New Mexico Administrative Code
Title 17 - PUBLIC UTILITIES AND UTILITY SERVICES
Chapter 3 - UTILITIES FINANCIAL ACCOUNTING AND REPORTING-GENERAL PROVISIONS
Part 340 - AUTHORIZATION OF DEPRECIATION PRACTICES TO BE OBSERVED BY PUBLIC UTILITIES
Section 17.3.340.7 - DEFINITIONS
Current through Register Vol. 35, No. 18, September 24, 2024
When used in NMPSC Rule 340 [17.3.340 NMAC] unless otherwise specified the following definitions will apply:
A. "Accounts" means the accounts described or recognized by the New Mexico Public Service Commission [New Mexico Public Regulation Commission].
B. "Depreciation Accounting" means a system of accounting which aims to distribute the cost or other basic value of tangible capital assets less salvage (if any) over the estimated useful life of the unit (which may be a group of assets) in a systematic and rational manner. It is a process of allocation not of valuation.
C. "Amortization" means the gradual extinguishment of an amount in an account by distributing such amount over a fixed period of time, 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.
D. "Commission" means the New Mexico Public Service Commission [New Mexico Public Regulation Commission].
E. "Cost of Removal" means the cost of demolishing, dismantling, removing, tearing down, or abandoning physical assets including the cost of transportation and handling incidental thereto.
F. "Accumulated Provision for Depreciation" means the summation of the annual provision for depreciation accruals recorded by the utility under a predetermined plan of accounting including charges for retirements and net salvage to recover the cost of the asset between the time it is first devoted to public use and retired from service.
G. "Annual Provision for Depreciation Accrual" means the annual amount charged to expense and/or clearing accounts.
H. "Group Plan" means the plan under which depreciation charges are accrued upon the basis of the original cost of the asset included in each depreciable plant account using the average service life thereof properly weighed, and upon retirement of any depreciable asset its original cost less net salvage is charged to the depreciation reserve whether or not the particular asset has attained or exceeded the average service life.
I. "Net Salvage" means salvage of property retired less the cost of removal.
J. "Original Cost" means the cost of property at the time it was first devoted to public service.
K. "Property Retired" means assets which have been removed, sold, abandoned, destroyed, or which for any cause have been withdrawn from service and the books of account.
L. "Salvage" means the amount received from assets retired less any expenses incurred in connection with the sale or in 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.
M. "Service Life" means the period between the date an asset is first devoted to public use and the date of its retirement from service.
N. "Straight-line Method" as applied to depreciation accounting means the plan under which the original cost adjusted for net salvage of the asset is charged to operating expenses and/or to clearing accounts and credited to the depreciation reserve through equal annual charges as nearly as may be during its service life.
O. "Utilities" means Classes A, B, C, and D as defined by the following table of annual operating revenues:
| Class A | Class B | Class C | Class D |
| Electric and Gas | |||
| Exceeding $2,500,000 | $1,000,000 to $2,500,000 | $150,000 to $1,000,000 | $25,000 to $50,000. |
| Water (annual revenues for 3 consecutive year periods) | |||
| Exceeding $500,000 | Exceeding $500,000 | $50,000 to $500,000 | Less than $50,000. |
| Sewer (average annual revenues for 3 consecutive year periods) | |||
| $750,000 or more | $150,000 but less than $750,000 | Less than $150,000 | |
Annual operating revenues are those revenues recorded in the accounts of the utility resulting from all sales of commodities or services or from other uses of utility properties. For combination utilities departmental operating revenues shall be used for classification purposes. "Department" as used in NMPSC Rule 340 [17.3.340 NMAC] shall mean a responsibility center within a combination utility where revenues and costs are accumulated by commodity or service rendered.
P. "Detailed Study" means a determination of depreciation accruals, depreciation rates, and depreciation reserve requirements.
Q. "Annual Review" means a cursory examination to insure that no major changes have taken place which would call for a new detailed study.
R. "Survivor Curve" means a curve that shows the number of units or cost of a given group which is surviving in service at given ages.
S. "Probable Life Curve" means a curve that shows the probable average life of the survivors at any age from zero to maximum life.
T. "Frequency Curve" means a curve that shows in what manner retirements are distributed over the period from zero age to maximum life.
U. "Units of Production Method" means the process whereby an equal portion of an asset's depreciable cost is allocated to operating expense or clearing accounts based on each unit of production from the asset.
