retirement units shall be accounted for as follows.
(a) When a retirement unit is added to utility plant, the cost shall be added to the appropriate utility plant account.

(b) When a retirement unit is retired from utility plant, with or without replacement, the book cost shall be credited to the utility plant account in which it is included. If the retirement unit is depreciable, the book cost of the unit retired and credited to utility plant shall be charged to the accumulated provision for depreciation applicable to such property. The cost of removal and the salvage shall be charged or credited, as appropriate, to such depreciation account.

(3) The addition and retirement of minor items of property shall be accounted for as follows.
(a) When a minor item of property which did not previously exist is added to plant, the cost charged shall be to expense.

(b) When a minor item of property is retired and not replaced, the book cost shall be credited to the utility plant account in which it is included; in the event the minor item is a part of depreciable plant, the account accumulated provision for depreciation shall be charged with the book cost and cost of removal and credited with the salvage.

(c) When a minor item of depreciable property is replaced, the cost of replacement shall be charged to expense.

(4) The book cost of utility plant retired shall be the amount at which such property is included in the utility plant accounts plus all components of construction costs. The book cost shall be determined from the utility's records and if this cannot be done, it shall be estimated.

(5) The book cost of land retired shall be credited to the land account. If the land is sold, the difference between the book cost and the sale price of the land (less commissions and other expenses of making the sale) shall be included in account 422, Gains (Losses) From Disposition of Property, unless otherwise authorized or required by the Commission. If the land is not used in utility service but is retained by the utility, the book cost shall be charged to account 105, Property Held for Future Use, or account 121, Nonutility Property, as appropriate.

(6) The book cost less net salvage of utility plant retired shall be charged in its entirety to account 110, Accumulated Provision for Depreciation and Amortization of Utility Plant. Any amounts which by approval or order of the Commission are charged to account 182, Extraordinary Property Losses, shall be credited to account 110, Accumulated Provision for Depreciation and Amortization of Utility Plant.

Disclaimer: These regulations may not be the most recent version. New Mexico may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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