UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Parts 366, 367, 368, 369, and 375 

(Docket No. RM06-11-000; Order No. 684) 

Financial Accounting, Reporting and Records Retention Requirements Under the Public 

Utility Holding Company Act of 2005 

(Issued October 19, 2006) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Final Rule. 

SUMMARY: In this Final Rule, the Federal Energy Regulatory Commission 

(Commission) is amending its regulations to further implement the Public Utility Holding 

Company Act of 2005 (PUHCA 2005). Specifically, the Commission is adding a 

Uniform System of Accounts (USofA) for Centralized Service Companies, adding 

preservation of records requirements for holding companies and service companies, 

revising FERC Form No. 60, Annual Report of Centralized Service Companies, to 

provide for financial reporting consistent with the new USofA and providing for 

electronic filing of the revised FERC Form No. 60. The Final Rule will provide for 

greater accounting transparency for centralized service company operations, and uniform 

records retention by holding companies and service companies subject to PUHCA 2005. 

This transparency will protect ratepayers from pass-through of improper service company 

costs. 
EFFECTIVE DATE: The rule will become effective [insert date 60 days after 

publication in the FEDERAL REGISTER]. 

FOR FURTHER INFORMATION CONTACT: 

James K. Guest (Technical Information) 

Division of Financial Regulation 

Office of Enforcement 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

Telephone (202) 502-6614 

E-mail:james.guest@ferc.gov 

Lawrence Greenfield (Legal Information) 

Office of the General Counsel – Energy Markets 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

Telephone (202) 502-6415 

E-mail:lawrence.greenfield@ferc.gov 

Julia A. Lake (Legal Information) 

Office of the General Counsel – Energy Markets 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

Telephone (202) 502-8370 

E-mail:julia.lake@ferc.gov 

SUPLEMENTARY INFORMATION: 
Table of Contents Page Number 

I. Introduction ........................................................................................................ - 1 -

II. Background......................................................................................................... - 2 -

III. Overview of Final Rule ...................................................................................... - 5 -

IV. Discussion........................................................................................................... - 9 -

1. Adoption of the Proposed Uniform System of Accounts................................... - 9 -

2. Implementation Date ........................................................................................ - 17 -

3. FERC Form No. 60 Filing Deadline................................................................. - 19 -

4. Definitions........................................................................................................ - 20 -

(a) “Direct cost” and “Indirect cost”................................................................ - 20 -

(b) “Work order system”.................................................................................. - 22 -

5. Instructions ....................................................................................................... - 26 -

(a) Section 367.2 – Companies for which this system of accounts is 

prescribed.................................................................................................... - 27 -

(b) Section 367.8 – Extraordinary items .......................................................... - 31 -

(c) Section 367.10 – Unaudited Items.............................................................. - 32 -

(d) Section 367.20(b) – Depreciation accounting ............................................ - 33 -

(e) Section 367.23 – Transactions with non-associate companies................... - 34 -

(f) Section 367.24 – Construction and service contracts for other 

companies ................................................................................................... - 36 -

(g) Section 367.25 – Determination of service cost......................................... - 38 -

(h) Section 367.27 – Billing procedures .......................................................... - 39 -

(i) Section 367.51(a)(17) – Allowance for funds used during construction ... - 41 -

(j) Section 367.53 – Service company property purchased or sold ................ - 42 -

(k) Section 367.54 – Expenditures on leased property .................................... - 45 -

(l) Section 367.59 – Additions and retirements of property............................ - 46 -

(m) Sections 367.103 – .104 – Current & Deferred Income Taxes .................. - 47 -

(n) Section 367.23 – Transactions with non-associate companies; 

§ 367.25 – Determination of service cost; § 367.27 – Billing 

procedures; § 367.28 – Methods of allocation; § 367.29 – Compensation 

for use of capital ......................................................................................... - 48 -

6. Balance Sheet Accounts ................................................................................... - 51 -

7. Income Statement Accounts............................................................................. - 56 -

(a) Sections 367.4570 – .4594 – Revenue accounts for services rendered...... - 56 -

(b) Sections 367.5000 and 367.8000 – Operation and maintenance expense 

accounts ...................................................................................................... - 59 -

(c) Sections 367.9220 and 367.4171 – Account 922, Administrative 

expenses transferred--Credit, and Account 417.1, Expenses of nonutility company........................................................................................... - 65 -

(d) Section 367.4160 – Costs and expenses of merchandising, jobbing and 

contract work; § 367.9120 – Demonstrating and selling expenses; § 

367.9130 – Advertising expenses; § 367.9301 – General advertising 

expenses...................................................................................................... - 67 -
(e) Sections 367.4263, 367.4117, 367.4180 – Miscellaneous Income 

Statement Issues ......................................................................................... - 70 -

8. Records Retention Requirements ..................................................................... - 70 -

9. FERC Form No. 60........................................................................................... - 73 -

(a) Use of GAAP Financial Statement instead of Structured FERC Form 

No. 60 ......................................................................................................... - 73 -

(b) FERC Form No. 60 Schedules ................................................................... - 76 -

(1) Schedule II, Service Company Property ............................................ - 76 -

(2) Schedule III-A, Summary of Service Company Property and 

Accumulated Provisions for Depreciation and Amortization ............ - 77 -

(3) Schedule IV, Investments and Schedule XII, Long-Term Debt ........ - 78 -

(4) Schedule V, Accounts Receivable from Associate Companies ......... - 79 -

(5) Schedule VI, Fuel Stock Expenses Undistributed.............................. - 80 -

(6) Schedule X, Research, Development or Demonstration Expenses.... - 81 -

(7) Schedule XI, Proprietary Capital........................................................ - 82 -

(8) Schedule XIV, Notes to Financial Statements ................................... - 83 -

(9) Schedule XV, Comparative Income Statement.................................. - 85 -

(10) Schedule XV-A, Schedule of Utility Operating Expenses; Schedule 

XVI, Analysis of Charges for Service; Schedule XVII, Schedule of 

Expense Distribution by Department or Service Function................. - 86 -

(11) Analysis of Billing Schedules ............................................................ - 90 -

(12) Departmental Analysis of Salaries Schedule; Methods of 

Allocation Schedule; and Organizational Chart Schedule ................. - 92 -

(13) Annual Statement of Compensation for Use of Capital Billed .......... - 94 -

(14) Miscellaneous General Expenses Schedule (Account 930.2) ............ - 95 -

(c) General Instruction IX................................................................................ - 96 -

(d) Raising the Threshold for Individually Itemized Items.............................. - 98 -

(e) Reporting in Whole Dollars or Alternatively in Thousands ...................... - 99 -

(f) Comparative Information ......................................................................... - 100 -

(g) Request to Expand Data Collection in FERC Form No. 60..................... - 101 -

(h) Schedule Numbering ................................................................................ - 103 -

(i) Chief Accountant’s delegated authority ................................................... - 104 -

V. Information Collection Statement .................................................................. - 106 -

VI. Environmental Analysis ................................................................................. - 111 -

VII. Regulatory Flexibility Act.............................................................................. - 112 -

VIII. Document Availability ................................................................................... - 113 -

IX. Effective Date and Congressional Notification.............................................. - 114 -
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Joseph T. Kelliher, Chairman; 

 Suedeen G. Kelly, Marc Spitzer, 

 Philip D. Moeller, and Jon Wellinghoff. 

Financial Accounting, Reporting and Docket No. RM06-11-000 

Records Retention Requirements Under 

the Public Utility Holding Company Act of 

2005 

ORDER NO. 684 

FINAL RULE 

(Issued October 19, 2006) 

I. Introduction

1. On April 24, 2006, the Commission issued a notice of proposed rulemaking 

(NOPR) that proposed to add a new Uniform System of Accounts (USofA) for 

centralized service companies, i.e., service companies that are not special purpose 

companies, and new preservation of records requirements for holding companies and 

service companies as new Parts 367 and 368 of Title 18 of the Code of Federal 

Regulations.

1

 The NOPR also proposed to revise FERC Form No. 60, Annual Report of 

Centralized Service Companies, to be codified in new Part 369, to provide for financial 

reporting by centralized service companies consistent with the new USofA; to provide for 

 

1

 71 FR 28464 (May 16, 2006), FERC Stats. & Regs. ¶ 32,600 (2006). 
Docket No. RM06-11-000 - 2 -

electronic filing of Form No. 60; and to make conforming changes to the Commission’s 

regulations in Part 366 and corresponding changes to the Commission’s Chief 

Accountant's delegation of authority in Part 375. The NOPR proposed to make the 

changes effective January 1, 2007. 

2. As directed by the Commission in the NOPR, the Commission staff held a 

technical conference on July 18, 2006, to provide interested persons an opportunity to 

discuss the regulations proposed in the NOPR. At the conclusion of the technical 

conference, staff announced that the record in this docket would remain open until 

August 8, 2006, to provide interested persons additional time to submit specific 

recommendations on how the Commission’s proposed regulations could be modified to 

accommodate their concerns. 

3. This Final Rule adopts, in many respects, the proposals contained in the NOPR, 

but with certain noted changes to minimize any unnecessary burden. Chief among them, 

the Commission defers the implementation date by an additional year, to January 1, 2008. 

II. Background 

4. 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, 

 2

 Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594 (2005). 

3

 15 U.S.C. 79a et seq. 

4

 EPAct 2005 at 1261 et seq. 
Docket No. RM06-11-000 - 3 -

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

5. Order No. 667 required that, unless otherwise exempted by Commission rule or 

order, holding companies6

 and service companies7 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 

 5

 Repeal of the Public Utility Holding Company Act of 1935 and Enactment of the 

Public Utility Holding Company Act of 2005, Order No. 667, 70 FR 75592 (Dec. 20, 

2005), FERC Stats. & Regs. ¶ 31,197 (2005), order on reh’g, Order No. 667-A, 71 FR 

28446 (May 16, 2006), FERC Stats. & Regs. ¶ 31,213 (2006), order on reh’g, Order No. 

667-B, 71 FR 42750 (July 28, 2006), FERC Stats. & Regs. ¶ 31,224 (2006). 

6

 As defined in 18 CFR 366.1, a holding company is (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, a service company is 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. “Centralized service companies” are defined in 18 CFR 

367.1(a)(7) as 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. Centralized service companies are different from other 

service companies that only provide a discrete good or service. 

8

 Order No. 667 also required centralized service companies to file the newly 

created FERC Form No. 60, Annual Report of Centralized Service Companies. 
Docket No. RM06-11-000 - 4 -

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. The Commission also 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 regulations9

 should be modified to adopt or otherwise 

integrate the relevant parts of the Securities and Exchange Commission’s (SEC) Uniform 

System of Accounts and records retention rules. 

6. In the April 24, 2006 NOPR,10 the Commission recognized that the range of 

changes that would be needed to Parts 101, 125, 201 and 225 of its regulations to allow 

for application of those requirements to holding companies and service companies would 

make understanding and applying them difficult for all entities. Therefore, the 

Commission proposed to adopt separate accounting, records retention, and reporting 

requirements for holding companies and service companies in new Parts 367, 368 and 

369. 

7. After consideration of the discussion during the technical conference and the 

comments received, the Commission is adopting this Final Rule which is generally 

consistent with the NOPR, but with several significant changes to reduce the compliance 

burden on affected entities. The Commission received nine comments on the proposed 

 9

 18 CFR Parts 101, 125, 201 and 225 (2006). 

10 Supra note 1. 
Docket No. RM06-11-000 - 5 -

NOPR and ten supplemental comments submitted following the July 18, 2006 staff 

technical conference. A list of the commenters is attached as Appendix B. Comments 

received on specific aspects of the Commission's proposal are discussed in greater detail 

below. 

III. Overview of Final Rule

8. As an initial matter, the Commission in this Final Rule has been guided by the 

clear intent of Congress to repeal the regulatory regime established by PUHCA 1935 and 

to rely on this Commission and state regulatory authorities to protect energy customers. 

Throughout, we have attempted to strike a balance between the Commission’s need for 

information to carry out its regulatory responsibilities and the burden that gathering and 

reporting information imposes on industry. Therefore, as described below, we have 

modified our proposal in several key respects to reduce any unnecessary burden. The 

modifications include deleting and modifying certain accounts and instructions in the 

originally proposed USofA, providing flexibility in the work order system requirements, 

streamlining and eliminating certain schedules in the FERC Form No. 60, retaining the 

May 1 filing date for the FERC Form No. 60, and postponing the implementation date of 

the Final Rule until January 1, 2008. These modifications balance the Commission’s 

need for information to fulfill its regulatory responsibilities with minimizing any 

unnecessary burden. 

9. Specifically, in the NOPR, the Commission proposed to add, as Part 367 of its 

regulations, a new USofA for centralized service companies that conforms, to the 

maximum extent practicable, to the existing USofA for public utilities and licensees and 
Docket No. RM06-11-000 - 6 -

for natural gas companies as set forth in Parts 101 and 201, respectively, of the 

Commission's regulations. The Final Rule adopts the new USofA for centralized service 

companies, but with the following modifications to reduce the burden on respondents: 

• Centralized service companies will not be required to adopt a formal work order 

system. Instead, the Commission will permit centralized service companies to use 

a variety of cost accumulation systems, provided such systems support the 

allocation of expenses to the services performed and readily identify the source of 

the expenses and the basis for their allocation. 

• Centralized service companies will not be required to obtain Commission approval 

to account for an item as extraordinary. Instead, the Commission will only require 

extraordinary items to be disclosed in footnotes to the financial statements. 

• Centralized service companies will not be required to conduct extensive mortality 

studies to support the useful lives of all depreciable assets, but can exercise 

judgment in determining the evidence needed to support the lives of depreciable 

assets. 

• Centralized service companies will not be required to prepare paper invoices each 

month for services rendered to associate utility companies. Instead, the 

Commission will permit centralized service companies to use a variety of 

accounting mechanisms, provided that associate utilities are receiving accurate 

information about the work being done for them and the related costs on a monthly 

basis. 
Docket No. RM06-11-000 - 7 -

• Centralized service companies will not be required to capitalize an allowance for 

funds used during construction (AFUDC) as a component of construction cost but 

will instead be allowed to capitalize interest. 

• Centralized services companies will not be required to calculate income taxes for 

individual departments. 

• Centralized service companies will not be required to recognize revenues received 

for, or expenses incurred in, providing services to non-utility companies in 

separate accounts. 

• Centralized service companies will not be required to record revenues received for 

services provided in support of merchandising, jobbing and contract work in a 

separate account. Instead, revenues from such services will be included in the 

accounts provided for other service company revenues. Proposed Account 415, 

Revenues from merchandising, jobbing and contract work, will be eliminated. 

10. In the NOPR, the Commission also proposed to add, as new Part 368 of its 

regulations, preservation of records requirements for holding companies and service 

companies, that conform to the preservation of records requirements for public utilities 

and natural gas companies contained in §§ 125.3 and 225.3 of the Commission's 

regulations, with certain modifications appropriate for holding companies and service 

companies. The Final Rule adopts the new requirements, with certain modifications to 

the Schedule of Records and Periods of Retention in § 368.3. In order to reduce any 

unnecessary burden, the Commission will revise the retention period for certain 
Docket No. RM06-11-000 - 8 -

depreciation records from 25 years to 3 years after retirement or disposition of the 

property. 

11. Additionally, the NOPR proposed to revise FERC Form No. 60 to permit reporting 

consistent with the proposed USofA for centralized service companies, and to codify it in 

new Part 369. The Final Rule adopts the revised FERC Form No. 60 in Part 369, but 

deletes or modifies the following schedules in the Form itself to reduce the compliance 

burden: 

• Schedule XV-A, Schedule of Utility Operating Expenses, will be deleted because 

similar information is available on Schedule XVI, Analysis of Charges for 

Service. 

• Schedule XVI will be modified to reflect the Commission’s decision not to require 

a separate account for recording expenses attributable to services provided to nonutility companies. 

• The Analysis of Billing Non-utility Companies - Account 459 Schedule, will be 

deleted to reflect the Commission’s decision to eliminate Account 459. 

• The schedules for analysis of service company billings will eliminate the need to 

separately report billings to utility customers and non-utility customers. 

• The departmental analysis of salaries schedule will be eliminated because the 

reported data is not comparable across companies. 

12. In addition, the Final Rule delays the implementation date of the new requirements 

until January 1, 2008, and makes conforming changes to the transition provisions 

contained in §§ 366.21, 366.22 and 366.23 of the Commission’s regulations. The delay 
Docket No. RM06-11-000 - 9 -

in the implementation date and the transition periods will allow for a more orderly 

implementation of the new requirements and further reduce the compliance burden on 

affected entities. 

13. The Final Rule, therefore, adopts new Parts 367, 368 and 369 and corresponding 

changes to Parts 366 and 375 of the Commission's regulations. 

IV. Discussion

14. In general, the National Association of Regulatory Utility Commissioners 

(NARUC), the American Public Power Association (APPA), the Florida Municipal 

Power Authority (FMPA), and National Rural Electric Cooperative Association 

(NRECA) supported the NOPR while Edison Electric Institute (EEI) and individual 

service companies opposed the NOPR. 

1. Adoption of the Proposed Uniform System of Accounts

15. The Commission proposed to adopt a new USofA for Centralized Service 

Companies that generally mirrors the Commission's existing USofA for public utilities 

and licensees and for natural gas companies, with certain modifications to reflect the 

unique business characteristics of centralized service companies. 

Comments

16. Several industry commenters urge the Commission to allow centralized service 

companies to continue to use their existing systems of accounts.11 These commenters 

 11 EEI at 19-20; FirstEnergy Service Company (FirstEnergy) Supplemental 

Comments at 2; Pepco Holdings, Inc. and PHI Service Company (PHI Companies) 

jointly-filed Supplemental Comments at 4-5; Progress Energy, Inc. (Progress Energy) at 
Docket No. RM06-11-000 - 10 -

contend that centralized service companies should not be required to adopt the USofA as 

proposed in the NOPR. EEI, First Energy, and XES also argue that centralized service 

companies should be permitted to continue to maintain their financial records in 

conformance with Generally Accepted Accounting Principles (GAAP) and SarbanesOxley requirements.12 

17. EEI argues that, to the extent there is some detail the Commission does not 

currently have, but wants to obtain, rather than requiring centralized service companies to 

restructure their accounting systems, the Commission could simply add items to FERC 

Form No. 60 to obtain that information.13 

18. Progress Energy contends that instituting reporting requirements that are more 

complicated and time-consuming runs counter to the spirit that prompted the repeal of 

PUHCA 1935.14 

19. PSEG Companies maintain that the Commission has substantially underestimated 

the costs of complying with the NOPR and that it failed to balance the costs associated 

with implementing the NOPR against the benefits expected to result from 

implementation.15 PSEG Companies state that the proposals in the NOPR, if adopted, 

would impose more regulatory burdens than was required under PUHCA 1935. They 

 

2; Public Service Enterprise Group Incorporated (PSEG Companies) at 9-10; Xcel 

Energy Services, Inc. (XES) at 2-3. 

12 EEI at 20-21; FirstEnergy Supplemental Comments at 2; XES at 2-3. 

13 EEI at 18. 

14 Progress Energy at 3. 

15 PSEG Companies at 3. 
Docket No. RM06-11-000 - 11 -

state this would be inconsistent with the intent of Congress. PSEG Companies express 

their concern that the increased cost of compliance will be much higher than the 

Commission has estimated and that the benefits of the rule are non-existent and may be 

counter-productive.16 PSEG Companies request the Commission to withdraw the 

requirement that the centralized service companies must adopt the USofA, or, at a 

minimum, modify the NOPR in such a manner that provides net public benefits.17 

20. XES claims that conversion to the new USofA proposed by the Commission 

would be expensive and time consuming, and is unnecessary because the current 

accounts and accounting systems comply with SEC’s requirements and state regulations. 

Additionally, XES asserts that it does not foresee any additional benefit to federal and 

state regulatory agencies by conversion to the USofA proposed by the Commission.18 

21. Southern Company Services and Southern Nuclear Operating Company 

(Southern) state that the accounting and work order systems now in place allow the 

public utility company receiving service company billings to report these expenses using 

the USofA. They state, further, that the Commission’s proposal for the centralized service 

companies to use a modified USofA does nothing to enhance that process. They suggest 

that, if the Commission concludes there must be a conversion to its USofA, there be 

flexibility.19 In their supplemental comments, Southern notes that the Commission 

 16 Id. at 6-7. 

17 Id. at 12. 

18 XES at 3-4. 

19 Southern at 1. 
Docket No. RM06-11-000 - 12 -

receives detailed FERC Form No. 1 information from all public utility companies, which 

is where the service company charges are ultimately placed in the appropriate USofA 

classification.20

22. Some commenters express their belief that compliance with existing reporting 

requirements, including GAAP and SEC requirements, along with the Sarbanes-Oxley 

and state regulatory requirements, will provide adequate information in sufficient detail 

to ensure transparency and facilitate review of centralized service company charges.21 

XES adds, further, that existing federal and state requirements ensure the accuracy of 

records and the adequacy of internal accounting controls.22 As such, these commenters 

believe the Commission’s proposal to adopt the proposed conversion to a USofA is 

unnecessary.23 

23. Conversely, APPA supports the Commission's effort to develop a comprehensive 

chart of accounts for centralized service companies. APPA believes that the Commission 

generally has done an admirable and workmanlike job of developing a comprehensive 

chart of accounts for centralized service companies. APPA states that such companies 

are likely to perform many operations and maintenance services for their public utility 

affiliates. The costs of these functions should be recorded and accounted for in the same 

way, regardless of exactly what entity performs them. APPA reports that some of its 

 20 Southern Supplemental Comments at 1. 

21 EEI at 17-19; Progress Energy at 2; PSEG Companies at 9-10; XES at 3-4. 

22 XES at 3. 

23 EEI at 23; XES at 3. 
Docket No. RM06-11-000 - 13 -

members that have had to deal with allocations of costs from centralized service 

companies to their public utility affiliates in the past have reported that accounting for 

such service company costs was often vague and opaque, recorded in accounts such as 

“Administrative and General.” According to APPA, these accounts could lead to 

improper allocation of such costs to utility customers. The new chart of accounts should 

be of material assistance in this regard. Indeed, APPA states that the Commission should 

make clear its intent to use the greater transparency achieved by the proposed service 

company accounting requirements to protect ratepayers from the pass-through of 

improper service company costs—i.e., costs that would not be chargeable to ratepayers 

consistent with Commission policy if incurred at the operating company level.24 

24. NRECA shares APPA’s comments and concerns, and urges the Commission to 

adopt regulations ensuring just and reasonable rates by prohibiting the pass-through of 

improper service company costs to jurisdictional public utilities.25

25. FMPA supports the NOPR and compliments the Commission on the proposed 

standards, accounting requirements, and new accounts for centralized service companies. 

FMPA states that the rule provides long-needed transparency and consistency for 

centralized service companies’ accounting. FMPA is of the view that the current method 

is broken, and there would not have been a need for a staff technical conference on this 

topic if it were otherwise. FMPA states that the current accounting method undermines 

the Commission’s ability to insure just and reasonable rates and, that without the 

 24 APPA at 5. 

25 NRECA Supplemental Comments at 2. 
Docket No. RM06-11-000 - 14 -

proposed reforms, the problem will only get worse. FMPA points out that with 

consolidation and mergers likely to follow the PUHCA repeal, inadequacies in the 

current accounting systems will face increasing stress leading to consumer harm. FMPA 

adds that there is growing reliance on formula rates at the Commission that heightens the 

need for greater transparency and consistency which also aids in their ability to audit and 

intervene in rate cases. FMPA states that the new USofA should facilitate scrutiny of 

costs passed through to customers, particularly as they need proper functionalization of 

costs under formula rates. FMPA indicates that there are centralized service companies 

that they deal with and have extreme difficulty getting the information needed to see the 

transparency. FMPA indicates also that, when they do get access to the information, it is 

very time consuming to ferret out, purge and find the information needed because there is 

not consistency of accounting between utilities. FMPA cautions that the Commission 

should not be swayed by the GAAP argument. FMPA states that financial reporting 

under GAAP is oriented toward investors, and that it does not provide sufficient 

regulatory scrutiny to protect the wholesale and retail ratepayers or to prevent crosssubsidization. FMPA asks that the Commission not water down the NOPR because it 

would only undermine the transparency and consistency that is needed.26

26. NARUC and the Wisconsin Commission state that service company costs are an 

important piece to the ratemaking responsibilities at the state regulatory level. They state 

that, typically, costs originating at the service company make up a large and increasing 

 26 See Technical Conference Tr. 111-115 (Mr. Steven Ruppel). 
Docket No. RM06-11-000 - 15 -

percentage of the operating expenses of the regulated utilities. They point out that, as 

affiliated companies, these transactions are not made on an arms-length basis and, 

therefore, require additional controls. Therefore, NARUC supports the Commission’s 

effort in attempting to increase transparency in bringing uniformity of these costs.27

Commission Determination

27. The Commission concludes that a structured USofA as proposed under new 

Part 367 of the Commission’s regulations is necessary to ensure consistency across the 

centralized service companies and, equally important, to ensure the Commission has the 

information necessary to carry out its obligations under PUHCA 2005, the Federal Power 

Act (FPA), and the Natural Gas Act (NGA).28 In reaching this conclusion, the 

Commission is mindful that one of Congress’ goals in repealing PUHCA 1935 was to 

reduce the regulatory burden on holding companies. The Commission, nevertheless, 

finds that the absence of a structured USofA would impede the Commission’s ability to 

carry out the new regulatory responsibilities imposed by Congress when it adopted 

PUHCA 2005. Without a structured USofA, the Commission would not have adequate 

information to be able to ensure just and reasonable jurisdictional rates, discern potential 

or actual cross-subsidization, or be able to approve cost allocations between holding 

company affiliates. 

28. Although GAAP and the SEC’s accounting rules may be sufficient for some 

purposes, they alone are not sufficient for fulfilling the Commission’s new regulatory 

 27 See Technical Conference Tr. 90 (Mr. Thomas Ferris). 

28 42 U.S.C. 16451 et seq.; 16 U.S.C. 824 et seq.; 15 U.S.C. 717 et seq. 
Docket No. RM06-11-000 - 16 -

responsibilities under PUHCA 2005. In order to carry out its regulatory responsibilities, 

the Commission needs accounting information that is more “granular,” i.e., more 

detailed, than what is required under GAAP. For example, reporting a single figure for 

total operation and maintenance expense on an income statement would satisfy GAAP 

requirements. However, the Commission needs information, among other things, about 

how much was spent on operations compared to maintenance, how much was spent on 

transmission compared to distribution, and what one company spent on an activity 

compared to another for that same activity in order to ensure, for example, just and 

reasonable jurisdictional rates. 

29. Although flexibility in accounting rules may have enabled the SEC to meet its 

regulatory responsibilities, such flexibility will not allow the Commission to accomplish 

its regulatory mandate to ensure just and reasonable rates. There are hundreds of entities 

subject to the Commission’s jurisdiction. The only way the Commission can efficiently 

carry out this mandate is by requiring these entities to account for transactions in a 

structured and uniform manner. That is why the Commission adopted and still maintains 

USofAs for public utilities and licensees and for natural gas companies. A structured 

USofA for centralized service companies is an equally essential tool that the Commission 

needs to carry out its regulatory responsibilities. 

30. Upon further consideration, however, the Commission finds that the USofA 

proposed in the NOPR for centralized service companies may include some requirements 

that, in retrospect, may not be needed. Therefore, consistent with the overall objective of 

not imposing unnecessarily burdensome regulatory requirements under PUHCA 2005, we 
Docket No. RM06-11-000 - 17 -

are adopting the following modifications suggested by the commenters to the proposed 

USofA to reduce that burden, as discussed below. 

 2. Implementation Date

31. The NOPR proposed to require holding companies and service companies to 

implement the new accounting, records retention, and reporting requirements on 

January 1, 2007. 

Comments

32. Several commenters argue that the January 1, 2007 implementation date does not 

allow sufficient time to implement the Final Rule.29 They argue that compliance with the 

Final Rule, if adopted as proposed, would require time, man hours and company 

resources to implement software changes, train personnel, to update Sarbanes-Oxley 

controls, and to receive sign off from internal and external auditors. In addition, Progress 

Energy argues that reengineering of company processes, procedures and software, 

remapping of thousands of projects to new Commission accounts, and testing and 

auditing (internal and external) of revised systems would take many months to ensure 

error-free implementation.30 The commenters suggest, therefore, that the Commission 

defer compliance with the Final Rule until January 1, 2008. According to commenters, 

this deferral also would provide time to issue a Final Rule and an order on rehearing. 

 29 EEI at 45-48; XES, at 5; Southern at 2; Progress Energy at 12; National Grid 

USA (National Grid) at 14-15; NiSource Inc. (NiSource) Supplemental Comments at 3; 

FirstEnergy Supplemental Comments at 4; PHI Companies Supplemental Comments at 

5-6. 

30 Progress Energy at 12. 
Docket No. RM06-11-000 - 18 -

NARUC and other state commissions had no objections to extension of the 

implementation date as long as there was no gap between the SEC’s regulations and 

implementation of the Commission’s regulations.31 

Commission Determination

33. The Commission agrees with the commenters, and will move the implementation 

date of this Final Rule from January 1, 2007 to January 1, 2008. As a result, the revised 

FERC Form No. 60 prescribed in this Final Rule will first be due on May 1, 2009 

(reporting data for the 2008 reporting year).32 This change will provide companies 

sufficient time to implement software changes, train personnel, update Sarbanes-Oxley 

controls, and receive sign off from internal and external auditors. The change in 

implementation date will reduce the burden and cost to service companies impacted by 

the Final Rule. Additionally, the Commission will extend the transition periods for 

holding companies and service companies to comply with the Commission's accounting 

and recordkeeping requirements.33

 31 See Technical Conference Tr. 97-98 (Mr. Thomas Ferris); Technical Conference 

Tr. 101 (Mr. Joseph Buckley); Technical Conference Tr. 109 (Mr. James Mitchell). 

32 The currently effective FERC Form No. 60 due on May 1, 2007 and May 1, 

2008 will be the FERC Form No. 60 adopted in Order Nos. 667, 667-A and 667-B. See

Repeal of the Public Utility Holding Company Act of 1935 and Enactment of the Public 

Utility Holding Company Act of 2005, Order No. 667, 70 FR 75592 (December 20, 

2005), FERC Stats. & Regs. ¶ 31,197 (2005), order on reh’g, Order No. 667-A, 71 FR 

28446 (May 16, 2006), FERC Stats. & Regs. ¶ 31,213 (2006), order on reh’g, Order No. 

667-B, 71 FR 42750 (July 28, 2006), FERC Stats. & Regs. ¶ 31,224 (2006). 

33 In Order No. 667, the Commission established transition periods for holding 

companies formerly “registered” under PUHCA 1935 to comply with the Commission’s 

record retention requirements, and for service companies in such holding company 
Docket No. RM06-11-000 - 19 -

3. FERC Form No. 60 Filing Deadline

34. In the NOPR, the Commission proposed to change the filing deadline for the 

FERC Form No. 60 from May 1 to April 18. The proposed April 18 filing date is 

consistent with the filing date for most of the Commission's other annual report forms 

that contain financial information. 

Comments

35. EEI proposes that the Commission retain the current FERC Form No. 60 filing 

deadline of May 1 because companies have a number of financial reporting requirements 

with spring due dates affecting the same staff. EEI claims accelerating the filing date to 

April 18 would increase the cost of compliance, and increase company staffing needs. 

Commission Determination

36. We will retain the current FERC Form No. 60 filing date of May 1. Retention of 

the May 1 date will minimize the burden on service companies that may also be 

responsible for filing FERC Form Nos. 1, 2 or 6 on behalf of regulated public utility 

companies and licensees, natural gas pipelines, or oil pipelines. The Commission will 

also make submission software available to companies, allowing for electronic filing of 

the revised FERC Form No. 60 for the 2008 reporting year and subsequent reporting 

 

systems to comply with the Commission’s accounting, records retention, and reporting 

requirements. See 18 CFR 366.21(b), 366.22(a)(2), 366.22(b)(2) and 366.23(b). 
Docket No. RM06-11-000 - 20 -

years, similar to the submission software used for electronic filing of Form Nos. 1, 2, 2-

A, 3-Q, 6, and 6-Q.34 

4. Definitions

(a) “Direct cost” and “Indirect cost” 

37. In the NOPR, the Commission proposed to define “direct cost” to include “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. Costs incidental to or related to a directly charged item must be classified as 

a direct cost.” “Indirect cost” was defined to include “the costs of a general overhead 

nature such as general services, housekeeping costs, and other support costs 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.” These are the same definitions that were contained in the SEC's former USofA 

for service companies.35

 34 We note that, contemporaneously with this Final Rule, we are issuing, in Docket 

No. RM06-25-000, a Final Rule providing for the electronic filing of the currentlyeffective FERC Form No. 60 for 2006 and 2007 reporting years, to be filed on May 1, 

2007 and May 1, 2008, respectively. See Electronic Filing of FERC Form No. 60, Order 

No. 685, published elsewhere in this issue of the Federal Register, FERC Stats. & Regs. 

¶ (2006). 

35 See 17 CFR part 256 (Uniform System of Accounts for Mutual Service 

Companies; Subsidiary Companies, Public Utility Holding Company Act of 1935). 
Docket No. RM06-11-000 - 21 -

Comments 

38. Southern recommends redefining the terms “direct cost” and “indirect cost” 

because it believes the definitions of these terms in the NOPR require costs it views as 

direct costs to be re-characterized as indirect costs. Southern explains that billings for 

direct costs should include overhead costs, such as employee benefits, as an adder to 

those direct costs, which otherwise would be characterized as indirect costs based on the 

definition in the NOPR. Southern suggests the Commission define “direct cost” as “those 

costs which are applicable to services performed for a single client company. Costs 

incidental to, or related to, a directly charged item also should be classified as a direct 

cost.” Likewise, Southern suggests “indirect cost” be defined as “those costs which are 

not applicable to services performed for a single client company and which must be 

allocated.” Costs incidental to, or related to, indirect items should also be classified as an 

indirect cost.36

Commission Determination 

39. We do not agree with Southern’s assertion that costs such as employee benefit 

costs must be re-characterized as indirect costs. The definition for “direct cost” includes 

labor costs and expenses applicable to services performed for a single or group of 

associate and non-associate companies and any cost incremental to or related to a directly 

charged item. Based on that definition, employee labor costs that are applicable to a 

 36 Southern at 4; Southern Supplemental Comments at 2. 
Docket No. RM06-11-000 - 22 -

service performed for a single or group of companies are a “direct cost” together with the 

related employee benefit costs. 

40. We also will not adopt Southern’s proposal to define “direct cost” as those 

applicable to services performed for a single client company, and “indirect cost” as those 

not applicable to services performed for a single client company. We do not believe 

Southern’s proposed definition would be workable in all situations. For example, a 

centralized service company could provide engineering services for a construction project 

that is jointly owned by two associated public utilities. In that instance, the labor costs of 

providing the engineering services are a direct cost of the project but the services are 

provided for more than a single client company. Therefore, we will adopt the definitions 

set forth in the NOPR. 

(b) “Work order system”

41. In the NOPR, the Commission proposed to adopt the definition and requirements 

of “work order system” from the SEC’s former USofA for service companies. The 

NOPR, therefore, defined “work order system” as a system for the accumulation of 

service company costs on a job, project, or functional basis. It includes schedules and 

worksheets used to account for charges billed to single and groups of associate and nonassociate companies. The requirements of a “work order system,” in turn, were provided 

as a General Instruction in § 367.30. This instruction provides that a service company 

must maintain a detailed classification of service costs that permits costs to be identified 

with the functional processes of the associate companies served and also various other 

accounting and cost allocation records needed to support work order charges. 
Docket No. RM06-11-000 - 23 -

Comments 

42. Commenters suggest that the Commission clarify and redefine the term “work 

order system” to incorporate a broader use of the term.37 XES believes the focus of the 

Commission, as it relates to a work order system, should be on complete and accurate 

reporting to enable it, state commissions, and other interested persons to monitor service 

company activities. XES states that variation in work order procedures should not affect 

the accuracy of reporting, and holding company systems should have the flexibility to 

rely on the systems that they have previously developed and implemented. 

43. EEI notes that, at the technical conference, industry panelists suggested that work 

order systems could include the use of a variety of systems.38 EEI recommends that the 

Commission replace the current definition of “work order system” with the following 

broader definition: “Work order system means a system for the accumulation of service 

company costs on a job, project, or functional basis. It includes any method used to 

account clearly for charges billed to single and groups of associate and non-associate 

companies, including, but not limited to, use of actual work orders, electronic 

notifications, bills, ledger entries, or activity-based accounting software systems.”39 EEI 

encourages the Commission to reflect this broad meaning of the term “work order 

system” throughout this Final Rule, by conforming the regulatory text and preamble to 

this broadly defined concept. To do this, EEI states the following sections should be 

 37 EEI Supplemental Comments at 15; FirstEnergy Supplemental Comments at 4; 

XES Supplemental Comments at 2. 

38 EEI Supplemental Comments at 15. 

39 Id. at 16. 
Docket No. RM06-11-000 - 24 -

revised to avoid implying that work orders are required: §§ 367.24(a), 367.27, 367.28, 

367.58(a), 367.4571, 367.4581, 367.4591, 367.50(d), 367.52(c), 367.1070(b), 

367.1080(c), 367.1520, 367.1850, and 367.9240(d); and Records Retention Requirements 

Nos. 13, 15, 16, 17, and 19. 

44. Commenters also argue that, while the SEC previously had regulations on work 

order systems, the SEC never formally required formal work order systems and allowed 

significant flexibility in how to account for inter-affiliate transactions.40 They state that, 

for the Commission to impose a formal work order system, centralized service companies 

would incur substantial costs to update accounting systems and train workers and their 

companies would decrease operating efficiency would suffer because routine and 

recurring work would now need to be reorganized around specific work orders.41 

National Grid also explains that its current practice accomplishes all of the goals sought 

by the Commission’s proposed work order system.42 Accordingly, the commenters 

believe the Commission should not require the use of a formal work order system, but 

should allow centralized service companies to continue to use their prior SEC-approved 

practices for tracking and assigning service costs. 

45. NARUC states that if the Commission determines that a formal work order system 

would be too burdensome, an alternative would be for the Commission to use the 

proposed definition and describe the minimum requirements of a work order system. 

 40 EEI at 40; National Grid at 4; XES at 4. 

41 EEI at 41; National Grid at 5-6; XES at 4. 

42 National Grid at 5. 
Docket No. RM06-11-000 - 25 -

NARUC adds that each centralized service company would then be required to file 

information describing its system and how it complies with the Commission’s definition 

and minimum requirements. NARUC suggests minimum requirements could include a 

written agreement on the types of work that will be performed by the service company 

for the utility, identification of the work to be completed by functional area, and the 

ability to track the costs to the services provided. NARUC states the work order system 

should separately break down costs related to one-time/nonrecurring expenditures. 

Further, if the service company incurs direct costs relating to construction work for a 

utility, NARUC believes the service company should have a work order system identical 

to the one that is required under Parts 101and 201 of the Commission’s regulations.43

Commission Determination 

46. While the Commission would prefer centralized service companies to utilize 

formal work order systems, the Commission also recognizes that the goals and purposes 

of a formal work order system can be met through other means, as several commenters 

suggest. The Commission also recognizes that there are increased costs associated with 

implementing a formal work order system. Accordingly, the Commission will replace 

the term “work order system” with “cost accumulation system,” and will modify the 

instructions in § 367.30 so that the instructions do not mandate centralized service 

companies to implement a formal work order system. The Commission, further, will 

allow centralized service companies to use a variety of cost accumulation systems, 

 43 NARUC Supplemental Comments at 6; codified at 18 CFR parts 101 and 201. 
Docket No. RM06-11-000 - 26 -

provided any cost accumulation system adopted meets the requirements provided in the 

definition for “cost accumulation system” and the requirements contained in § 367.30. 

Also, we will modify the regulations to remove language that suggests a formal or 

uniform work order system is required. 

47. The definition for “cost accumulation system” in § 367.1(a)(12) will be 

“a system for the accumulation of service company costs on a job, project, 

or functional basis. It includes schedules and worksheets used to account 

for charges billed to single and groups of associate and non-associate 

companies. It can be a variety of systems, including but not limited to, a 

work order system or an activity-based accounting software system.” 

While the instructions in § 367.30 will remain the same, we will revise all references to a 

work order system in the regulations. 

48. In making the changes discussed above, the Commission affords centralized 

service companies flexibility in the type of cost accumulation system they use to reflect 

their costs, and reduces any unnecessary burden that may be associated with changing 

their current system for accounting for these costs to a formal “work order system.” 

5. Instructions

49. In the NOPR, the Commission proposed to adopt four categories of instructions: 

General Instructions, Service Company Property Instructions, Operating Expense 

Instructions, and Special Instructions. The proposed instructions included most of the 

instructions contained in Parts 101 and 201 of the Commission’s regulations modified to 

meet the needs of centralized service companies and certain additional instructions 

contained in the SEC’s USofA relevant to centralized service companies. The specific 

comments received on these instructions are discussed below. 
Docket No. RM06-11-000 - 27 -

(a) Section 367.2 – Companies for which this system of accounts is 

prescribed

50. The Commission proposed that the USofA apply 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. However, we also proposed to continue the existing SEC 

exemptions from the USofA, including: special-purpose service companies, electric or 

gas utility companies, companies primarily engaged in the production of goods, and 

service companies that provide services exclusively to a local gas distribution company. 

Comments 

51. NARUC states that § 367.2 does not adequately ensure the existence of proper 

controls in the event of certain possible organization changes. For example, NARUC 

explains that, in the event that a service company is eliminated, the utility may transfer 

relevant service company functions to the holding company, a utility within the holding 

company, or another company within the holding company system. NARUC claims 

there is a risk that such transfers will result in the elimination of needed accounting 

controls relating to these functions, because under the proposed rules holding companies 

and special purpose companies would not be required to comply with the new USofA. 

NARUC argues that, in order to assure all service companies that provide goods and 

services to utilities are subject to proper controls, § 367.2 should be revised to (1) 

eliminate the special purpose service company exemption; (2) clarify that the new USofA 

applies to the entity that performs service company functions, even if it is a holding 
Docket No. RM06-11-000 - 28 -

company or a company providing electric or gas utility services; and (3) prohibit service 

company functions from being transferred to a utility in the holding company system. 

NARUC states that, in the absence of such modifications the purpose of the 

Commission’s proposed regulations may be thwarted.44

52. Certain commenters, on the other hand, argue that the Commission should 

maintain its requirement that the new recordkeeping and reporting requirements apply to 

centralized service companies only.45 EEI states that parent holding companies and their 

subsidiaries may own a variety of assets and undertake a variety of activities. Thus, EEI 

argues, if the Commission were to extend the requirements beyond centralized service 

companies, the Commission would need to address a variety of potential scenarios in 

order to define the circumstances in which the requirements would apply to other 

companies – which would complicate and increase the accounting and recordkeeping 

burden.46 EEI also argues that the Commission should not adopt requests to impose 

constraints on whether and how holding companies establish service companies to 

provide services to their subsidiaries. EEI states that neither the FPA nor PUHCA 2005 

gives the Commission authority to regulate holding company structure and operations in 

such a manner. Additionally, EEI urges the Commission to adopt a new definition for 

centralized service companies that would limit application of the Final Rule’s accounting 

and reporting requirements to service companies, and to preclude holding companies 

 44 NARUC at 3-5. 

45 EEI at 38; EEI Supplemental Comments at 19; CMS Energy Corporation and 

Consumers Energy Company (CMS Energy) Supplemental Comments at 3. 

46 EEI Supplemental Comments at 21-22. 
Docket No. RM06-11-000 - 29 -

from being classified as service companies. EEI also suggests the Commission specify 

that only Parts 367 and 368 apply to service companies.47 

53. For its part, CMS Energy argues that the Commission already has put into place 

the ability to monitor and respond to any concentration of utility functions within special 

purpose companies through the FERC-6548 and FERC-6149 reporting requirements 

established in Order No. 667.50 CMS Energy states these reporting requirements require 

identification of special purpose service companies and annual reporting on the functions 

of each special purpose company. CMS Energy adds that special purpose service 

companies have a simpler, smaller, more focused nature and the FERC-65 and FERC-61 

reporting requirements are well suited to monitor them, without imposing the USofA and 

FERC Form No. 60 requirements.51

Commission Determination 

54. We have decided that the USofA we are adopting herein will apply to centralized 

service companies only, consistent with Order No. 667.52 We agree with EEI that 

 47 EEI Supplemental Comments at 20. 

48 Holding companies that meet the definition of a holding company as defined by 

§ 366.1 must notify the Commission of this status by submitting FERC-65. See

18 CFR366.4(a). 

49 Every service company in a holding company system, including a specialpurpose company, which does not file a FERC Form No. 60 must instead file a narrative 

description of the service company’s function during the prior calendar year. See 

18 CFR 366.23(a)(2). 

50 Supra note 5. 

51 CMS Energy Supplemental Comments at 8. 

52 See Order No. 667 at P 38. 
Docket No. RM06-11-000 - 30 -

extending the requirements beyond centralized service companies would be a difficult 

definitional exercise that could lead to unnecessary regulatory uncertainty. While the 

Commission shares NARUC’s concerns that holding company systems could potentially 

circumvent the Commission’s accounting and reporting requirements for centralized 

service companies, the Commission does not believe NARUC’s recommendations are the 

best way to address the potential issue. At this time it is preferable to monitor 

developments in the industry and assess whether the instructions we are adopting lead to 

circumvention of our rules. If centralized service companies begin to decentralize their 

service functions in an effort to circumvent the Commission’s accounting and reporting 

regulations, the Commission will take the necessary actions to ensure the Commission 

has the information necessary to carryout its obligations under PUCHA 2005, the FPA, 

and the NGA. The Commission also will not impose restrictions on holding company 

systems which prevent centralized service company functions from being transferred to 

other companies in the same holding company system. Such restrictions are outside the 

Commission’s statutory authority under the PUCHA 2005, the FPA, and the NGA. 

55. We also clarify that holding companies are not subject to the rules of this USofA, 

and we will amend the instructions to § 367.2 to provide for this exemption. Further, we 

will adopt in § 367.1(a) of the regulations a definition for the term “centralized service 

company” based on our discussions in Order No. 667.53

 53 See Order No. 667 at P 37. 
Docket No. RM06-11-000 - 31 -

(b) Section 367.8 – Extraordinary items

56. In the NOPR, we proposed that centralized service companies must obtain 

Commission approval to record all extraordinary items. Extraordinary items are 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. 

Comments 

57. EEI and Progress Energy disagree with the Commission’s proposed requirement 

that Commission approval is required for an item to be accounted for as extraordinary.54 

They state that this requirement is unnecessary and burdensome. Further, they contend, it 

should be sufficient for centralized service companies to follow the GAAP requirement 

for reporting extraordinary items. Progress Energy also argues that, to the extent the 

Commission does not approve an item that is a required disclosure for SEC reporting, the 

Commission runs the risk of promoting inconsistent treatment of extraordinary items 

across holding company systems.55 Progress Energy adds that such a requirement would 

be an unnecessary burden on Commission staff to perform the reviews.56 EEI suggests 

that the Commission should require centralized service companies to provide a footnote 

describing any amounts included in Accounts 434, Extraordinary income and Account 

435, Extraordinary deductions.57 

 54 EEI at 32; Progress Energy at 10. 

55 Progress Energy at 10. 

56 Id.

57 EEI at 32. 
Docket No. RM06-11-000 - 32 -

Commission Determination

58. Upon further consideration, we agree that requiring Commission approval for any 

item to be recognized as extraordinary may impose an unnecessary burden on centralized 

service companies. EEI’s suggested alternative strikes a balance between the need for 

disclosure of such items and the desire to reduce unnecessary regulatory burden. 

Accordingly, the Commission will not require centralized service companies to seek 

Commission approval for all extraordinary items. Rather, as suggested by EEI, the 

Commission will require centralized service companies to include disclosure in the Notes 

to the Financial Statements of the FERC Form No. 60 identifying and describing any 

amounts included in Account 434, Extraordinary income, and Account 435, 

Extraordinary deductions. Accordingly, we will add an instruction to Schedule XIV, 

Notes to Financial Statements, to require disclosure of extraordinary items. 

(c) Section 367.10 – Unaudited Items

59. Proposed § 367.10 states that, when preparing a financial statement 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 the effect upon the accounts cannot be 

determined with absolute accuracy, the amount must be estimated and the estimated 

amount included in the proper accounts. 
Docket No. RM06-11-000 - 33 -

Comments

60. Southern questions the purpose of § 367.10 because its financial statements are 

audited and include all estimable liabilities in accordance with GAAP.58

Commission Determination

61. Southern’s comments are misplaced. The Commission does not at this time 

require the centralized service company financial statements, contained in the FERC 

Form No. 60, to be audited by independent public accountants. The purpose of § 367.10 

is simply to instruct a centralized service company, in preparing such statements, that it 

must use estimates if a transaction occurs that affects a company’s accounts even if the 

amount involved in the transaction and its effect upon the accounts cannot be determined 

with absolute accuracy and the estimates have not been audited. 

(d) Section 367.20(b) – Depreciation accounting

62. The NOPR at § 367.20(b) required service companies to support the estimated 

useful service lives of depreciable property with engineering, economic, or other 

depreciation studies. 

Comments

63. Southern recommends the Commission eliminate § 367.20(b) or use a more 

restrictive definition of when a study is needed. Southern states that a service company 

would not typically need “engineering, economic, or other depreciation studies” to 

 58 Southern at 5. 
Docket No. RM06-11-000 - 34 -

support the useful lives of depreciable property, which consists primarily of computer 

equipment, furniture, and other fixtures.59 

Commission Determination

64. Service companies own a variety of assets. Some centralized service companies 

primarily own office furniture and computers while others own more significant assets 

such as office buildings.60 Accordingly, some centralized service companies may need to 

conduct a more sophisticated engineering, economic, or other type of depreciation study 

than would others based on the complexity and characteristic of the depreciable assets 

that they own. The intent of the instruction is to require service lives of depreciable 

assets to be supported by evidence and analysis. It is not intended to require 

unnecessarily extensive mortality studies to be conducted when the cost of doing so 

cannot be supported by the improved accuracy in depreciation estimates. The 

Commission, therefore, will revise the instructions in § 367.20(b) to state that the 

“estimated useful service lives of depreciable property must be supported by objective 

evidence and analysis, including where appropriate engineering, economic, or other 

depreciation studies.” 

(e) Section 367.23 – Transactions with non-associate companies

65. Proposed § 367.23 was carried over from the SEC’s former USofA and requires 

profits and losses on transactions with non-associate companies to be recorded in 

 59 Southern at 5. 

60 See, e.g., American Electric Power Service Company’s 2005 FERC Form No. 

60. 
Docket No. RM06-11-000 - 35 -

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 nonutility companies (§ 367.4594), as appropriate. It also requires centralized service 

companies to use net profits received outside of the holding company system to reduce 

the cost of providing service to associate companies within the holding company system. 

Comments

66. NARUC supports the provisions; however, it explains that, if a service provided 

outside the corporate umbrella becomes profitable, a utility might form a new affiliate to 

provide the service so that profits associated with that service will no longer flow back to 

regulated operations.61 In that circumstance, it points out, the excess profits that would 

otherwise be available to reduce the costs of associate companies may decline. 

Therefore, NARUC suggests that services should not be transferred to a new affiliate if, 

and when, they become profitable. Additionally, NARUC suggests the Final Rule could 

require the centralized service company to report yearly which services it provides to 

outside entities, including an explanation of why any services were dropped from one 

year to the next. 

Commission Determination

67. It is beyond the scope of the Commission’s authority under PUHCA 2005 to set 

regulations which prohibit the transfer of services performed from one associate company 

in a holding company system to another associate company. Therefore, we will not adopt 

 61 NARUC at 8. 
Docket No. RM06-11-000 - 36 -

NARUC’s suggestion to prohibit services provided outside the corporate umbrella by a 

service company from being transferred to another associate company. Nor will we 

adopt the suggestion that service companies provide a yearly report on changes to 

services provided. A separate report is unnecessary because the Commission and others 

will be able to monitor such transfers because they will be reported annually either 

through FERC Form No. 60 or in FERC-61.62

(f) Section 367.24 – Construction and service contracts for other 

companies

68. Proposed § 367.24 was carried over from the SEC's former USofA for service 

companies. Section 367.24(b) requires centralized service companies to exclude from 

their accounting system the cost of materials, construction payrolls, outside services, and 

other expenses directly attributable to the construction of physical property for other 

companies, and requires that these costs must be charged directly by the vendor or 

supplier to the construction project. Additionally, § 367.24(c) requires the cost of goods 

procured (as opposed to services) to be excluded from the accounting system of the 

service company and charged directly by the vendor or supplier to the associate company 

concerned. 

 62 Pursuant to Order No. 667-A, service companies that do not file the FERC Form 

No. 60 must file annually a narrative description of their functions, as identified in 

FERC-61. See 18 CFR 366.23(a)(2). 
Docket No. RM06-11-000 - 37 -

Comments

69. Southern states it does not understand the purpose behind § 367.24(b) and (c), and 

recommends their elimination as it requires the exclusion of certain direct costs and cost 

of goods procured from the accounting system of the service company.63 Southern 

explains that its service companies contract for such expenses on behalf of its affiliate 

companies, as well as incur costs directly that are related to construction projects, that are 

then billed to a utility or other affiliate company. EEI requests the Commission clarify to 

whom § 367.24(b) applies. 64

70. National Grid believes § 367.24 requires that expenses associated with the 

construction services performed by service company employees will not be accounted for 

separately but treated as part of the capital investment in assets being constructed. This 

will cause, in National Grid’s view, an inconsistency with proposals by the Commission 

to create incentives for transmission construction by allowing expense treatment of precommercial costs incurred in relation to new transmission builds.65

Commission Determination

71. We agree with Southern that the purpose and intent of § 367.24(b) and (c) are 

somewhat unclear. We believe the ambiguity is due in part to the fact that § 367.24(a) 

does not prescribe specific accounts for recording costs incurred in connection with 

construction or service contracts under which the service company undertakes projects to 

 63 Southern at 5. 

64 EEI at 25. 

65 National Grid at 7-9. 
Docket No. RM06-11-000 - 38 -

construct physical property for others. Therefore, we will amend § 367.24(a) to require 

that costs incurred for this purpose, as well as any other purpose not provided for 

elsewhere in the expense accounts, are to be charged to new Account 412, Costs and 

expenses of construction or other services, adopted in this Final Rule. We also will 

eliminate the ambiguous language contained in § 367.24(b) and (c). 

(g) Section 367.25 – Determination of service cost

72. In the NOPR, the Commission proposed to adopt § 367.25 to state that 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. 

Comments

73. NARUC requests that the Commission clarify the meaning of the phrase “if paid” 

in § 367.25 because the language renders the meaning of the section unclear.66

Commission Determination

74. The Commission agrees that the phrase “if paid” in § 367.25 is unclear. This 

instruction is intended to state that the cost of services provided equals the total amounts 

included in the expense accounts plus an appropriate amount for the compensation for the 

use of capital. Furthermore, the meaning of compensation for the use of capital is 

explained in § 367.29, Compensation for use of capital. Therefore, the Commission finds 

that the phrase “if paid” is unnecessary and will modify § 367.25 to remove the phrase. 

 66 NARUC at 13-14. 
Docket No. RM06-11-000 - 39 -

(h) Section 367.27 – Billing procedures

75. Proposed § 367.27 requires service companies to bill monthly for their services 

and to include sufficient information in such billings to permit any company to properly 

classify the amount billed according to the accounting system prescribed by the 

regulatory authority of such company. This section was carried over from the SEC’s 

former USofA for service companies. 

Comments

76. Several commenters disagree with the Commission’s proposed regulation in 

§ 367.27 on monthly billing procedures.67 EEI and National Grid argue that generating 

paper invoices for billings of services rendered to associate utility companies on a 

monthly basis is largely unnecessary as the specific charges and their accounting are 

obtainable through the holding company’s accounting system.68 Southern also argues 

that it does not currently provide the level of detail required in § 367.27 to its affiliate 

companies but that the information it does provide is sufficient in detail.69 

77. EEI and FirstEnergy encourage the Commission to clarify in the regulatory text 

and preamble to the Final Rule that service companies can bill their clients using a 

variety of mechanisms as long as the service company clients are receiving accurate, 

timely information about the work being done for them and the cost of the work.70 

 67 EEI at 41-42; National Grid at 9-10; Southern at 5. 

68 EEI at 41, National Grid at 10. 

69 Southern at 5. 

70 EEI Supplemental Comments at 18, FirstEnergy Supplemental Comments at 4. 
Docket No. RM06-11-000 - 40 -

FirstEnergy notes that it has a fully integrated accounting system which provides full 

access to the information contained within the system as it relates to their company. 

Therefore, FirstEnergy argues that there is no need for a formal bill due to the available 

technology.71

78. With respect to billing of services rendered to non-associated utility companies, 

these commenters state service companies often provide a de minimis amount of 

services.72 Thus, according to National Grid, it makes little business sense to undertake 

the costs of establishing a detailed monthly invoicing for non-associated companies for 

services rendered.73 The commenters add that those arrangements are largely negotiated 

on an arms-length basis without reference to specific costs and would potentially provide 

sensitive competitive information that is not required by any contract between the service 

company and the unrelated party.74 Consequently, they contend, the Commission’s 

mandated monthly invoice scheme would force the service company into a cost of service 

business, even for non-jurisdictional services.75

Commission Determination

79. The commenters misunderstood the purpose of this section. It was not intended to 

require the use of paper invoices as some commenters concluded. Rather, the intent of 

this instruction is to require centralized service companies to charge their associate 

 71 FirstEnergy Supplemental Comments at 4. 

72 EEI at 42; National Grid at 10; Southern at 5. 

73 National Grid at 10. 

74 EEI at 42; National Grid at 10; Southern at 5. 

75 EEI at 42; National Grid at 10. 
Docket No. RM06-11-000 - 41 -

public-utility companies for services provided each month, together with enough 

information to allow these companies to properly classify the amount in the accounts 

prescribed by their regulatory authorities. However, in order to eliminate any confusion, 

we will remove the reference to “invoices” in § 367.27, and clarify it is only intended for 

billings to associate public-utility companies. 

(i) Section 367.51(a)(17) – Allowance for funds used during construction 

80. Proposed § 367.51 provided instructions on the cost of construction properly 

included in the service company property accounts. These instructions were taken from 

the Electric and Gas Plant Instructions in Parts 101 and 201 of the Commission’s 

regulations, and include an allowance for funds used during construction (AFUDC). 

Comments

81. EEI believes that AFUDC, as described in § 367.51(a)(17), only has relevance to 

jurisdictional entities that have been granted this provision by regulators.76 For service 

companies, EEI contends, a more appropriate approach would be to calculate capitalized 

interest based on GAAP. EEI recommends that the section on AFUDC be removed from 

the proposed rule and that service companies be allowed to capitalize interest based on 

GAAP.77

Commission Determination

82. Based on a review of the record in this proceeding, the construction projects for 

service company property do not appear to be large and the related interest charges will 

 76 EEI at 25. 

77 Id.
Docket No. RM06-11-000 - 42 -

be relatively insignificant. In such circumstances, the Commission agrees the use of the 

proposed AFUDC formula would be unnecessarily complex. Therefore, the Commission 

will modify § 367.51(a)(17) to allow centralized service companies to capitalize interest 

in accordance with GAAP. 

(j) Section 367.53 – Service company property purchased or sold

83. In § 367.53, we proposed to modify Electric and Gas Plant Instructions No. 5 in 

Parts 101 and 201 of the Commission’s regulations to require centralized service 

company property to be recorded at the cost of acquisition rather than its original cost. 

Section § 367.53 also requires centralized service companies to file journal entries with 

the Commission when they acquire property at a purchase price of $10 million or more 

that has been previously devoted to public service.78 This filing requirement was 

intended to provide the Commission and others the opportunity to monitor transactions 

involving property previously devoted to public service. 

Comments

84. NARUC states that the regulations on service company property purchased or sold 

could be used as a vehicle to inflate rate base.79 For example, it posits, a service 

company may have bought an asset at a premium over original cost to the party that 

previously owned it and recorded the asset on the service company's books at the total 

 78 The $10 million threshold is consistent with the threshold for certain 

transactions subject to section 203 of the FPA, as amended by section 1289 of 

EPAct 2005. See Order No. 669, 71 FR 1348 (Jan. 6, 2006), FERC Stats. & Regs. 

¶ 31,200 (2005). 

79 NARUC at 6. 
Docket No. RM06-11-000 - 43 -

acquisition cost, after which a public utility may have purchased the asset from the 

service company. To avoid such problems, NARUC suggests, the new USofA should 

require that any asset purchased by a service company not be transferred at an amount 

higher than the original purchase price or the remaining original cost, whichever is lower. 

Specifically, NARUC suggests that the following language (underlined below) should be 

incorporated into § 367.53(e), Service company property purchased or sold: 

In connection with the acquisition of 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. If the 

property was previously devoted to utility service, the service company must 

preserve the original cost of the property in the records of the service company.

80 

85. NARUC also states that, in order for state commissions to monitor the acquisition 

of property from affiliates, a copy of the journal entries also should be filed with the 

relevant state commissions and suggests the following language changes (stricken or 

underlined below) to incorporate this concept. 

(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. In addition, a copy of the 

proposed journal entries filed with the Commission must be sent to the state 

regulatory commissions having jurisdiction in the states in which associated utility 

companies provide utility service.81

 80 Id. at 6-7. 

81 NARUC at 11-12. 
Docket No. RM06-11-000 - 44 -

Commission Determination

86. The Commission will not adopt NARUC’s proposed language changes to 

§ 367.53. The regulations which are already in place for public utilities and licensees, 

and natural gas companies adequately prevent rate base from being artificially inflated. 

The Commission’s regulations in Parts 101 and 201 require all electric and gas plant 

purchased by a public utility or a natural gas company to be recorded at its original cost 

and the related journal entries must be filed with the Commission.82 Further, proposed 

§ 367.53(c) requires that property acquired from affiliates must be at book value and 

journal entries must be filed with the Commission for purchases of property previously 

devoted to public service in excess of $10 million. Therefore, NARUC’s proposed 

language is not necessary, nor do we believe it is necessary for the Commission to require 

copies of journal entries to be filed with state commissions. All filings of this nature are 

docketed by the Commission and can be viewed electronically by all interested parties. 

Accordingly, state commissions will be able to monitor the acquisition of property from 

affiliates without imposing an additional reporting burden on service companies. We 

also note that our determination here is consistent with the filing requirements applied to 

public utilities, licensees, and natural gas companies for similar transactions under the 

Commission’s regulations in Parts 101 and 201.

 82 See, e.g., 18 CFR part 101, Account No. 102. 
Docket No. RM06-11-000 - 45 -

(k) Section 367.54 – Expenditures on leased property

87. Proposed § 367.54 requires the cost of improvements made to leased property to 

be used for more than one year to be charged to the appropriate service company property 

account. It also requires that amounts charged to service company property be amortized 

to Account 404, Amortization of limited-term service property, over the lease term if the 

service life of the improvement is terminable by the action of the lease. Otherwise, the 

improvement is subject to depreciation practices normally followed for amounts recorded 

in the account to which the improvement was charged. The forgoing requirements are 

essentially the same requirements for public utilities, licensees and natural gas companies 

for leasehold improvements in Electric and Gas Plant Instructions No. 6 of Parts 101 and 

201 of the Commission’s regulations. 

Comments

88. Southern notes that GAAP requires that the life of a leasehold improvement be coterminus with the lease; thus, there would not be a leasehold improvement whose 

“service life is not terminated by action of the lease but by depreciation proper.”83 By 

this section’s definition, according to the company, all leasehold improvement 

amortization would have to be accounted for as “amortization of limited term property.” 

Southern asks what value this information is to the Commission. 

 83 Southern at 5. 
Docket No. RM06-11-000 - 46 -

Commission Determination

89. This instruction provides important guidance on how the costs of leasehold 

improvements are to be recorded and depreciated or amortized under the USofA. We, 

therefore, will retain this instruction. Further, we do not believe this instruction prohibits 

a centralized service company from following GAAP as it relates to leasehold 

improvements. 

(l) Section 367.59 – Additions and retirements of property 

90. Proposed § 367.59 requires centralized service companies to adopt and maintain a 

list of retirement units. The list forms the basis for determining whether the cost of 

property-related work should be capitalized or charged to expense. In general, if the 

work involves adding or replacing an item of property appearing on the list, the cost of 

the work is capitalized. If the work involves adding or replacing an item of property that 

is not on the list and, therefore, constitutes a minor item of property, the cost of the work 

is charged to expense. 

Comments

91. Southern states it does not believe that retirement units are applicable to service 

company property. Southern states that each service company purchase is a discrete unit 

of property and service companies would not be able to maintain a written property units 

listing for use in accounting for additions and retirements of property.84

 84 Southern at 5. 
Docket No. RM06-11-000 - 47 -

Commission Determination 

92. We do not agree with Southern that retirement units are not applicable to service 

company property. Establishing a retirement unit is necessary to determine whether 

property-related expenditures should be capitalized or expensed. It is the same 

requirement that is followed by public utilities and licensees and by natural gas 

companies under Parts 101 and 201 of the Commission’s regulations. We see no reason 

service companies should not follow the same practice because they have the same assets 

that an electric or gas company would have if the service company did not exist. 

Therefore, service companies should maintain property unit listings. 

(m) Sections 367.103 – .104 – Current & Deferred Income Taxes

93. Proposed §§ 367.103–.104 contain special accounting instructions for recognizing 

income tax expense. Among other things, they require the accruals for income taxes to 

be apportioned among service company departments and other income and deductions. 

These requirements were carried over from the Special Instructions for the current and 

deferred tax expense accounts in Parts 101 and 201 of the Commission’s regulations. 

Comments

94. EEI and Progress Energy recommend that there be no requirement to calculate or 

allocate taxes on a department level because income taxes are generally computed at a 

legal entity level, not to individual departments.85 Progress Energy notes that service 

companies are not income-producing; rather, they are cost centers required to bill all of 

 85 EEI at 39; Progress Energy at 8-9. 
Docket No. RM06-11-000 - 48 -

their expenses at cost and their income statements net to zero. The only income taxes 

that are computed for service companies are due to timing differences between GAAP 

and tax accounting, which, according to Progress Energy, cannot, in any meaningful way, 

be associated with individual departments. Therefore, Progress Energy states it does not 

have actual income tax accruals for its individual service company departments and could 

not meaningfully apportion the limited timing-related income tax accruals to the 

individual departments.86

Commission Determination

95. Upon further consideration, the Commission agrees that it is not practical or 

necessary for centralized service companies to calculate income taxes for individual 

departments. Therefore, the regulations will be revised to eliminate this requirement. 

(n) Section 367.23 – Transactions with non-associate companies; § 367.25 –

 Determination of service cost; § 367.27 – Billing procedures; § 367.28 –

Methods of allocation; § 367.29 – Compensation for use of capital 

96. The proposed sections of the Commission’s regulations listed above specify rules 

or standards that must be applied in accounting for certain transactions or events. The 

rules are fairly broad in their application and were carried over from the SEC’s USofA 

for service companies. 

97. More specifically, § 367.23 requires that the excess or deficiencies in providing 

services to non-associated companies to be recorded in Account 458.4, and that the net 

 86 Progress Energy at 9. 
Docket No. RM06-11-000 - 49 -

excess be used to reduce charges to associate companies. Section 367.25 states that a 

service must be deemed at cost and 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 constitutes cost during that period. Section 367.27 provides that 

charges for services to associate public-utility companies be made monthly with 

sufficient information and in sufficient detail to permit such company, where applicable, 

to identify and classify the charge in terms of the system of accounts prescribed by the 

regulatory authorities to which it is subject. Section 367.28 requires that indirect costs 

and compensation for use of capital must be allocated to projects in accordance with the 

service company’s applicable and currently effective methods of allocation. Section 

367.29 states that interest on borrowed capital and compensation for the use of capital 

must represent a reasonable return on the amount of capital reasonably necessary for the 

performance of services or construction work for associate companies. It also requires 

that the amount of compensation be separately stated on each billing to associate 

companies and an annual statement to support the amount of compensation for the use of 

capital billed for the previous 12 months be supplied to each associate company at the 

end of the calendar year. 

 Comments 

98. EEI argues that the proposed rule goes beyond accounting regulations and adopts 

cost allocation and billing practice principles in the definition of “indirect cost” and in 
Docket No. RM06-11-000 - 50 -

§§ 367.23, 367.25, 367.27, 367.28, and 367.29.87 EEI states these cost allocation and 

billing principles should be made applicable only in the context of service company cost 

allocations the Commission is asked to review under section 1275 of PUHCA 2005.88

Commission Determination 

99. The Commission disagrees with EEI’s assertion that the matters addressed in these 

sections of the regulations are only applicable in the context of cost allocation reviews 

under section 1275 of PUHCA 2005. Costs are incurred continually and on an on-going 

basis by centralized service companies and these costs must be accounted for and 

eventually reported to the Commission in the FERC Form No. 60. The noted regulations 

provide important guidance to centralized service companies as to how the items covered 

by those regulations should be accounted for as the transactions or events occur. For 

example, § 367.23 requires excesses or deficiencies in providing services to nonassociate companies to be recorded in Account 458.4, and § 367.25 provides that “cost” 

includes reasonable compensation for the use of capital. The guidance that these 

instructions provide promotes uniformity in accounting practices. 

100. As it relates to the portions of these sections which relate to cost allocation and 

billing requirements, we note that such regulations are necessary to carry out the 

 87 EEI at 39. 

88 Section 1275 of PUHCA 2005 provides that in the case of non-power goods or 

administrative or management services provided by an associate company organized 

specifically for the purpose of providing such goods or services to any public utility in 

the same holding company system, at the election of the system or a State commission 

having jurisdiction over the public utility, the Commission, must review and authorize the 

allocation of costs for those goods or services to the extent relevant to that associate 

company. See 42 U.S.C. 16462. 
Docket No. RM06-11-000 - 51 -

Commission’s obligations and duties under PUCHA 2005, the FPA and the NGA. These 

instructions assist the Commission in ensuring just and reasonable jurisdictional rates, 

discerning potential or actual cross-subsidization, and approving cost allocations between 

holding company affiliates. Therefore, these instructions are needed beyond the review 

required under section 1275 of PUCHA 2005 and are adopted as proposed. 

6. Balance Sheet Accounts 

101. In the NOPR, the Commission proposed to adopt in the new USofA for centralized 

service companies many, but not all, of the balance sheet accounts contained in Parts 101 

and 201 of the Commission's regulations, as well as the primary property Accounts 301 

(§ 367.3010), 303 (§ 367.3030) and 389 to 399.1 (§§ 367.3890 to 367.3991). 

Comments

102. EEI suggests that the Commission add the following balance sheet accounts to 

Part 367 subpart F: 

Account 106 – Completed construction not classified 

 Account 182.3 – Other regulatory assets 

 Account 189 – Unamortized loss on reacquired debt 

 Account 228.2 – Accumulated provision for injuries and damages 

 Account 228.3 – Accumulated provision for pensions and benefits 

 Account 254 – Other regulatory liabilities89

 89 EEI at 26. 
Docket No. RM06-11-000 - 52 -

103. These accounts were not included in the SEC’s Uniform System of Accounts.90 

However, a review of 2005 FERC Form No. 60s indicates that some companies are using 

these accounts.91

104. In addition, EEI and Southern suggest that the Commission make improvements to 

Account 146, Accounts receivable from associate companies, and Account 123, 

Investment in associate companies.92 EEI argues that the requirement to classify long 

term receivables as investments in associate companies is contrary to GAAP, and 

recommends elimination of this requirement.93 Southern asserts that, on occasion, 

operating companies do not have to submit payment immediately. The company argues 

that the delay in payment could exceed 12 months, which, according to Southern, would 

be appropriately classified as long term receivables and not as investments in associate 

companies.94 

105. NARUC asks that the Commission clarify the meaning of “common expenditures” 

in § 367.1070, Construction work in progress, because, in its opinion, the proposed 

language renders the section unclear.95 NARUC also believes proposed § 367.1070 

includes language that may not be appropriate for a service company doing work for 

 90 17 CFR part 256. 

91 See, e.g., Schedule I Comparative Balance Sheet contained in 2005 FERC Form 

No. 60 of American Electric Power Service Corporation, E. ON U.S. Services INC, PHI 

Service Company, and Progress Energy Service Company, LLC. 

92 EEI at 26; Southern at 6. 

93 EEI at 26. 

94 Southern at 6. 

95 NARUC at 14. 
Docket No. RM06-11-000 - 53 -

more than an associate public utility company. Accordingly, it requests that the 

Commission clarify the language (underlined below) in § 367.1070 as follows: 

(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 readiness for service of the first unit. ...96 

106. NiSource states that the definitions of proposed Accounts 233, Notes payable to 

associate companies (§ 367.2330) and 234, Accounts payable to associate companies 

(§ 367.2340) appear to be identical. The language of the definitions, it suggests, should 

be clarified to indicate that Account 233 applies to notes payable, whereas Account 234 

applies to accounts payable.97

Commission Determination

107. EEI did not explain in its comments why it suggests that the Commission add the 

recommended accounts. However, our review of a number of the FERC Form No. 60s 

filed with the Commission for calendar year 2005 indicates that some of the 

recommended accounts are already being used by service companies.98 For other 

recommended accounts it appears reasonably possible that service companies either 

already have or could enter into transactions in the future requiring use of those accounts. 

 96 NARUC at 14. 

97 NiSource at 3. 

98 See, e.g., Schedule I Comparative Balance Sheet contained in 2005 FERC Form 

No. 60 of American Electric Power Service Corporation, E. ON U.S. Services INC, PHI 

Service Company, and Progress Energy Service Company, LLC. 
Docket No. RM06-11-000 - 54 -

Therefore, the Commission will add the following balance sheet accounts recommended 

by EEI to Part 367 Subpart F: 

Account 106, Completed construction not classified 

 Account 182.3, Other regulatory assets 

 Account 189, Unamortized loss on reacquired debt 

 Account 228.2, Accumulated provision for injuries and damages 

 Account 228.3, Accumulated provision for pensions and benefits 

Account 254, Other regulatory liabilities 

108. The Commission also will add Account 306, Leasehold improvements, as a 

transitional accommodation only.99 Account 306 was included in the SEC’s Uniform 

System of Accounts.100 Use of this account will be restricted to leasehold improvements 

placed in service prior to January 1, 2008. Effective January 1, 2008, leasehold 

improvements must be charged to the appropriate primary plant account consistent with 

§ 367.54. Conforming changes to Schedules II and III of the FERC Form No. 60 will be 

made to permit reporting of amounts related to Account 306. 

109. In response to EEI and Southern’s comments concerning Account 123, Investment 

in associate companies, we note that, in the NOPR, the Commission proposed to adopt 

Account 146, Accounts receivable from associate companies, (§ 367.1460) as contained 

in Parts 101 and 201 of the Commission's regulations. The text to Account 146 requires 

 99 Account 306 was contained in the SEC USofA for service companies. We will 

permit continued use of this account and not require reclassification of amounts recorded 

therein for leasehold improvements placed in service prior to January 1, 2008. 

100 17 CFR part 256. 
Docket No. RM06-11-000 - 55 -

that items which do not bear a specified due date, but which have been carried for more 

than 12 months and items which are not paid within 12 months from the due date be 

transferred to Account 123, Investment in associate companies. This requirement results 

in classifying receivables that are long term in nature to a long term asset account 

(Account 123) and facilitates preparation of a classified balance sheet directly from the 

accounts. Although the Commission could prescribe a new account created specifically 

for recording long-term accounts receivables held by service companies, as Southern 

suggests, it would create an inconsistency between the accounts prescribed for service 

companies and those prescribed for public utilities and licensees and for natural gas 

companies. To ensure consistency between the service companies and the public utilities 

and natural gas companies, the Commission will continue to require long-term accounts 

receivables to be recorded in Account 123, Investment in associate companies. 

110. In response to NARUC’s comments concerning Account 107, Construction work 

in progress, we agree that the instructions contained in § 367.1070 that address 

construction projects consisting of multiple units with different in-service dates are 

unclear. Therefore, the Commission will modify that section and adopt NARUC’s 

recommended clarifying language. 

111. Additionally, in response to NiSource’s comments we will revise the language in 

Account 234 (§ 367.2340) to indicate that Account 234 applies to accounts payable. The 

language is revised to read, "This account must include all amounts payable to associate 

companies by the service company within one year, which are not provided for in other 

accounts." 
Docket No. RM06-11-000 - 56 -

7. Income Statement Accounts

112. In the NOPR, the Commission proposed to incorporate some of the income 

statement accounts contained in Parts 101 and 201 of the Commission’s regulations and 

some of the income statement accounts contained in the SEC's USofA for service 

companies. The specific comments received on these accounts are discussed below. 

(a) Sections 367.4570 – .4594 – Revenue accounts for services rendered 

113. In the NOPR, we proposed to adopt new revenue control Accounts 457, Services 

rendered to associate utility companies; Account 458, Services rendered to non-associate 

utility companies; and Account 459, Services rendered to non-utility companies. We 

proposed that each of these new revenue control accounts have corresponding 

subaccounts for direct labor (Accounts 457.1, 458.1 and 459.1) and indirect labor 

(Accounts 457.2, 458.2 and 459.2), and compensation for use of capital (Accounts 457.3, 

458.3 and 459.3). We also proposed to include revenue Accounts 458.4, Excess or 

deficiency on servicing non-associate utility companies, and 459.4, Excess or deficiency 

on servicing non-associate non-utility companies. Our proposal differed slightly from the 

SEC's USofA for service companies, which provided control accounts for revenues from 

services provided to associate companies and revenues from services provided to nonassociate companies. 

Comments

114. National Grid and NiSource believe that the Commission should provide for 

separate revenue control accounts for services to associate companies and to nonassociate companies, and that these accounts should each be further subdivided into 
Docket No. RM06-11-000 - 57 -

separate accounts or subaccounts tracking services to utility and non-utility companies in 

order to satisfy the Commission’s stated goals and to provide a more detailed picture of 

service company revenues.101 These commenters believe that this added detail (i.e., 

separately identifying revenues associated with services to associate, non-utility 

companies and non-associate, non-utility companies) would not impose a significant 

burden over the status quo, but would provide a more detailed picture of service company 

services rendered for non-utility companies than the Commission’s proposed regulations 

would require. As an alternative, NiSource requests that the Commission clarify that all 

service company revenues received from non-utility companies are to be charged to 

Account 459.4, whether or not they are derived from companies that are part of the same 

holding company system.102 Southern believes that subaccounts should be added for all 

direct and indirect charges including the non-labor components of billings.103 

115. In contrast, EEI believes most service companies will not have information needed 

to distinguish between direct labor, indirect labor, and use of capital costs for services 

provided to associate utilities, non-associate utilities and non-utilities. Instead, EEI 

encourages the Commission to retain the current breakdown into services rendered to 

associate and non-associate companies, at most subdividing the associate company 

information by utility and non-utility if necessary to address cross subsidization concerns. 

EEI also recommends that the Commission delete the requirement for tracking revenue 

 101 National Grid at 11-12; at 2-3. 

102 NiSource at 2-3. 

103 Southern at 4. 
Docket No. RM06-11-000 - 58 -

related to the use of capital, and states that it is a minor aspect of service company 

activities already reflected elsewhere in company accounts.104

116. Progress Energy expresses concerns that requiring the redesign of allocation 

processes and systems to capture and disaggregate expense and revenue data to 

distinguish utility and non-utility services would impose a significant and unjustified 

burden on company resources without any appreciable benefit. Progress Energy points 

out that service companies already have procedures in place to prevent inappropriate 

costs shifts and other cross subsidization, and that the separation of costs as proposed by 

the Commission is not necessary.105

Commission Determination

117. In response to commenters’ concerns, the Commission will adopt revenue 

accounts that will provide a breakdown by services rendered to associate and nonassociate companies, but eliminate the requirement to record revenues from services 

provided to utilities and non-utilities in separate accounts. The Commission believes this 

modification to the NOPR is appropriate because this information can be obtained in the 

FERC Form No. 60, Analysis of Billing Schedule, which requires reporting amounts 

billed by customer for the year. Therefore, this modification will reduce burden without 

loss of important data. More specifically, we will adopt the following revenue control 

accounts and corresponding subaccounts: Account 457, Services rendered to associate 

companies; Account 457.1, Direct costs charged to associate companies; Account 457.2, 

 104 EEI at 27-28. 

105 Progress Energy at 6-9. 
Docket No. RM06-11-000 - 59 -

Indirect costs charged to associate companies; Account 457.3, Compensation for use of 

capital-associate companies; Account 458, Services rendered to non-associate companies; 

Account 458.1, Direct costs charged to non-associate companies; Account 458.2, Indirect 

costs charged to non-associate companies; Account 458.3, Compensation for use of 

capital-non-associate companies; Account 458.4, Excess or deficiency on servicing nonassociate companies. Consistent with the discussion above, we will not adopt proposed 

Accounts 459, 459.1, 459.2, 459.3, and 459.4. Use of Accounts 457, 457.1, 457.2, 457.3, 

458, 458.1, 458.2, 458.3, and 458.4 is consistent with the requirements that existed under 

the SEC’s USofA for service companies. Contrary to EEI’s assertion, our review of 2005 

FERC Form No. 60s indicates that service companies are capable of breaking down 

amounts billed between direct costs, indirect costs and compensation for capital.106 

(b) Sections 367.5000 and 367.8000 – Operation and maintenance expense 

accounts

118. In the NOPR, the Commission proposed to require centralized service companies 

to use the 500 and 800 series of accounts contained in Parts 101 and 201 of the 

Commission's regulations for recording the expenses related to generation, transmission 

and distribution operation and maintenance services they provide to associate publicutilities and licensees and, where applicable, associate natural gas companies. 

 106 2005 FERC Form No. 60, Analysis of Billing – Associate Companies Schedule 

and Analysis of Billing – Non-associate Companies Schedule. 
Docket No. RM06-11-000 - 60 -

Comments

119. NARUC initially indicated that it was unclear how the 500 and 800 series 

accounts will be impacted by the types of services that centralized service companies 

provide.107 In supplemental comments filed following the staff technical conference, 

NARUC explains that, at the July 18, 2006 Technical Conference, it became clear that 

because some service companies currently use the 500 and 800 series accounts, it could 

be reasonable to include the accounts in the centralized service company’s USofA.108 

NARUC believes the question the Commission needs to determine is whether these 

accounts should be mandatory. NARUC believes that if the Commission determines that 

use of the 500 and 800 series accounts should not be mandatory for all service 

companies, then the Commission needs to identify the accounting methods that best 

reflect the financial position of the service companies and associate companies within a 

holding company system. NARUC suggests that one approach would be to establish a 

threshold for when the use of the 500 and 800 series accounts would become mandatory. 

NARUC suggests that a possible threshold could be a percentage, such as ten percent or 

less, of utility costs or of service company expenses. Another option, NARUC suggests, 

is to require the use of the 500 and 800 series accounts whenever a service company 

starts performing utility functions that should be recorded in the 500 and 800 series 

accounts. NARUC also suggests that the Commission prohibit the recording of charges 

classified in Account 923, Outside services on the utility’s records, and, instead, it 

 107 NARUC at 8-9. 

108 NARUC Supplemental Comments at 3-6. 
Docket No. RM06-11-000 - 61 -

suggests that the Commission mandate that service company charges be classified in 

accordance with the utility account or function to which they relate because, in some 

cases, all costs are classified in Account 923. NARUC explains that adoption of this 

recommendation is necessary if the Commission adopts a threshold.109 

120. Mr. Buckley, a participant at the technical conference, indicates that in Ohio they 

have experienced an explosion of service company costs recently. Mr. Buckley states 

that service company costs make up a large and increasing percentage of the costs that 

are ultimately passed on to ratepayers. Mr. Buckley points out that mergers and 

consolidations are moving the physical records and altering the existing relationships that 

state regulators have with the companies they regulate. According to Mr. Buckley, this 

makes it harder to know to whom to go to get information and, therefore, any increase in 

transparency is a positive step.110 Mr. Buckley adds that, if the service companies 

become more centralized, citing American Electric Power as an example and noting that 

consolidation in the industry could lead to things becoming more centralized, the 500 and 

800 accounts will provide for growth.111

121. In contrast, several commenters do not believe that the 500 and 800 series 

accounts accurately portray the majority of service company costs.112 While National 

Grid recognizes that some companies already record costs and revenues to match the 

 109 NARUC Supplemental Comments at 3-5. 

110 See Technical Conference Tr. 101-102 (Joseph Buckley). 

111 See Technical Conference Tr. 120-121 (Joseph Buckley). 

112 NARUC at 8-9; Progress Energy at 3; EEI at 22-24; NiSource Supplemental 

Comments at 4-6; FirstEnergy Supplemental Comments at 3. 
Docket No. RM06-11-000 - 62 -

accounting accorded to such costs and revenues by the ultimate service recipients, it 

asserts there is no reason to require wholesale reclassification of costs and revenues by all 

service companies. National Grid also believes this may lead to an inaccurate picture of a 

service company’s financial position, and explains that using the 500 and 800 series 

accounts implies that the service company owns the assets that it is operating and 

maintaining.113

122. EEI and Progress Energy assert that requiring the use of the 500 and 800 series of 

accounts would cause service companies to be out-of-compliance with GAAP 

principles.114 Progress Energy explains that GAAP principles presume that each 

company reports its financial information as if it were a stand-alone (non-affiliated) 

company. It explains that force-fitting a centralized service company’s financials into the 

format reported by a public utility would result in books that do not properly reflect the 

work conducted by a centralized service company and would over-complicate the 

accounting, increase the risk of errors inherent in any process or system change and 

violate GAAP principles.115 In addition, EEI and NARUC contend that the burden 

associated with the 500 and 800 series accounts is greater than the benefit.116 

 113 National Grid at 7-8. 

114 Progress Energy at 6; EEI at 22-24. 

115 Progress Energy at 6. 

116 EEI at 5-6; NARUC at 8-9. 
Docket No. RM06-11-000 - 63 -

Commission Determination

123. We will require centralized service companies to use the 500 and 800 series of 

accounts as proposed. It is evident from the July 18, 2006 Technical Conference and 

from a review of the 2005 FERC Form No. 60s that a number service companies use the 

500 and 800 series accounts. These centralized service companies perform operation and 

maintenance services related to generation, distribution, transmission, and customer 

services for associate electric and gas companies. The expenses incurred from providing 

these types of services are most accurately reported in the 500 and 800 series accounts. 

124. We do not agree with National Grid that use of these accounts by centralized 

service companies performing the types of services for which costs are properly included 

in these accounts would result in an inaccurate picture of the service company’s financial 

position. To the contrary, we believe the use of these accounts will add transparency to 

centralized service company costs and will facilitate comparison across such companies. 

Centralized service companies that offer operation and maintenance services related to 

generation, distribution, transmission, and services perform the same type of work and 

incur the same costs that a public utility would incur if that public utility performed the 

work itself. Therefore, we will require centralized service companies to record the 

expenses it incurs for conducting operation and maintenance activities related to 

generation, transmission, distribution and customer services in the same expense accounts 

public utilities are required to use to record these costs. Using the 500 and 800 series of 

accounts also provides better assurance that costs are properly assigned because like 

items will be identified and measured in the same way regardless of the entity performing 
Docket No. RM06-11-000 - 64 -

the work. Although EEI and Progress Energy suggest that this is somehow in violation of 

GAAP principles, they offer nothing in the way of concrete evidence or reference to 

specific accounting standards to support this allegation. Furthermore, even if such 

evidence did exist, and we do not believe it does, the Commission's need for 

comparability and transparency of service company expenses provided by use of the 500 

and 800 series of accounts would outweigh concerns about conformity with GAAP 

principles. 

125. In responding to NARUC’s concern, we will not prohibit the recording of charges 

in Account 923, Outside services. Prohibiting the use of this account would be overly 

prescriptive. It is possible that some service company costs would be accurately reported 

in Account 923. However, we believe that it is appropriate for utilities that receive bills 

from service companies to classify those costs in the appropriate accounts. Utilities 

would not be in compliance with Part 101, General Instruction 14, if they do otherwise. 

Specifically, General Instruction 14 requires that transactions with associated companies 

be recorded in the appropriate accounts for transactions of the same nature. We will 

require that centralized service companies performing services such as operation and 

maintenance services related to generation, distribution, transmission, and customer 

service on behalf of service companies to use the appropriate accounts for those services 

performed. 

126. We do not agree with NARUC that the use of thresholds is an option for 

determining when centralized service companies must use the 500 and 800 accounts. As 

discussed above, the use of the 500 and 800 accounts provides clarity about the types of 
Docket No. RM06-11-000 - 65 -

services performed by centralized service companies and the costs of providing those 

services. Proper classification of service company costs facilitates proper classification 

of the costs at the utility. Therefore, we will require centralized service companies to use 

the 500 and 800 series of accounts as proposed. 

(c) Sections 367.9220 and 367.4171 – Account 922, Administrative 

expenses transferred--Credit, and Account 417.1, Expenses of nonutility company 

127. In the NOPR, the Commission proposed that the portion of administrative, 

general, and customer expenses recorded in the 900 series of expense accounts, but 

attributable to services provided to non-utility companies, be transferred to proposed 

Account 417.1, Expenses of non-utility company related operations, with a contra-credit 

to Account 922, Administrative expenses transferred-credit. 

Comments

128. EEI and Progress Energy request clarification regarding the adoption of Account 

922 since most service company expenses are recorded in Accounts 920, Administrative 

and general salaries, and 921, Office supplies and expenses.117 Progress Energy states 

that service companies are labor intensive, so most of their expenses are currently 

charged to Accounts 920 and 921. Progress Energy also states that the Commission 

should not adopt its proposal to credit Account 922 with administrative expenses 

recorded in Accounts 920 and 921 that are transferred to construction costs or to other 

 117 Progress Energy at 9-10; EEI at 24-26. 
Docket No. RM06-11-000 - 66 -

accounts or with the amount of operating expenses related to services provided to nonutility companies and Account 417.1, Expenses of non-utility company related 

operations. In addition, Progress Energy points out that its accounts are mapped to the 

appropriate associate company accounts in compliance with the Federal (e.g., 

Commission and SEC) and state regulatory reporting requirements imposed on the 

affiliated companies. Further, Progress Energy explains that its cost allocation 

methodology and charging practices have been approved by state regulatory commissions 

and are currently consistent with inter-company service agreements. If required to 

comply with this proposal, Progress Energy asserts its processes, systems and legal 

documents will have to be changed even though the associate companies already 

accurately report their allocations in compliance with Federal and state requirements.118

129. EEI states there is confusion related to the credit posted in Account 922. EEI 

states that many of these costs are administrative and general costs that are allocated 

based on service agreement methodologies and that the proposed process would require 

service companies to keep track of a dollar spent on administrative and general labor so 

the dollar could be recorded partly in the administrative and general series and partly 

“below the line” in Account 417.1. EEI states this would result in a process to build a 

“clump” of expenses in Account 417.1 that would be essentially useless to the service 

 118 Progress Energy at 9-10. 
Docket No. RM06-11-000 - 67 -

company. EEI recommends that the Commission not implement, or require companies to 

use, the proposed accounting treatment for new Account 417.1.119 

Commission Determination

130. Upon further consideration, the Commission has concluded that it is not necessary 

at this time for centralized service companies to record expenses attributable to services 

provided to non-utility companies in a separate account because the information reported 

in the Analysis of Billing Schedule should be sufficient to identify such amounts. The 

Analysis of Billing Schedule requires centralized service companies to report all amounts 

billed for services during the year on a company by company basis. Since services are 

billed at cost, it will be possible to determine the expenses attributable to services 

provided to non-utilities from the schedule. Therefore, Accounts 417.1, Expenses of nonutility company, and Account 922, Administrative expenses transferred-credit, will be 

deleted from §§ 367.9220 and 367.4171. 

(d) Section 367.4160 – Costs and expenses of merchandising, jobbing and 

contract work; § 367.9120 – Demonstrating and selling expenses; § 

367.9130 – Advertising expenses; § 367.9301 – General advertising 

expenses

131. In the NOPR, the Commission proposed to adopt Account 416, Costs and 

expenses of merchandising, jobbing and contract work; Account 912, Demonstrating and 

selling expenses; Account 913, Advertising expenses; and Account 930.1, General 

 119 EEI at 24-25. 
Docket No. RM06-11-000 - 68 -

advertising expenses as they presently appear in Parts 101 and 201 of the Commission's 

regulation into the USofA for centralized service companies.

Comments 

132. NARUC states that it is difficult to determine in which accounts different types of 

advertising costs should be recorded. It also states that the Commission should anticipate 

service companies providing promotional services to non-utility affiliates. To address 

these concerns NARUC suggests: revising § 367.4160 to clarify that only the cost of 

merchandising and contract work performed for associated utility companies is recorded 

in Account 416, Costs and expenses of merchandizing, jobbing and contract work for 

associate companies; revising § 367.9120 and § 367.9130 to clarify that demonstrating, 

selling and advertising costs incurred to promote/retain either the service companies 

services/customers or associate companies services/customers are recorded in these 

accounts; and revising § 367.9301 to clarify that only general advertising costs incurred 

on behalf of associated utility companies are recorded in this account.120

Commission Determination

133. The Commission agrees that §§ 367.416, 367.912 and 367.913 should be clarified. 

We will adopt the revisions suggested by NARUC for §§ 367.912 and 367.913 and 

incorporate others that will clarify what amounts are properly included in these accounts. 

In considering the suggested revisions to § 367.416, the Commission has determined that 

services related to merchandising, jobbing and contract work could be performed on 

 120 NARUC at 9-12. 
Docket No. RM06-11-000 - 69 -

behalf of associate, non-associate, utility or non-utility companies. Consequently, we do 

not believe the use of Account 416 should be limited to costs of merchandising, jobbing 

and contract work performed for associate utility companies. Additionally, we have 

concluded that it is inappropriate to place Account 416 within the Other Income section 

of FERC Form No. 60, Schedule XV – Comparative Income Statement, as proposed in 

the NOPR. Services performed related to merchandising, jobbing and contract work are 

an operating activity of a service company and the cost of those services should be 

included in an account that enters into the determination of net operating income of the 

service company. Therefore, we will revise Schedule XV to reflect Account 416, Costs 

and expenses of merchandizing, jobbing and contract work, as an operating expense 

account and require revenues related to merchandising, jobbing and contract work to be 

recorded in Accounts 457, Services rendered to associate companies and 458, Services 

rendered to non-associate companies, as appropriate. Account 415, Revenues for 

merchandising, jobbing and contract work, will be eliminated from the USofA for 

centralized service companies. Finally, we consider Account 930.1 to be a general “catch 

all” account for recording advertising costs not provided for elsewhere in the accounts. 

Therefore, we will not adopt NARUC's recommendation to limit its use to advertising 

related to associate utility companies. 
Docket No. RM06-11-000 - 70 -

(e) Sections 367.4263, 367.4117, 367.4180 – Miscellaneous Income 

Statement Issues

Comments

134. EEI states that the numbering appears to be incorrect in § 367.4263.121 EEI also 

states the following accounts should be added to Subpart H: Account 411.7, Losses from 

disposition of service company plant; and Account 418, Non-operating rental income.122

Commission Determination

135. EEI did not explain in its comments why the numbering should be corrected in 

§367.4263 or why the Commission should add the recommended accounts. However, 

our review of a number of the FERC Form No. 60s filed with the Commission for 

calendar year 2005 indicates that these accounts are used by some service companies.123 

Therefore, we will correct the numbering in § 367.4263, and add Account 411.7, Losses 

from disposition of service company plant, and Account 418, Non-operating rental 

income. 

8. Records Retention Requirements

136. Order No. 667 required all holding companies and all service companies, which 

were not granted a waiver or otherwise exempted by the Commission, to follow the 

Commission's records retention requirements in Parts 125 and 225. The NOPR proposed 

to establish, as new Part 368 of the Commission's regulations, records retention 

 121 EEI at 26. 

122 Id. at 27. 

123 See, 2005 FERC Form No. 60, Schedule XV, Comparative Income Statement 

for American Electric Power Service Corporation. 
Docket No. RM06-11-000 - 71 -

requirements for all holding companies and all service companies. The records retention 

requirements proposed were based on the requirements contained in §§ 125.3 and 225.3 

of the Commission's regulations,124 with certain modifications considered appropriate for 

holding companies and service companies. 

Comments

137. EEI notes that the NOPR is unclear as to whether a holding company that also is a 

public utility would be subject to both the Commission's holding company and public 

utility records retention requirements. EEI requests that the Commission specify that 

only one set of records retention requirements apply and allow the company involved to 

select the most appropriate set to apply. Furthermore, if the holding company is already 

following the public utility records retention requirements, it should be able to continue 

to do so without also having to follow the new holding company records retention 

requirements.125 

138. NARUC requests that the records retention general instruction at § 368.2(g) be 

amended to include the requirement for companies to file a copy of a certified statement 

of records prematurely lost or destroyed with state commissions to facilitate the state 

commissions' ability to monitor the activities of service companies.126

139. Southern requests that the records retention requirements be better tailored for a 

service company. Specifically, Southern proposes that the retention period for 

 124 See 18 CFR §§ 125.3 and 225.3. 

125 EEI at 39. 

126 NARUC at 12. 
Docket No. RM06-11-000 - 72 -

accumulated depreciation records should be reduced because the majority of service 

company property has useful lives significantly less than the 25-year retention period 

proposed in the NOPR.127

Commission Determination

140. The records retention requirements originally proposed, and as adopted here, 

generally are based on the requirements contained in Parts 125 and 225 of the 

Commission's regulations,128 with certain minor modifications appropriate for holding 

companies and service companies. As a result, most retention periods proposed for 

holding companies and service companies are identical to the retention periods required 

for public utilities and licensees and natural gas pipelines. Additionally, the general 

instructions for Parts125 and 225 and proposed § 368.2(a)(5) make clear that "To the 

extent that any Commission regulations may provide for a different records retention 

period, the records must be retained for the longer of the retention periods." If a holding 

company that is also a public utility has a conflict between the retention period specified 

for a public utility and the retention period specified for a holding company, the longer of 

the retention periods must be observed. Therefore, we do not believe it is appropriate to 

specify that only one set of records retention requirements apply. 

141. We deny NARUC's request to amend the records retention instruction at 

§ 368.2(g) to include a requirement for companies to file a copy of a certified statement 

of records prematurely lost or destroyed with state commissions. We do not believe it is 

 127 Southern at 6. 

128 See 18 CFR 125.2(a)(3) and 225.2(a)(3). 
Docket No. RM06-11-000 - 73 -

necessary for the Commission to establish filing requirements for state commissions. All 

filings of this nature are docketed by the Commission and can be viewed electronically 

by all interested parties. Accordingly, state commissions will be able to monitor the 

report of prematurely lost or destroyed records without imposing an additional reporting 

burden on companies. We note that this is the same treatment applied to public utilities, 

licensees, and natural gas companies under the Commission’s regulations in Parts 125 

and 225. 

142. We agree with Southern's observation related to holding and service company 

property, and will tailor the schedule of records retention periods. Specifically, we will 

reduce the retention period for accumulated depreciation records reflecting the service 

life of property at § 368.3 – Item 24, Records of accumulated provisions for depreciation 

and depletion from 25 years to 3 years after retirement or disposition of property.129 

9. FERC Form No. 60

(a) Use of GAAP Financial Statement instead of Structured FERC Form 

No. 60

143. The Commission proposed a structured reporting format in proposed FERC Form 

No. 60 in the NOPR. Under the structured format, a centralized service company must 

report in specified data fields the financial information called for in the report.

 129 Most holding and service company property typically has a useful life 

significantly less than 25 years, for example office furniture and equipment and computer 

software have shorter useful lives than generating facilities or transmission towers. 

Therefore, establishing a shorter retention period for accumulated depreciation records 

that closely corresponds to the expected useful life of the related property is more 

reasonable. 
Docket No. RM06-11-000 - 74 -

Comments 

144. In its supplemental comments, in contrast to its initial comments,130 EEI suggests 

the FERC Form No. 60 be based on the original FERC Form No. 60 set out in the 

Commission’s December 8, 2005 Order No. 667 Final Rule (December 2005 FERC Form 

No. 60), with additional changes EEI requests to streamline the form. EEI believes a 

streamlined version of the December 2005 FERC Form No. 60, together with data the 

Commission receives directly from public utilities and the Commission’s new FPA 

section 203 regulations,131 should suffice to enable the Commission to perform its 

regulatory responsibilities.132 In its supplemental comments, EEI further encourages the 

Commission to work with a streamlined version of the December 2005 FERC Form No. 

60 with changes EEI has requested to further streamline the form.133 Southern, PHI 

Companies, and FirstEnergy support EEI’s comments that the FERC Form No. 60 be a 

streamlined version of the December 2005 FERC Form No. 60. These commenters, 

together with EEI, believe this streamlined FERC Form No. 60 provides the transparency 

and uniformity that the Commission desires without imposing undue burden. However, 

Southern also suggests that the Commission should allow companies the option of 

 130 In its initial comments to the NOPR, EEI proposed the Commission rely on 

information provided in the SEC Forms 10-K and 10-Q supplemented by selected 

additional information the Commission may need instead of the new FERC Form No. 60. 

131 See 18 CFR part 33. 

132 EEI Supplemental Comments at 2. 

133 Id.
Docket No. RM06-11-000 - 75 -

submitting their audited GAAP financial statements instead of FERC Form No. 60.134 

145. Conversely, APPA thinks that the revised FERC Form No. 60 will be very useful 

in auditing and understanding centralized service company cost allocations to public 

utility operating companies.135 

Commission Determination

146. The December 2005 FERC Form No. 60 is essentially the SEC's old Form U13-60 

for service companies with certain streamlining changes adopted in Order No. 667. The 

December 2005 FERC Form No. 60, like the old SEC Form U13-60, is a non-structured 

reporting format that permits filers wide latitude and flexibility in how they report 

required financial information. While the Commission understands the centralized 

service companies’ desire to have flexibility in reporting, the Commission believes that it 

is necessary to have a structured reporting system. A structured report format results in 

disclosure and display of predetermined financial information in a uniform manner by all 

centralized service companies. This promotes comparability of the data not only between 

entities but also between accounts prescribed. Increasing the comparability of the data 

makes the information inherently more useful. Moreover, a structured report format 

allows for the creation of a financial data base that can be used for more complex and 

sophisticated analysis of the information. These items are important to allow the 

Commission to perform its duties. It also will facilitate electronic submission using 

 134 Southern at 2. 

135 APPA at 3. 
Docket No. RM06-11-000 - 76 -

Commission-supplied software. This system will help ensure the integrity of the data and 

make completing the FERC Form No. 60 easier. 

147. In response to Southern’s suggestion, we do not believe that audited GAAP 

financial statements would be sufficient for carrying out the Commission’s regulatory 

responsibilities. GAAP financial statements are prepared primarily for investors, and do 

not provide information in enough detail to ensure that jurisdictional rates charged are 

just and reasonable or to review cost allocations under section 1275 of PUHCA 2005136 if 

called upon to do so. Therefore, the Commission will not modify the proposed 

requirement for a structured FERC Form No. 60. 

(b) FERC Form No. 60 Schedules 

(1) Schedule II, Service Company Property

148. Proposed Schedule II requires centralized service companies to report the amounts 

recorded in the service company primary property accounts and construction work in 

progress at the beginning of the year, changes to the accounts during the year, and the 

balance at the end of the year. 

 136 Supra note 5. 
Docket No. RM06-11-000 - 77 -

Comments 

149. Southern does not see the added value of the supplemental information provided in 

Instructions 2-4137 and proposes their elimination. Southern comments the break out of 

the property by account gives sufficient information.138

Commission Determination

150. The Commission agrees that the information required by Instructions 2 and 3 is of 

little value to the Commission and will be deleted. However, we will continue to require 

centralized service companies to provide information about construction projects similar 

to the December 2005 current FERC Form No. 60, Instruction 4. Instead of providing the 

information in a footnote format, we are revising the schedule to provide for additional 

lines on the schedule for reporting this information.139 

(2) Schedule III-A, Summary of Service Company Property and 

Accumulated Provisions for Depreciation and Amortization 

151. Schedule III-A would require companies to split out property devoted to utility 

versus non-utility services. 

 137 Instruction 2 requires a breakdown of each equipment subaccount for each 

class of equipment property owned. Instruction 3 requires a description of other 

company property. Instruction 3 requires a listing of construction work-in-progress 

projects and the beginning, additions and end-of-year balance for each. 

138 Southern at 2. 

139 The December 2005 FERC Form No. 60 requires this information to be 

reported in a footnote. 
Docket No. RM06-11-000 - 78 -

Comments 

152. EEI contends this reporting requirement should be deleted because company 

records do not differentiate service company property between utility related and nonutility services.140 FirstEnergy argues that assets devoted exclusively to the utility are on 

the books of the utility and not on the service company books.141

Commission Determination

153. We agree with EEI and will eliminate this schedule from FERC Form No. 60. All 

service company property will be reported in Account 101. 

(3) Schedule IV, Investments and Schedule XII, Long-Term Debt

154. Proposed Schedule IV provides detailed information on service company 

investments in associate companies and temporary cash investments. Proposed Schedule 

XII provides detailed information on long-term debt of the service company. Both 

schedules require the same information as in the current FERC Form No. 60. 

Comments 

155. EEI proposes to eliminate schedules that include information already available on 

the face of the Balance Sheet or within the detailed footnotes. Examples include 

Schedule IV, Investments and Schedule XII, Long Term Debt.142 

 140 EEI at 29. 

141 FirstEnergy Supplemental Comments at 3. 

142 EEI at 29. 
Docket No. RM06-11-000 - 79 -

Commission Determination

156. We disagree with EEI that the information reported on Schedule IV and Schedule 

XII is available on the Balance Sheet. Long-term debt and investments are reported on 

the Balance Sheet as aggregate totals. Schedule IV and Schedule XII provide significant 

additional details that allow for a greater understanding of the aggregate totals reported 

on the Balance Sheet. For example, short-term investment schedules provide specific 

details on where centralized service companies have invested excess cash flows from 

operations and Schedule XII provides specific details on service company long-term 

capital. We do not agree that footnote disclosure is an adequate substitution for these 

supporting schedules because the format for footnotes is unstructured and does not allow 

for database archiving and retrieval. Therefore, the Commission will retain these 

schedules. 

(4) Schedule V, Accounts Receivable from Associate Companies

157. This schedule identifies accounts receivable for each associate company and 

reports convenience payments. 

Comments

158. EEI and Southern recommend the portion of this schedule identifying convenience 

payments143 should be eliminated. If retained, EEI recommends the Commission modify 

the schedule to report the total convenience payments made during the year, consistent 

 143 Convenience payments represent payments such as benefits, outside legal, and 

consulting paid by service companies to outside vendors and others on behalf of associate 

companies. 
Docket No. RM06-11-000 - 80 -

with the December 2005 FERC Form No. 60 reporting. EEI states that service 

companies do not necessarily identify convenience payments separately, and this 

information would be time consuming to gather. Also, EEI does not understand the 

usefulness of this information to the Commission; beginning and ending convenience 

payment balances are not meaningful because convenience payments are Expense 

accounts, rather than Balance Sheet accounts.144 

Commission Determination

159. We agree it is not necessary to require beginning and ending convenience payment 

balances. Consequently, we will not adopt that portion of the proposed Schedule V that 

would require reporting the beginning and ending balances of convenience payments. 

Instead, we will retain the December 2005 FERC Form No. 60 requirement of reporting 

total convenience payments by associate company. 

(5) Schedule VI, Fuel Stock Expenses Undistributed

160. Proposed Schedule VI requires centralized service companies to report labor and 

expenses incurred during the year with respect to fuel stock and the amounts attributable 

to each associate company. It also requires a summary of the fuel functions performed by 

the service company.

 144 EEI at 33; Southern at 2-3. 
Docket No. RM06-11-000 - 81 -

Comments

161. Southern comments that Schedule VI requires extracting data from work order 

billings through an annual process to meet the annual report requirement. Southern 

recommends elimination of this schedule based on its limited value.145

Commission Determination 

162. For centralized service companies performing fuel services for utilities, this is an 

important supporting schedule. Some companies report large amounts of labor and other 

expenses. The reported information includes amounts billed to each associate company 

including electric and gas utilities, which ultimately could be reflected in cost of service. 

Consequently we will retain this schedule. 

(6) Schedule X, Research, Development or Demonstration Expenses

163. Proposed Schedule X requires a description of all research, development and 

demonstration projects engaged in by the centralized service company and the related 

costs incurred during the year. 

Comments

164. EEI and Southern state project titles may not provide meaningful information to 

the Commission. EEI and Southern recommend that service companies have the option 

instead to list account balance by project partner, citing the U.S. Department of Energy, 

as an example.146

 145 Southern at 3. 

146 EEI at 34; Southern at 3. 
Docket No. RM06-11-000 - 82 -

Commission Determination

165. The Commission disagrees with EEI and Southern that Schedule X requires a 

project title. The schedule requires a description of the project, not the project title. 

Knowing the project partner alone does not provide useful information. More relevant 

information is a description of the nature of the project and not just who is the project 

partner. Therefore, the schedule will be retained the same as in the FERC Form No. 60. 

(7) Schedule XI, Proprietary Capital

166. Proposed Schedule XI discloses common and preferred stock shares authorized, 

outstanding, par or stated value, as well as information on miscellaneous paid-in capital, 

appropriated retained earnings and other comprehensive income. The second part of the 

schedule presents information similar to a statement of retained earnings. 

Comments

167. EEI and Southern state the first section of this schedule duplicates Schedule I, 

Comparative Balance Sheet except for shares outstanding.147 EEI argues the second 

section of this schedule is new, and generally not applicable to a service company.148 EEI 

and Southern recommend including the shares outstanding on Schedule I, Comparative 

Balance Sheet, and deleting this schedule.149 

 147 EEI at 34; Southern at 3. 

148 EEI at 34 

149 EEI 34; Southern at 3. 
Docket No. RM06-11-000 - 83 -

Commission Determination

168. The Commission disagrees with commenters regarding what is reported on this 

schedule. Commenters indicate only outstanding shares of stock are reported. The 

schedule asks for class of stock, number of shares authorized, par or stated value per 

share, and outstanding shares. Further, the schedule requests explanations about 

transactions which gave rise to miscellaneous paid-in capital and appropriated retained 

earnings. Additionally, the schedule requests information on changes in unappropriated 

retained earnings such as net income and dividends paid. This requirement is not new; it 

is part of the FERC Form No. 60. The requirements are not overly burdensome. 

Consequently, we will retain the current requirements. A statement of retained earnings 

is a basic financial statement. However, we agree with EEI’s suggestion that a statement 

of retained earnings is not applicable to a service company; so, we will delete that portion 

of the schedule which includes the added statement of retained earnings. 

(8) Schedule XIV, Notes to Financial Statements

169. Instruction No. 3 of Schedule XIV states “Furnish particulars as to any significant 

increase in services rendered or expenses incurred during the year.” 

Comments

170. EEI recommends the Commission not implement this reporting requirement in the 

notes section.150 EEI states this introduces an element of Management’s Discussion and 

Analysis (MD&A) that is part of GAAP disclosure requirements, but has never been a 

 150 EEI at 34. 
Docket No. RM06-11-000 - 84 -

requirement of the FERC Form No. 60, Form No. 1, or Form No. 2. EEI indicates that an 

explanation of service company expense variances is frequently scrutinized by state 

regulators and would unnecessarily add to the administrative burden of annual reporting. 

EEI contends this level of detail could be provided on an ad hoc basis as needed, and, 

when it is needed, companies would like the flexibility of attaching a Microsoft Word file 

rather than re-keying voluminous footnote data into the Commission’s automated 

reporting application. 

Commission Determination

171. Contrary to EEI’s assertion, Instruction No. 3 is not a new reporting requirement. 

Instruction No. 3 is included in the December 2005 FERC Form No. 60 under Schedule 

XVIII, Notes to the Statement of Income. Any large increase in services and expenses 

could impact cost allocations which would be useful information to the Commission and 

others. The disclosure of significant increases in services rendered or expenses incurred 

is particularly relevant to understanding the business operations of the centralized service 

company and the efficiency or inefficiency of providing services on a centralized basis to 

associated utilities. Furthermore, reporting this information should not be 

administratively burdensome. As EEI notes, this type of information is already part of 

the MD&A in its GAAP disclosures. The Commission’s FERC Form No. 60 submission 

software will allow copy and paste of this information into the footnote page. 

Consequently, we will retain the instruction as proposed.151

 151 EEI at 34 and 35. 
Docket No. RM06-11-000 - 85 -

(9) Schedule XV, Comparative Income Statement

172. Proposed Schedule XV requires centralized service companies to report revenues, 

expenses, gains and losses for the current and prior year by account.

Comments

173. EEI states that the Commission should not require reporting of information broken 

down into accounts that do not make sense for a given service company. EEI states that 

there seems to be a presumption in the NOPR that the service company income statement 

can be presented in a ratemaking format, with an “above the line” and “below the line” 

character. EEI points out, that just as with the proposed use of the 500 and 800 series of 

operational and maintenance expense accounts, this presumption does not fit well with 

many service company operations, which typically consist primarily of labor services to 

other companies.152

Commission Determination

174. The Schedule XV, Comparative Income Statement, we are adopting for the 

revised FERC Form No. 60 will require centralized service companies to report the 

amounts entered in the income statement accounts adopted in this Final Rule. These 

accounts were developed to be of sufficient scope and breadth to allow for recording the 

economic effects of all transactions and events that could impact a centralized service 

company. As noted elsewhere in this Final Rule, not all service companies are engaged 

in all of the activities for which use of the new accounts would be required. This, 

 152 EEI at 30. 
Docket No. RM06-11-000 - 86 -

however, does not mean that the accounts do not “fit well” or do not “make sense” for 

centralized service companies, as EEI seems to suggest. It means only that more 

accounts exist under the USofA than might be used by any particular centralized service 

company. If a centralized service company does not incur costs properly included in one 

of the new accounts adopted in this Final Rule, it simply would not record anything in 

that account. 

(10) Schedule XV-A, Schedule of Utility Operating Expenses; Schedule 

XVI, Analysis of Charges for Service; Schedule XVII, Schedule of 

Expense Distribution by Department or Service Function 

175. Proposed Schedule XV-A requires centralized service companies to report all 

amounts entered in the 500 and 800 series of operation and maintenance expense 

accounts. Proposed Schedule XVI requires centralized service companies to report direct 

and indirect costs charged to associate utility companies, associate non-utility companies, 

non-associate utility companies and non-associate non-utility companies. Proposed 

Schedule XVII requires centralized service companies to report service cost billed by 

department or service function and overhead costs. 

Comments 

176. EEI recommends that the Commission consider deleting Schedule XV-A and 

either Schedule XVI or XVII.153 EEI states that, whichever of these schedules the 

Commission retains, the Commission should allow companies to report total amounts for 

 153 EEI at 36. 
Docket No. RM06-11-000 - 87 -

each account or group of accounts listed rather than by direct and indirect or overhead 

costs. In EEI’s opinion, the breakdown by direct, indirect, and use of capital would 

require companies to parse the information in each account or set of accounts to too fine a 

degree with no clear benefit. EEI indicates that if Schedule XVI is retained, the 

Commission should follow the SEC’s past practice of having companies distinguish the 

information for associate and non-associate companies, ideally by group of accounts 

rather than by utility versus non-utility.154

177. In addition, EEI encourages the Commission not to require information to be 

broken down as shown on Schedule XVII by service company department or service 

function.155 As presented, EEI states, the schedule would require companies to break 

down internal financials across the array of USofA accounts by department or function, 

requiring far too much detail with no clear benefit.156 Southern states 

departmental/functional reporting by account adds difficulty and would not be consistent 

among companies.157 

178. NARUC, on the other hand, states Schedule XVI is important since it allows a 

comparison of direct and indirect costs allocated to utility companies and non-utility 

companies while showing the allocation of 100 percent of these costs to the various 

 154 Id.

155 EEI at 36. 

156 Id.

157 Southern Supplemental Comments at 3. 
Docket No. RM06-11-000 - 88 -

billing groups.158 NARUC indicates this is needed to ensure utility companies are not 

treated differently from non-utility companies. NARUC suggests simplifying this 

schedule, at least for the 500 and 800 series of operation and maintenance expense 

accounts; NARUC contends it may be possible to allow companies to provide 

information by group of accounts. 

179. NARUC explains that Schedule XVII assists state regulators in classifying charges 

on the utility’s records, helps in judging the reasonableness of service company charges 

and whether such charges duplicate what the utility incurs internally, and focuses 

attention on comparisons between what gets charged to the associated utility companies 

and non-utility companies. NARUC proposes expanding Schedule XVII to provide a 

break down by associate utilities and non-utilities, and by non-associate companies. 

NARUC states this is important to make a comparison of departmental costs allocated to 

associate utility and non-utility companies because these comparisons ensure that 

associate utility companies are not treated differently from associated non-utility 

companies.159

Commission Determination

180. The Commission agrees with EEI that the information required in proposed 

Schedule XV-A is unnecessary, and will delete Schedule XV-A. The same information 

is reported in Schedule XVI, Analysis of Charges for Services, except for comparable 

information for the prior year. Therefore, the Commission, will delete Schedule XV-A. 

 158 NARUC Supplemental Comments at 7. 

159 Id.
Docket No. RM06-11-000 - 89 -

181. The Commission will also delete Schedule XVII. With regard to Schedule XVII, 

Southern notes that departmental/functional reporting would not be consistent among 

companies. Departments and functions are not standardized and, therefore, comparison 

across companies is not possible. While we agree with NARUC that Schedule XVII may 

provide some useful departmental/functional information, on a company by company 

basis, requiring the reporting on an annual basis may be an unnecessary burden. 

NARUC’s proposal to expand Schedule XVII to include reporting by individual associate 

and non-associate utility companies, associate non-utility companies and non-associate 

companies points to a weakness in the current schedule. In fact, the schedule does not 

disclose information on charges to utility companies except through the department 

service or functional category. The additional expense accounts required under the new 

USofA will provide better functional information and lessen the need for this schedule. 

The information provided in Schedule XVI will enable the Commission to capture 

information about charges for services provided to utility companies. If 

departmental/functional information is needed, the information can be obtained from 

each centralized service company on a case-by-case basis without the need to be reported 

annually. Therefore, the Commission will delete Schedule XVII. 

182. The Commission will retain Schedule XVI, but modify the schedule to remove the 

utility versus non-utility expense separation, consistent with our decision concerning the 

service company revenue accounts discussed elsewhere in this Final Rule. While the 

utility versus non-utility expense separation is removed, the total amounts assigned to 

individual utility companies are available in the Analysis of Billing schedules. This will 
Docket No. RM06-11-000 - 90 -

result in returning to the associate company/non-associate company expense separation 

contained in the December 2005 FERC Form No. 60. We also will revise Schedule XVI 

to roll up certain expense classifications suggested by EEI and NARUC to reduce the 

burden associated with completing this schedule. 

(11) Analysis of Billing Schedules

183. In the NOPR, the Commission proposed to modify the Analysis of Billing 

schedules that report billings to each company for services provided by the centralized 

service companies by breaking out the schedules into associate utility, non-associate 

utility and non utility companies. 

Comments

184. EEI indicates the Commission should not require reporting of information broken 

down into utility and non-utility services, in particular for non-associate companies where 

the service company often will not have this information. Service companies currently 

report their services provided by individual company in the FERC Form No. 60, on 

schedules “Analysis of Billing – Associate Companies” and “Analysis of Billing – Nonassociate Companies.” EEI argues these schedules provide ample information of the sort 

being proposed and that no additional detail is necessary.160

185. Southern recommends the schedule, Analysis of Billing - Non-associate 

Companies, be revised to request the names and amounts for non-associate companies 

only for those that exceed 10% of the total non-associate billings. Southern argues this 

 160 EEI at 29. 
Docket No. RM06-11-000 - 91 -

would reduce the time spent in preparation of this schedule while still providing the 

Commission with the names of all non-associate companies of consequence.161

Commission Determination

186. We agree with EEI’s comments that the Analysis of Billing schedules contained in 

the December 2005 FERC Form No. 60 provide sufficient information concerning the 

customers to whom amounts are billed, and a further separation of those customers into 

utility and non-utility classifications for purposes of this schedule is not needed by the 

Commission since specific information about utilities is already reported separately in the 

current Analysis of Billing schedules. Therefore, consistent with our decision above to 

eliminate Account 459, Services rendered to non-utility companies, we will also 

eliminate the proposed schedule "Analysis of Billing Nonutility Companies - Account 

459." Also, we will revise the "Analysis of Billing Schedules" for Accounts 457, 

Services rendered to associate companies, and 458, Services rendered to non-associate 

companies to reflect only a separation of billings between associate and non-associate 

companies, consistent with our decision on the service company revenue accounts 

discussed elsewhere in this Final Rule. The Commission will not adopt Southern’s 

proposal to reduce the reported number of non-associate companies. The requirement is 

not overly burdensome and allows the Commission to observe all billings to such 

companies. 

 161 Southern Supplemental Comments at 3. 
Docket No. RM06-11-000 - 92 -

(12) Departmental Analysis of Salaries Schedule; Methods of Allocation 

Schedule; and Organizational Chart Schedule

187. The proposed Departmental Analysis of Salaries Schedule reports the amount of 

service company salaries billed by department or service function to the parent holding 

company, associate companies, and non-associate companies and the number of 

employees. The Methods of Allocation Schedule reports the allocation factors used to 

allocate indirect costs to each associate company. The Organizational Chart schedule 

reports how the service company is organized. 

Comments

188. EEI states these schedules involve what it considers organizational reporting and 

recommends eliminating the schedules because adequate oversight can be accomplished 

without this level of detail, and accurate comparisons between companies would be very 

difficult.162 If the Methods of Allocation schedule is retained, EEI requests the 

Commission continue its current practice of allowing companies to list their allocation 

methods, as they currently do in the FERC Form No. 60, rather than having to elaborate 

on the methods in the form. EEI indicates companies should not be required to key 

voluminous formulas, by service rendered, into the automated reporting application.163

 162 EEI at 30. 

163 EEI at 31. 
Docket No. RM06-11-000 - 93 -

189. Southern does not see the benefit to the Commission of providing a current 

Organizational Chart in the FERC Form No. 60 and proposes that this requirement be 

eliminated. Southern argues it is not required for FERC Form No. 1.164

Commission Determination

190. The Commission will eliminate the Departmental Analysis of Salaries Schedule. 

Consistent with our decision above regarding our decision to eliminate Schedule XVII, 

departmental or functional categories are difficult to compare because they are not 

standardized. If needed, the information can be obtained from centralized service 

companies on a case-by-case basis. 

191. The Commission will retain the Methods of Allocation schedule, however, 

because that is the only means readily available to determine how indirect costs are being 

allocated to services provided. The current schedule has no instructions and Staff’s 

review of 2005 FERC Form No. 60s indicated poor reporting. The main purpose of the 

schedule is to disclose what allocation ratios are used and what numerator and 

denominator were used to create the ratio. We are revising the instruction, accordingly.

192. The Commission will also continue to require submission of an Organization 

Chart in the FERC Form No. 60 as proposed. An Organization Chart provides basic 

information about the hierarchical structure of the service company. It provides useful 

information to the Commission about how the centralized service company deploys its 

resources and the relationship between organizational departments within the centralized 

 164 Southern at 3. 
Docket No. RM06-11-000 - 94 -

service company and the allocation of costs to services, functions and projects. We 

recognize the FERC Form No. 1 does not require an Organization Chart. However, our 

need to know the organizational structure of a centralized service company is greater as 

opposed to the organizational structure of an electric utility company. 

(13) Annual Statement of Compensation for Use of Capital Billed

193. This schedule reports the amount of compensation for use of capital billed to each 

associate company. 

Comments

194. EEI proposes to eliminate the Annual Statement of Compensation for Use of 

Capital Billed, and the associated revenue Accounts 457.3, Compensation for use of 

capital-associate companies, 458.3, Compensation for use of capital – Non-associate 

companies, and 459.3, Compensation for use of capital – Non-associate non-utility 

companies. EEI argues compensation for use of capital is so minor that it does not 

warrant special treatment in reporting. Moreover, EEI states details of significant 

financial arrangements are included in the notes to the balance sheet, and total interest 

costs are disclosed in the income statement.165

195. Conversely, NARUC indicates the Annual Statement of Compensation for Use of 

Capital Billed should be required in FERC Form No. 60. NARUC argues this statement 

provides the calculation of the use of capital that will be billed to the centralized service 

companies' associate companies during the calendar year. In addition, NARUC indicates 

 165 EEI at 31. 
Docket No. RM06-11-000 - 95 -

this statement in the FERC Form No. 60 is a resource for verifying and reconciling the 

costs that are included in centralized service company billings. NARUC notes the FERC 

Form No. 60 requires a separate statement for each associate company. However, 

NARUC claims, a separate statement for each associate company may not be necessary if 

the calculations are consistent.166

Commission Determination

196. We agree with EEI that footnote disclosure would be a suitable substitute for this 

schedule, and so, we will delete the Annual Statement of Compensation for Use of 

Capital Billed. However, we will not delete Accounts 457.3 or 458.3. The amounts 

recorded in these accounts will continue to be reported on the Analysis of Billing 

Schedules for Accounts 457 and 458. Centralized service companies should disclose the 

basis of how the amounts are assigned to the associate and non-associate companies in a 

footnote to the Analysis of Billing Schedules for Accounts 457 and 458. As long as all 

companies are treated similarly, we believe this should satisfy NARUC’s requirements. 

(14) Miscellaneous General Expenses Schedule (Account 930.2)

197. This schedule lists the items included in Account 930.2, Miscellaneous general 

expenses. 

 166 NARUC Supplemental Comments at 8 and 9. 
Docket No. RM06-11-000 - 96 -

Comments 

198. EEI and Southern recommend deleting the schedule or only requiring disclosure of 

items that exceed $1 million. EEI and Southern contend this schedule requires 

considerable detailed analysis to complete.167

Commission Determination 

199. The Commission will retain this schedule. Many service companies report 

significant amounts in Account 930.2. This schedule provides the nature of the amounts 

included in a miscellaneous catchall account where the account title does not provide 

descriptive information of the amounts included in the account. This schedule currently 

has no threshold level. However, in response to EEI’s and Southern’s proposal, we will 

adopt a threshold requiring the separate reporting of items over $50,000.168 We believe a 

$1,000,000 threshold alternative suggested by commenters is unreasonably high and 

would not provide for adequate disclosure of the nature of the items included in this 

account.169

(c) General Instruction IX

200. General Instruction IX states that prior period comparison figures must be the 

same as reported in the previous report, or “an appropriate explanation given as to why 

the different figures were used.” 

 167 EEI at 37; Southern at 3. 

168 Our staff review of FERC Form No. 60 submissions for calendar year 2005 

indicates that $50,000 is a reasonable threshold that will provide sufficient information 

without eliminating necessary detail. 

169 The FERC Form No. 1 threshold for this account schedule is $5,000. 
Docket No. RM06-11-000 - 97 -

Comments

201. EEI states that in general, companies would like to follow the GAAP practice of 

reclassifying prior period amounts when necessary, with a footnote to the effect that 

“certain prior amounts have been reclassified to conform to the current year 

presentation.”170 EEI indicates any material reclassifications would include a footnote 

disclosure. Therefore, EEI recommends the Commission insert the word “materially” 

before “different figures were used.” 

Commission Determination

202. As an initial matter, we note that instances in which prior year data in current 

reports is different than previously reported should be rare. The instances should be 

limited to such things as corrections of accounting errors and changes in accounting 

principles. The Commission and other users of the FERC Form No. 60 are particularly 

interested in understanding the economic effects of these types of occurrences, including 

the particular accounts affected and the related amounts. An explanation that “certain 

prior amounts have been reclassified to conform to the current year presentation” does 

not provide an adequate explanation. Footnote disclosure of only material amounts as 

EEI suggests also is insufficient because amounts below the material threshold could 

affect cost allocations or have rate implications. Consequently, we will adopt the 

proposed instruction unmodified. 

 170 EEI at 32-33. 
Docket No. RM06-11-000 - 98 -

(d) Raising the Threshold for Individually Itemized Items

203. Some of the supporting schedules contained in the FERC Form No. 60 require 

reporting individual items when the amount for such items exceeds a specified threshold 

amount. For instance, some schedules list individual items and amounts less than a 

$5,000 threshold can be grouped together rather than reported separately. 

Comments

204. EEI proposes the establishment of a higher threshold to apply to itemizations on 

schedules. Currently, when stated, the minimum for itemization is $5,000 or $10,000. 

EEI states that, due to the difference in company sizes, the establishment of a relative 

threshold (for example, five percent of total) would minimize unnecessary itemization 

and still provide meaningful data.171 EEI further recommends the Commission allow 

companies to set a materiality threshold, so that items less than some de minimis amount 

do not need to be broken out in the FERC Form No. 60.172 EEI suggests using as the 

de minimis amount $100,000, one to five percent of company billings, or 10 percent of 

the total amount on a particular schedule, whichever is higher. Further, EEI points out 

that the SEC’s “PUHCA Staff Examination Instructional Manual,” section IV.A.3(c), 

which advised their staff to use a $50,000 or five percent threshold to determine if 

allocation methods should come to the attention of the SEC for approval. 

 171 EEI at 30-31. 

172 EEI Supplemental Comments at 12. 
Docket No. RM06-11-000 - 99 -

Commission Determination

205. We agree with EEI that the thresholds can be raised without losing appropriate 

detail. However, the thresholds suggested by EEI are extremely high and would 

eliminate needed disclosure.173 The SEC Staff manual threshold suggested by EEI 

addressed allocations, and did not apply to thresholds in individual schedules. The 

Commission will raise or add thresholds over the current FERC Form No. 60 schedules. 

We believe a threshold of $50,000 would reduce the reporting burden without the loss of 

appropriate detail. Therefore, we will establish a threshold of $50,000 for the following 

schedules: Schedules IV, VIII, IX, X, XIII, and XIX. 

(e) Reporting in Whole Dollars or Alternatively in Thousands

206. In the NOPR, the Commission proposed to require reporting companies to use 

whole dollars as the reported dollar amounts. 

Comments 

207. EEI proposes that centralized service companies should have the option to report 

all dollars consistently in thousands, as opposed to whole dollars as proposed in the 

NOPR, as long as the companies indicate what they are doing. EEI indicates the added 

digits do not add significant information, but rather, make the schedules substantially 

 173 For example, for one centralized service company, one percent of its billings 

represents a $9,000,000 threshold, at five percent, it would represent $45,000,000. These 

thresholds would eliminate reporting in most itemized schedules. 
Docket No. RM06-11-000 - 100 -

harder to produce and read. EEI notes this is consistent with the way amounts were 

reported in the SEC Form U-13-60.174

Commission Determination

208. When centralized service companies filed with the SEC their filings were text 

based and did not allow for data retrieval and analysis. The Commission supports the use 

of submission software to ensure data integrity and permit ready analysis of forms data. 

The Commission plans to issue submission software for the FERC Form No. 60 in the 

early part of 2007. The software would allow companies to reduce costs of completing 

FERC Form No. 60 and allow for data retrieval and analysis not currently possible in the 

hard copy FERC Form No. 60. However, electronic reporting requires selecting one 

common reporting basis. Comparability is important, and can not be achieved without 

one common reporting basis. Consequently, we will adopt reporting in whole dollars. 

However, during a transition period covering the 2006 and 2007 reporting years, for the 

FERC Form No. 60s due May 1, 2007 and May 1, 2008, respectively, we will allow 

centralized service companies that report in thousands to round to the nearest $1000 

(reporting $123,000 instead of $123,456).175 

(f) Comparative Information

209. Some FERC Form No. 60 schedules present data from the current year along with 

the same data from the prior year. 

 174 SEC instructions to SEC Form U-13-60, the predecessor to December 2005 

FERC Form No. 60, allowed service companies to report in either whole dollars, 

thousands of dollars, hundreds of thousand of dollars, or millions of dollars. 

175 Supra note 34. 
Docket No. RM06-11-000 - 101 -

Comments

210. EEI states that comparative information provided in the revised FERC Form No. 

60 should not be required until the following year, at least to the extent the information 

being compared is not already presented in the December 2005 FERC Form No. 60.176

Commission Determination 

211. In response to EEI’s proposal and in order to reduce the possible administrative 

burden that may be incurred by respondents during the initial reporting year for the FERC 

Form No. 60 adopted in this Final Rule, i.e., the FERC Form No. 60 for the 2008 

reporting year due May 1, 2009, the Commission will only require current year data. 

Respondents will be required to report prior year’s amounts beginning with the second 

year the FERC Form No. 60 adopted in this Final Rule is required, i.e., the FERC Form 

No. 60 for the 2009 reporting year due May 1, 2010. 

(g) Request to Expand Data Collection in FERC Form No. 60

Comments 

212. NARUC proposes adding a new schedule showing charges from affiliated 

companies to the service company. NARUC states the schedule would show the affiliate, 

the nature of the charges, and the basis of the charges - i.e.,cost, market, or other. 

NARUC states this schedule is important, since an affiliate may charge the service 

company a marked-up price. Since this would become a cost to the service company, the 

marked-up item then could be charged to a public utility at a cost higher than if it had 

 176 EEI at 49. 
Docket No. RM06-11-000 - 102 -

been directly charged to the utility. NARUC also proposes adding a new schedule 

showing goods and services provided by the service company both internally and 

externally. NARUC’s concern is that, once a good or service becomes profitable, it will 

be moved from the service company and offered by another affiliate.177 

213. NARUC notes that in Order No. 667, the Commission deleted two supporting 

schedules concerning outside services employed (Account 923) and employee pensions 

and benefits (Account 926) from the FERC Form No. 60.178 NARUC proposes to add 

these schedules back in the revised FERC Form No. 60. NARUC argues outside services 

and employee expenses are major components of expense (along with labor) incurred by 

a service company. According to NARUC, the detail in these schedules would provide 

an important tool for understanding service company costs and functions. As a result, 

according to NARUC, these schedules are essential in the evaluation of whether crosssubsidization exists within the holding company organization. 

Commission Response

214. We share NARUC’s concerns about the possibility of inappropriate cross 

subsidization or other unfair results obtained through affiliate relationships and 

transactions. At this time, however, we are not convinced that it is necessary to require 

centralized service companies to report as extensively about its affiliated transactions as 

NARUC recommends. With regard to adding back schedules for outside services 

employed (Account 923) and employee pensions and benefits (Account 926) which we 

 177 NARUC Supplemental Comments at 8. 

178 NARUC Supplemental Comments at 9. 
Docket No. RM06-11-000 - 103 -

deleted in Order No. 667, we deleted the schedules because they are not required in the 

FERC Form No. 1. Our need to weigh centralized service company burden versus 

protecting the public interest is difficult. Our requirement to report services performed 

for public utilities in the 500 and 800 accounts should reduce the amounts reported in 

Account 923. Centralized service companies do report information on pensions and 

benefits in their notes to the financial statements. Therefore, the Commission will not 

adopt NARUC’s recommendations to add Schedules for Account 923 and Account 926 

back in the revised FERC Form No. 60 in this Final Rule. However, as we gain 

additional knowledge about our needs for centralized service company information we 

may revisit these proposals. 

 (h) Schedule Numbering 

Comments

215. Southern notes that some of the schedules within the revised FERC Form No. 60 

have a schedule number while others are referenced by the account number. Southern 

states that it would be helpful if the schedules were all labeled consistently with schedule 

numbers.179

Commission Determination

216. The Commission agrees that assigning schedule numbers to all schedules in the 

revised FERC Form No. 60 would be helpful for referencing purposes for both users and 

preparers. Therefore, we will label all schedules with schedule numbers. 

 179 Southern at 3. 
Docket No. RM06-11-000 - 104 -

(i) Chief Accountant’s delegated authority

217. The NOPR proposed to revise § 375.303(c), (d), (e), (f), (g) and (h) to update the 

delegations to the Chief Accountant or the Chief Accountant’s designee. These 

authorities are similar to those that the Chief Accountant has for public utilities and 

licensees, natural gas companies and oil pipeline companies. 

Comments

218. EEI and National Grid request clarification of proposed § 375.303(f), that 

authorizes the Chief Accountant or the Chief Accountant’s designee to “accept for filing” 

FERC Form Nos. 60, 3-Q, and 6-Q. The commenters believe that the requirement 

appears to imply that the Commission, its Chief Accountant, or the Chief Accountant’s 

designee would issue a formal order accepting such forms, which is not the current 

practice. They argue that because such a delegation could raise the expectation 

(especially on the part of auditors) that orders accepting Form Nos. 60, 3-Q and 6-Q 

would be issued, the Commission should clarify either that it will, in fact, issue such 

acceptance orders, or that the regulatory text is not intended to provide for the issuance of 

formal acceptance orders.180 

219. EEI and National Grid also request that the Commission clarify proposed 

§ 375.303(g) that permits the Chief Accountant or the Chief Accountant’s designee to 

grant or deny requests for waiver of various regulations including § 366.23, which 

requires the filing of FERC Form No. 60. The commenters assert that the authority to act 

 180 EEI at 43-44; National Grid at 13. 
Docket No. RM06-11-000 - 105 -

on motions for extensions of time is not explicitly provided for in the revisions in 

§ 375.303(g). The commenters ask that the Commission clarify that this delegated 

authority includes the authority to grant an extension of time.181 

220. Southern asserts that, in the proposed § 375.303(f), the reference to the Form Nos. 

3-Q and 6-Q is erroneous for service companies.182 

Commission Determination

221. We grant EEI and National Grid's request for clarification of § 375.303(f), that the 

authorization granted to the Chief Accountant or designee to "accept for filing" FERC 

Form Nos. 60, 3-Q, and 6-Q is not intended to provide for the issuance of formal 

acceptance orders; the term "accept for filing" is merely a designation of the office or 

Commission officer responsible for the management and oversight of the applicable 

form. 

222. We acknowledge Southern's comment that the proposed § 375.303(f) reference to 

the Form Nos. 3-Q and 6-Q would be erroneous for centralized service companies. Form 

Nos. 3-Q and 6-Q are not filing requirements for centralized service companies. 

However, the delegation of authority to accept the financial forms filed with the 

Commission, including Form Nos. 3-Q and 6-Q, and, with this Final Rule, the revised 

FERC Form No. 60, is not directed solely to centralized service companies but to all 

regulated public utilities and licensees, natural gas pipelines, oil pipelines and with this 

Final Rule centralized service companies. In this Final Rule, the Commission adopts the 

 181 National Grid at 13-14; EEI at 44. 

182 Southern at 6. 
Docket No. RM06-11-000 - 106 -

delegations to the Chief Accountant in § 375.303(f) as proposed in the NOPR with one 

modification, to include an additional form, FERC-61. Holding companies are required 

to file FERC-61, Narrative description of service company functions, annually with the 

Commission those centralized for service companies that do not file FERC Form No. 60, 

and, similar to the other reporting Forms, included in this delegation should be handled 

under delegated authority by the Chief Accountant.183 

223. We will grant EEI and National Grid's request to clarify § 375.303(g) to include 

the authority to act on motions for extensions of time to file FERC Form No. 60. While 

the Commission has previously delegated the authority to grant extensions of time to file 

FERC Form No. 60 to the Chief Accountant in § 366.23(a)(3), for ease of administration 

we will include this delegation in § 375.303(g). 

V. Information Collection Statement

224. The following collections of information referenced in this Final Rule have been 

submitted to the Office of Management and Budget (OMB) for review under section 

3507(d) of the Paperwork Reduction Act of 1995.184 OMB’s regulations require OMB to 

approve certain information collection requirements imposed by agency rule.185 Upon 

approval of a collection of information, OMB will assign an OMB control number and 

expiration date. Respondents subject to the filing requirements of this Final Rule will not 

be penalized for failing to respond to these collections of information unless the 

 183 18 CFR 366.23(a)(2) (2006). 

184 See 44 U.S.C. 3507(d) (2000). 

185 5 CFR 1320.11 (2006). 
Docket No. RM06-11-000 - 107 -

collections of information display a valid OMB control number or the Commission had 

provided a justification as to why the control number should be displayed. 

225. In the NOPR, the Commission provided burden estimates for complying with the 

rule as follows: 

 FERC Form No. 60: 38 Respondents, 38 Responses @ 10 hours per response = 

380 Total Annual Hours; and 

FERC-555A (recordkeeping): 300 Respondents @ 1,080 hours per respondent = 

324,000 Total Annual Hours. 

226. In response to comments the Commission received (see below), the Commission is 

revising its estimates as follows: 

Data Collection Number of 

Respondents 

Number of 

Responses 

Hours Per 

Response 

Total 

1 FERC Form No. 60 38 38 75 2,850 

2 FERC-555A 300 1,080 324,000 

 Totals 326,850 

Information Collection Costs: The Commission also projected (and has revised) the 

average annualized cost of all respondents to be the following: 

FERC Form No. 60 = 380 Hours at $120 an hour (an average of 3 staff @ $40 an 

hour) = $45,600. As revised, FERC Form No. 60 = 2,850 hours @ $120 (an 

average of 3 staff @ $40 an hour) = $342,000. 

FERC-555A = The Commission projected an annualized cost of all respondents as 

324,000 hours @ $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 
Docket No. RM06-11-000 - 108 -

average office storage space is $7,440 for retaining records on-site. (Usually after 

the initial year records are transferred to an off-site location 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 cost estimates 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 saving 

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 Total Costs for reporting and recordkeeping ($342,000 + $28,728,000) = 

$29,070,000. 

227. As noted above, the Commission sought comments on both the burden estimates 

and corresponding costs: it should be noted that the Commission’s initial estimates were 

based on its review of the SEC’s burden estimates and its first year of experience in 

implementing the FERC Form No. 60 reporting requirement. The Commission received 

one comment specifically addressing the burden estimate for completing the revised 

FERC Form No. 60. This commenter, Southern, provided an estimate for completion of 

the revised FERC Form No. 60 prior to our adoption of the requirements contained in this 

Final Rule. The Commission notes that Southern has significant operations, and it is to 

be expected that its estimates would exceed the average projected by the Commission. 

Otherwise, the majority of the commenters, while not providing specific comments on the 
Docket No. RM06-11-000 - 109 -

estimates, in general opposed the Commission’s proposal of establishing new accounting 

and reporting requirements for centralized service companies. These objections were 

also repeated in the staff technical conference where some participants stated that the 

NOPR’s proposed requirements would be burdensome and costly to implement as 

changes would have to be made to their accounting systems. The Commission did not 

receive any specific comments concerning the estimates for the recordkeeping 

requirements. 

228. The Commission has addressed commenters’ substantive concerns elsewhere in 

this Final Rule and will not repeat its responses here. The actions taken in this Final Rule 

should ameliorate the concerns of a significant burden increase and any corresponding 

cost increase. 

229. Further, in Order No. 667, the Commission provided its initial estimate for 

completing the FERC Form No. 60, and did not receive any comments in response to that 

estimate. In Order No. 667-A, the Commission made offsetting changes to those 

reporting requirements and, in light of the changes and the absence of comments, let the 

original projected burden estimates stand. However, we went on to say that, with 

additional experience, including comments received in response to our initiatives, we 

would adjust the burden estimates. In view of the comments received specifically 

concerning the burden estimates and the implementation of the reporting requirements 

contained in this Final Rule, we are revising the estimates accordingly. On the other 

hand, as the Commission is adopting electronic submission of this information in a 

separate rulemaking proceeding in Docket No. RM06-25-000, this will save time and 
Docket No. RM06-11-000 - 110 -

resources for all parties since electronic filings require fewer personnel than paper filings 

by avoiding the need for paper processing and mailing and consequently reduce the 

burden.186 

Title: FERC Form No. 60, “Annual Report of Centralized Service Companies” and 

FERC-555A, “Preservation of Records for Service Companies Subject to PUHCA 2005” 

Action: Proposed collections. 

OMB Control Nos.: 1902-0215 (FERC Form No. 60) and 1902-XXXX (to be 

determined) (FERC-555A). 

Respondents: Businesses or other for profit. 

Frequency of Responses: Annually and on occasion. 

Necessity of the Information: This Final Rule amends the Commission’s regulations to 

implement PUHCA 2005 as enacted by the EPAct 2005. Specifically, the Commission is 

adopting a USofA for Centralized Service Companies, adding preservation of records 

requirements for holding companies and service companies, revising the FERC Form No. 

60 in order to provide for financial reporting consistent with the new USofA, and 

providing for the electronic filing of revised FERC Form No. 60. In Order No. 667, the 

Commission also set forth its objective to prescribe 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. The addition of these accounts and related 

 186 Supra note 34. 
Docket No. RM06-11-000 - 111 -

changes in the reporting, as well as uniform records retention requirements, provides 

uniformity and transparency for costs that are billed to regulated entities, allows for 

comparability of like costs across centralized service companies, provides for 

comparisons of year-to-year changes in a centralized service company’s costs and 

billings, and facilitates the uniform compilation of consolidated financial statements. 

Without specific instructions and accounts for recording and reporting the above 

transactions and events, and retaining relevant records and information, inconsistent and 

incomplete accounting and reporting will result. 

230. Interested persons may obtain information on the reporting requirements by 

contacting the following: Federal Energy Regulatory Commission, 888 First Street, NE, 

Washington, D.C. 20426 [Attention: Michael Miller, Office of the Executive Director, 

Phone (202) 502-8415, fax: (202) 273-0873, e-mail: michael.miller@ferc.gov ] 

231. For submitting comments concerning the collection of information(s) and the 

associated burden estimates, please send your comments to the contact listed above and 

to the Office of Management and Budget, Office of Information and Regulatory Affairs, 

Washington, D.C. 20503, Attention: Desk Officer for the Federal Energy Regulatory 

Commission; Phone: (202) 395-4650, fax: (202) 395-7285. 

VI. Environmental Analysis 

232. The Commission is required to prepare an Environmental Assessment or an 

Environmental Impact Statement for any action that may have a significant adverse effect 
Docket No. RM06-11-000 - 112 -

on the human environment.187 No environmental consideration is necessary for the 

promulgation of a rule that addresses information gathering, analysis, and 

dissemination,188 and, also, that addresses accounting.189 This Final Rule addresses 

information gathering, analysis, and dissemination. In addition, this Final Rule involves 

accounting requirements. Therefore, the Final Rule falls within categorical exemptions 

provided in the Commission’s regulations. Consequently, neither an Environmental 

Impact Statement nor an Environmental Assessment is required. 

VII. Regulatory Flexibility Act

233. The Regulatory Flexibility Act of 1980 (RFA)190 generally requires a description 

and analysis of the effect that a Final Rule will have on small entities or a certification 

that a rule will not have a significant economic impact on a substantial number of small 

entities. 

234. The Commission concludes that this Final Rule will not have such an impact on a 

substantial number of small entities. Most holding companies to which this Final Rule 

would be applicable do not fall within the RFA’s definition of a small entity.191 

 187 See Regulations Implementing the National Environmental Policy Act, Order 

No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. ¶ 30,783 (1987). 

188 See 18 CFR 380.4(a)(5). 

189 See 18 CFR 380.4(c)(16). 

190 See 5 U.S.C. 601-612. 

191 See 5 U.S.C. 601(3) citing to section 3 of the Small Business Act, 15 U.S.C. 

632. Section 3 of the Small Business Act defines a “small-business concern” as a 

business which is independently owned and operated and which is not dominant in its 

field of operation. The Small Business Size Standards component of the North American 

Industry Classification System (NAICS) defines a small electric utility as one that, 
Docket No. RM06-11-000 - 113 -

Moreover, the Commission also concludes that this Final Rule will not impose a 

significant burden since the information is already being captured by existing accounting 

systems and generally being reported at a consolidated business level. 

VIII. Document Availability

235. 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 

(http://www.ferc.gov) and in the Commission’s Public Reference Room during normal 

business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, N.E., Room 2A, 

Washington D.C., 20426. 

236. From the Commission’s Home Page on the Internet, this document is available in 

the Commission’s document management system, e-Library. The full text of this 

document is available on e-Library in PDF and Microsoft Word format for viewing, 

printing, and/or downloading. To access this document in e-Library, type the docket 

number excluding the last three digits of this document in the docket number field. 

237. 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- 

 

including its affiliates, is primarily engaged in generation, transmission, and/or 

distribution of electric energy for sale and whose total electric output for the preceding 

fiscal years did not exceed 4 million MWh. NAICS defines a small natural gas pipeline 

company as one that transports natural gas and whose annual receipts (total income 

including cost of goods sold) did not exceed $6.5 million dollars for the preceding years. 

13 CFR 121.201. 
Docket No. RM06-11-000 - 114 -

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). 

IX. Effective Date and Congressional Notification

238. This Final Rule will take effect [insert date that is 60 days after date of publication 

in the FEDERAL REGISTER]; however, the revised FERC Form No. 60 adopted 

herein will be implemented with the reporting year 2008 (due by May 1, 2009) and the 

accounting and records retention requirements adopted herein will be implemented 

January 1, 2008. 

239. The Commission has determined with the concurrence of the Administrator of the 

Office of Information and Regulatory Affairs of the Office of Management and Budget 

that this Final Rule is not a major rule within the meaning of section 251 of the Small 

Business Regulatory Enforcement Fairness Act of 1996.192 The Commission will submit 

the Final Rule to both houses of Congress and the General Accounting Office. 

List of Subjects 

18 CFR Part 366

Electric power 

Natural gas 

Reporting and recordkeeping requirements. 

 192 5 U.S.C. 801. 
Docket No. RM06-11-000 - 115 -

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 the Commission. 

( S E A L ) 

 Magalie R. Salas, 

 Secretary. 

 

 
Docket No. RM06-11-000 - 116 -

 In consideration of the foregoing, under the authority of EPAct 2005, the 

Commission amends parts 366, and 375 and adds parts 367, 368 and 369, to Chapter I, 

Title 18 of the Code of Federal Regulations, as set forth below: 

PART 366 – PUBLIC UTILITY HOLDING COMPANY ACT OF 2005

1. The authority citation for part 366 is revised to read as follows: 

Authority: 42 U.S.C. 16451-16463. 

2. In § 366.21, paragraph (b) is revised to read as follows: 

§ 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, beginning January 1, 2008, 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, 2007, 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), (a)(2) (b)(1) and (b)(2) are revised to read as 

follows: 
Docket No. RM06-11-000 - 117 -

§ 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, beginning January 1, 2008, 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. 

(2) Transition period. Until December 31, 2007, service companies in holding 

company systems 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 requirements in 

parts 125 and 225 of this chapter or the Securities and Exchange Commission’s records 

retention rules in 17 CFR part 257. 

* * * * * 

(b) Accounting requirements. 

(1) General. Unless otherwise exempted or granted a waiver by Commission 

rule or order pursuant to §§ 366.3 and 366.4, beginning January 1, 2008, 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 
Docket No. RM06-11-000 - 118 -

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 

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. 

(2) Transition period. Until December 31, 2007, service companies in holding 

company systems registered under the Public Utility Holding Company Act of 1935 (15 

U.S.C. 79a et seq.), as described in paragraph (b)(1) of this section, may follow either the 

Commission’s Uniform System of Accounts in parts 101 and 201 of this chapter or the 

Securities and Exchange Commission’s Uniform System of Accounts in 17 CFR 

part 256. 

* * * * * 

4. In § 366.23, the section heading and paragraphs (a) and (b) are revised to read as 

follows: 
Docket No. RM06-11-000 - 119 -

§ 366.23 FERC Form No. 60, Annual report of centralized 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, every centralized service 

company (See § 367.2 of this chapter) in a holding company system must file an annual 

report, FERC Form No. 60, as provided in § 369.1 of this chapter. Every report must be 

submitted on the FERC Form No. 60 then in effect and must be prepared in accordance 

with the instructions incorporated in that form. 

* * * * * 

 (b) Transition period. Service companies in holding company systems 

exempted from the requirements of the Public Utility Holding Company Act of 1935 (15 

U.S.C. 79a et seq.) need not file an annual report, FERC Form No. 60, for calendar years 

2005 through 2007, after which they must comply with the provisions of this section. 

* * * * * 

5. Part 367 is added to read as follows: 

PART 367 – UNIFORM SYSTEM OF ACCOUNTS FOR CENTRALIZED 

SERVICE COMPANIES SUBJECT TO THE PROVISIONS OF PUBLIC 

UTILITY HOLDING COMPANY ACT OF 2005 

Subpart A – Definitions

Sec. 
Docket No. RM06-11-000 - 120 -

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. 
Docket No. RM06-11-000 - 121 -

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 Cost allocation 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 Property record system required for service company property. 

367.59 Additions and retirements of property. 
Docket No. RM06-11-000 - 122 -

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. 

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. 

367.1060 Account 106, Completed construction not classified. 

367.1070 Account 107, Construction work in progress. 

367.1080 Account 108, Accumulated provision for depreciation of service company 
Docket No. RM06-11-000 - 123 -

property. 

367.1110 Account 111, Accumulated provision for amortization of service company 

property. 

OTHER PROPERTY AND INVESTMENTS

367.1230 Account 123, Investment in associate companies. 

367.1240 Account 124, Other investments. 

367.1280 Account 128, Other special funds. 

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. 
Docket No. RM06-11-000 - 124 -

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. 

367.1750 Account 175, Derivative instrument assets. 

367.1760 Account 176, Derivative instrument assets – Hedges. 

DEFERRED DEBITS

367.1810 Account 181, Unamortized debt expense. 

367.182.3 Account 182.3, Other regulatory assets. 

367.1830 Account 183, Preliminary survey and investigation charges. 

367.1840 Account 184, Clearing accounts. 

367.1850 Account 185, Temporary facilities. 

367.1860 Account 186, Miscellaneous deferred debits. 

367.1880 Account 188, Research, development and demonstration expenditures. 

367.1890 Account 189, Unamortized loss on reacquired debt. 

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 paid-in-capital. 

367.2150 Account 215, Appropriated retained earnings. 

367.2160 Account 216, Unappropriated retained earnings. 
Docket No. RM06-11-000 - 125 -

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. 

367.2282 Account 228.2, Accumulated provision for injuries and damages. 

367.2283 Account 228.3, Accumulated provision for pensions and benefits. 

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. 
Docket No. RM06-11-000 - 126 -

367.2430 Account 243, Obligations under capital leases-Current. 

367.2440 Account 244, Derivative instrument liabilities. 

367.245 Account 245, Derivative instrument liabilities – Hedges. 

DEFERRED CREDITS

367.2530 Account 253, Other deferred credits. 

367.2540 Account 254, Other regulatory liabilities. 

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. 

367.3060 Account 306, Leasehold improvements. 

367.3890 Account 389, Land and land rights. 

367.3900 Account 390, Structures and improvements. 

367.3910 Account 391, Office furniture and equipment. 

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. 
Docket No. RM06-11-000 - 127 -

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. 

367.4073 Account 407.3, Regulatory debits. 

367.4074 Account 407.4, Regulatory credits. 

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 
Docket No. RM06-11-000 - 128 -

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 Accounts 411.6, Gains from disposition of service company plant. 

367.4117 Accounts 411.7, Losses from disposition of service company plant. 

367.4118 Account 411.10, Accretion expense. 

367.4120 Account 412, Costs and expenses of construction or other services. 

367.4160 Account 416, Costs and expenses of merchandising, jobbing and contract 

work. 

367.4180 Account 418, Non-operating rental income. 

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. 

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. 
Docket No. RM06-11-000 - 129 -

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 long-term 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 constructionCredit. 

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
Docket No. RM06-11-000 - 130 -

367.4570 Account 457, Services rendered to associate companies. 

367.4571 Account 457.1, Direct costs charged to associate companies. 

367.4572 Account 457.2, Indirect costs charged to associate companies. 

367.4573 Account 457.3, Compensation for use of capital-associate companies. 

367.4580 Account 458, Services rendered to non-associate companies. 

367.4581 Account 458.1, Direct costs charged to non-associate companies. 

367.4582 Account 458.2, Indirect costs charged to non-associate companies. 

367.4583 Account 458.3, Compensation for use of capital—Non-associate 

companies. 

367.4584 Account 458.4, Excess or deficiency on servicing non-associate 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. 
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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. 

367.9230 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 expenses. 

367.9301 Account 930.1, General advertising expenses for associated companies. 

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 mean the accounts prescribed by this Uniform System of 
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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 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) Centralized service company means 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. Centralized service 
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companies are different from other service companies that only provide a discrete good 

or service. 

 (8) Commission means the Federal Energy Regulatory Commission. 

(9) Company, when not otherwise indicated in the context, means a service 

company. 

 (10) 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. 

 (11) 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. 

 (12) Cost accumulation system means a system for the accumulation of service 

company costs on a job, project, or functional basis. It includes schedules and 

worksheets used to account for charges billed to single and groups of associate and nonassociate companies. It can be a variety of systems, including but not limited to, a work 

order system or an activity-based accounting software system. 

 (13) 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 
Docket No. RM06-11-000 - 134 -

give rise to the obligation (See General Instructions in § 367.22). 

 (14) 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 marketing such evidences of debt; fees and expenses of listing on 

exchanges; and other like costs. 

 (15) 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. 

 (16) Direct cost means the labor costs and expenses which can be identified 

through a cost allocation 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. 

 (17) 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. 

 (18) Electric utility company means any company that owns or operates 
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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. 

 (19) 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.

 (20) 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. 

(21) 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 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 
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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” does 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. 

 (22) Holding company system means a holding company, together with its 

subsidiary companies. 

 (23) Indirect cost means the costs of a general overhead nature such as general 
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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. Costs incidental to or related to indirect items should also be classified 

as an indirect cost. 

 (24) 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. 

 (25) 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. 

 (26) 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. 

 (27) Minor items of property means the associated parts or items of which 

retirement units are composed. 

(28) 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. 

 (29) Net salvage value means the salvage value of property retired less the cost 

of removal. 

 (30) 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 
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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. 

 (31) 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. 

 (32) Non-associate company means a person, partnership, organization, 

government body or company which is not a member of the holding company system. 

 (33) Non-utility company means a company that is not a utility company. 

 (34) Person means an individual or company. 

 (35) 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. 

 (36) 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. 

 (37) Public-utility company means an electric utility company or gas utility 

company. 

(38) Regulatory assets and liabilities are the assets and liabilities that result from 
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rate actions for regulatory agencies. Regulatory assets and liabilities arise from specific 

revenues, expenses, gains, or losses that would have been included in net income 

determination in one period under the general requirements of the Uniform System of 

Accounts but for it being probable: 

 (i) That such items will be included in a different period(s) for purposes of 

developing rates the service company is authorized to charge for its services; or 

 (ii) In the case of regulatory liabilities, that refunds to customers, not provided 

for in other accounts, will be required. 

 (39) 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. 

 (40) 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 
Docket No. RM06-11-000 - 140 -

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’ nonconventional 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. 

 (41) Retained earnings means the accumulated net income of the service 

company less distribution to stockholders and transfers to other capital accounts. 

 (42) 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. 

 (43) 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 
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supplies, or other appropriate account. 

 (44) 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. 

 (45) 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. 

 (46) Service cost means the total of direct and indirect costs incurred to provide 

a service to an associate or non-associate company which are properly charged to 

expense by the service company. 

 (47) 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. 

 (48) Service value means the difference between the cost and net salvage value 

of service property. 

 (49) 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 
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companies. 

 (50) Uniform System of Accounts (USofA) means the Uniform System of 

Accounts for Centralized Service Companies prescribed in this part, as amended from 

time to time. 

 (51) Utility company means a public-utility company or natural gas company 

whose rates are regulated by the Commission, state commission or other similar 

regulatory body. 

Subpart B – General Instructions

§ 367.2 Companies for which this system of accounts is prescribed. 

 (a) Unless otherwise exempted or granted a waiver by Commission rule or 

order pursuant to §§ 366.3 and 366.4 of this chapter, 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. 

 (b) This Uniform System of Accounts is not applicable to: 

(1) Service companies that are specifically organized as a special-purpose 

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 
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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. 

 (5) Holding companies. 

 (c) To the extent that the term service company is used in this Uniform System 

of Accounts, it applies only to centralized service companies. 

§ 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 

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 
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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. 

§ 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) 457-458, 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 
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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 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. 
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 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 Extraordinary items. 

 Extraordinary items are to be recognized according to the rules which are 

considered generally accepted accounting principles. These items are 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. Each item recognized as 

extraordinary must be disclosed in the notes to financial statements (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 
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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 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, or operating functions. 

§ 367.13 Accounting to be on accrual basis. 
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 (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 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 
Docket No. RM06-11-000 - 149 -

the service company from subdividing accounts for the purpose of recording separately 

transactions with associate companies. 

§ 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 (including receivers’ certificates) issued or 

assumed by the service company. The premium must be recorded in account 225, 

Unamortized premium on long-term 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 
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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 
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deferred credits in accounts 190, Accumulated deferred income taxes (§ 367.1900), 282, 

Accumulated deferred 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 
Docket No. RM06-11-000 - 152 -

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 or extending its term, in a manner that 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 

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 
Docket No. RM06-11-000 - 153 -

new classification of a lease for accounting purposes. 

§ 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 
Docket No. RM06-11-000 - 154 -

the periodic accretion of the liability in account 230, Asset retirement obligations 

(§ 367.2300), must be recorded by a charge to account 411.10, Accretion expense 

(§ 367.4118), for service company property, and account 421, Miscellaneous income or 

loss (§ 367.4210), for non-service company property 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 objective evidence and analysis, including where appropriate 

engineering, economic, or other depreciation studies. 

 (c) Rate. Service companies must use percentage rates of depreciation that are 
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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 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 
Docket No. RM06-11-000 - 156 -

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 (§ 367.4118); 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 
Docket No. RM06-11-000 - 157 -

the 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). 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). In computing charges to associate companies for any calendar year, any 

net credit in this account must be deducted from amounts reimbursable by associate 

companies as compensation for use of capital invested in the service company. 

§ 367.24 Construction and service contracts for other companies. 
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 (a) 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 must be recorded in Account 412, Cost and 

expenses of construction or other services. The service company must keep records 

pursuant to its cost allocation system indicating the cost of each contract or project, the 

amount of service costs allocated to the 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) Account 412 will include: 

 (1) The cost of materials, construction payrolls, outside services, and other 

expenses which are directly attributable to the performance of service or construction 

contracts for other companies. 

 (2) The cost of goods procured directly attributable to the performance of 

service or construction contracts for other companies. 

 (3) The related 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. 

 (4) The support services performed by the service company in connection with 

the procurement of goods for associate companies. 

§ 367.25 Determination of service cost. 
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 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 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. 

 Charges for services to associate public-utility companies must be made monthly 

with sufficient information and in sufficient detail to permit such company, where 

applicable, to identify and classify the charge in terms of the system of accounts 

prescribed by the regulatory authorities to which it is subject. The information provided 

to associate public-utility companies must provide a summary of the accounts by service 

provided 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 projects in 

accordance with the service company’s applicable and currently effective methods of 

allocation. Both direct and allocated indirect costs on projects must be assigned among 
Docket No. RM06-11-000 - 160 -

those companies in the same manner. The cost accumulation system 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 Cost accumulation 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 cost 

accumulation system, as described in Definitions § 367.1(a)(12), 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 
Docket No. RM06-11-000 - 161 -

of all expenses assignable to the types of services performed and chargeable to the 

associate companies served. Service company employee records must permit a ready 

identification of the hours worked, account numbers charged, and other code designations 

that facilitate proper classification. 

Subpart C – Service Company Property Instructions

§ 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)(11)). 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 
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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 for posting to property ledgers of accounts. The 

accumulated gross costs of property 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 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 in 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 
Docket No. RM06-11-000 - 163 -

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 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 
Docket No. RM06-11-000 - 164 -

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 
Docket No. RM06-11-000 - 165 -

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 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 selfinsurance 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 
Docket No. RM06-11-000 - 166 -

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) Interest cost on funds used during construction which are allowed to be 

capitalized following generally accepted accounting principles. 

 (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 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 
Docket No. RM06-11-000 - 167 -

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 project and to each 

property account, and the bases of distribution of such costs. 

§ 367.53 Service company property purchased or sold. 
Docket No. RM06-11-000 - 168 -

 (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 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 recorded 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 
Docket No. RM06-11-000 - 169 -

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. 

§ 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 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 
Docket No. RM06-11-000 - 170 -

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 
Docket No. RM06-11-000 - 171 -

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 

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, Gain on disposition of property 

(§ 367.4211), or account 421.2, Loss 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 
Docket No. RM06-11-000 - 172 -

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 limited-term 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. 

 (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. 
Docket No. RM06-11-000 - 173 -

 (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. 
Docket No. RM06-11-000 - 174 -

 (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, which 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, 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 rights-of-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. 
Docket No. RM06-11-000 - 175 -

 (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 air-conditioning systems, plumbing, vacuum cleaning 
Docket No. RM06-11-000 - 176 -

systems, incinerator and smoke pipe, flues and similar items. 

 (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. 
Docket No. RM06-11-000 - 177 -

 (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. 

 (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. 
Docket No. RM06-11-000 - 178 -

 (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 
Docket No. RM06-11-000 - 179 -

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 

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 
Docket No. RM06-11-000 - 180 -

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 
Docket No. RM06-11-000 - 181 -

property account. 

§ 367.58 Property record system required for service company property. 

 (a) Each service company must keep its cost allocation 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. Records covering jobs of short duration may be cleared monthly. 

 (b) 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 
Docket No. RM06-11-000 - 182 -

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 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 
Docket No. RM06-11-000 - 183 -

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, 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 
Docket No. RM06-11-000 - 184 -

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 limited-term 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. 
Docket No. RM06-11-000 - 185 -

 (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 

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. 
Docket No. RM06-11-000 - 186 -

 (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 

equipment and all amounts paid for use of equipment that, if owned, would be includible 
Docket No. RM06-11-000 - 187 -

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 
Docket No. RM06-11-000 - 188 -

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

§ 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 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 
Docket No. RM06-11-000 - 189 -

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 long-term 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) Special assessments for street and similar improvements must be included 

in the appropriate service company property account. 
Docket No. RM06-11-000 - 190 -

 (d) Taxes specifically applicable to construction must be included in the cost of 

construction. 

 (e) 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. 

 (f) 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. 

 (g) Interest on tax refunds or deficiencies must not be included in these 

accounts but in accounts 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 to Operating Income, 

Other Income and Deductions, and Extraordinary Items so that, as nearly as practicable, 

each tax will be included in the appropriate account based on the income which gave rise 

to the tax. 
Docket No. RM06-11-000 - 191 -

 (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. 

§ 367.104 Accounts 410.1, 410.2, 411.1, and 411.2, Provision for deferred income 

taxes. 

 (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). 
Docket No. RM06-11-000 - 192 -

§ 367.105 Accounts 411.4, and 411.5, Investment tax credit adjustments. 

 (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. 

Subpart F -- Balance Sheet Chart of Accounts

SERVICE COMPANY PROPERTY
Docket No. RM06-11-000 - 193 -

§ 367.1010 Account 101, Service company property. 

(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, 
Docket No. RM06-11-000 - 194 -

(7) Present value of minimum lease payments, 

(8) The amount representing interest and the interest rate used, and 

(9) Expenses paid. 

§ 367.1060 Account 106, Completed construction not classified. 

 (a) At the end of the year or such other date as a balance sheet may be required 

by the Commission, this account must include the total of the balances of construction 

projects for service company property which has been completed and placed in service 

but have not been classified for transfer to the detailed service company property 

accounts. 

§ 367.1070 Account 107, Construction work in progress. 

(a) This account must include the total of the balances of construction projects 

for service company property in process of construction. 

(b) Construction projects 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 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. 
Docket No. RM06-11-000 - 195 -

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. 
Docket No. RM06-11-000 - 196 -

(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. 

 (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. 

§ 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 
Docket No. RM06-11-000 - 197 -

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 
Docket No. RM06-11-000 - 198 -

must not transfer any portion of this account to retained earnings or make any other use 

of the amortization without authorization by the Commission. 

OTHER PROPERTY AND INVESTMENTS

§ 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). 
Docket No. RM06-11-000 - 199 -

(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. 

§ 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. 
Docket No. RM06-11-000 - 200 -

§ 367.1280 Account 128, Other special funds. 

(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 Account 134, Other special deposits. 

(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. 
Docket No. RM06-11-000 - 201 -

(b) Assets available for general corporate purposes must not be 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).) 
Docket No. RM06-11-000 - 202 -

(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. 

(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 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).) 

§ 367.1440 Account 144, Accumulated provision for uncollectible accounts--

Credit. 
Docket No. RM06-11-000 - 203 -

(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 
Docket No. RM06-11-000 - 204 -

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 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. 

§ 367.1460 Account 146, Accounts 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 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. 
Docket No. RM06-11-000 - 205 -

(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 its cost allocation system. 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 

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: 
Docket No. RM06-11-000 - 206 -

(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-in-first-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. 
Docket No. RM06-11-000 - 207 -

(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 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 
Docket No. RM06-11-000 - 208 -

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: 

(1) Adjustments of inventories of materials and supplies, but not including 

large differences that can readily be assigned to important classes of materials and 
Docket No. RM06-11-000 - 209 -

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. 
Docket No. RM06-11-000 - 210 -

§ 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 

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 Account 173, Accrued revenues. 

At the option of the service company, the estimated amount accrued for service 
Docket No. RM06-11-000 - 211 -

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. 

§ 367.1740 Account 174, Miscellaneous current and accrued assets. 

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. 

§ 367.1750 Account 175, Derivative instrument assets.

This account must include the amounts paid for derivative instruments, and the 

change in the fair value of all derivative instrument assets not designated as cash flow or 

fair value hedges. Account 421, Miscellaneous income or loss (§ 367.4210), must be 

credited or debited, as appropriate, with the corresponding amount of the change in the 

fair value of the derivative instrument. 

§ 367.1760 Account 176, Derivative instrument assets – Hedges.

(a) This account must include the amounts paid for derivative instruments, and 

the change in the fair value of derivative instrument assets designated by the service 

company as cash flow or fair value hedges. 

(b) When a service company 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 219, Accumulated other comprehensive 

income (§ 367.2190), with the effective portion of the gain or loss. The ineffective 

portion of the cash flow hedge must be charged to the same income or expense account 
Docket No. RM06-11-000 - 212 -

that will be used when the hedged item enters into the determination of net income. 

(c) When a service company designates a derivative instrument as a fair value 

hedge it must record the change in the fair value of the derivative instrument in this 

account with a concurrent charge to a subaccount of the asset or liability that carries the 

item being hedged. The ineffective portion of the fair value hedge must be charged to the 

same income or expense account that will be used when the hedged item enters into the 

determination of net income. 

DEFERRED DEBITS 

§ 367.1810 Account 181, Unamortized debt expense. 

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. 

§ 367.1823 Account 182.3, Other regulatory assets

(a) This account must include the amounts of regulatory-created assets, not 

includible in other accounts, resulting from the ratemaking actions of regulatory agencies. 

(See Definitions § 367.1(a)(38).) 

(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 
Docket No. RM06-11-000 - 213 -

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 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 (§ 367.4074), must 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 (§ 367.4074) must be charged to account 407.3, Regulatory debits 

(§ 367.4073), concurrent with the recovery in rates. 

(c) If rate recovery of all or part of an amount included in this account is 

disallowed, the disallowed amount must be charged to Account 426.5, Other deductions 

(§ 367.4265), or Account 435, Extraordinary deductions (§ 367.4350), in the year of the 

disallowance. 

(d) The records supporting the entries to this account must be kept so that the 

service company can furnish full information as to the nature and amount of each 

regulatory asset included in this account, including justification for inclusion of such 

amounts in this account. 

§ 367.1830 Account 183, Preliminary survey and investigation charges. 

(a) This account must be charged with all expenditures for preliminary 
Docket No. RM06-11-000 - 214 -

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. 

(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. 

§ 367.1840 Account 184, Clearing accounts. 

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. 

§ 367.1850 Account 185, Temporary facilities. 

This account must include amounts shown by project for property installed for 

temporary use for a period of less than one year. Each project 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 project to which the facilities relate. 
Docket No. RM06-11-000 - 215 -

§ 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)(40)), except those expenditures properly 

chargeable to account 107, Construction work in progress (§ 367.1070). 

(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 
Docket No. RM06-11-000 - 216 -

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. 

§ 367.1890 Account 189, Unamortized loss on reacquired debt. 

 This account must include the losses on long-term debt reacquired or redeemed. 

The amounts in this account must be amortized in accordance with General Instruction 

§ 367.16. 

§ 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 
Docket No. RM06-11-000 - 217 -

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 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 Account 201, Common stock issued. 
Docket No. RM06-11-000 - 218 -

This account must include the par or stated value of all common capital stock 

issued and outstanding. 

§ 367.2040 Account 204, Preferred stock issued. 

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. 

§ 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 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 
Docket No. RM06-11-000 - 219 -

(§ 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 
Docket No. RM06-11-000 - 220 -

(§ 367.2340). 

(b) The records supporting the entries to this account must be kept so that the 

service company can furnish complete information concerning each note and open 

account. 

§ 367.2240 Account 224, Other long-term debt. 

(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). 
Docket No. RM06-11-000 - 221 -

§ 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 applicable to leased property recorded as assets in account 

101.1, Property under capital leases (§ 367.1011). 

§ 367.2282 Account 228.2, Accumulated provision for injuries and damages. 

 (a) This account must be credited with amounts charged to account 925, 

Injuries and damages (§ 367.9250), or other appropriate accounts, to meet the probable 

liability, not covered by insurance, for deaths or injuries to employees and others and for 

damages to property neither owned nor held under lease by the service company. 

 (b) When liability for any injury or damage is admitted by the service 

company, either voluntarily or because of the decision of a court or other lawful 
Docket No. RM06-11-000 - 222 -

authority, such as workmen's compensation board, the admitted liability must be charged 

to this account and credited to the appropriate current liability account. Details of these 

charges must be maintained according to the year the casualty occurred which gave rise 

to the loss. 

 (c) Recoveries or reimbursements for losses charged to this account must be 

credited to this account; the cost of repairs to property of others if provided for in this 

account must be charged to this account. 

§ 367.2283 Account 228.3, Accumulated provision for pensions and benefits. 

(a) This account must include provisions made by the service company and 

amounts contributed by employees for pensions, accident and death benefits, savings, 

relief, hospital and other provident purposes, where the funds are included in the assets of 

the service company either in general or in segregated fund accounts. 

 (b) Amounts paid by the service company for the purposes for which this 

liability is established must be charged to this account. 

 (c) A separate account must be kept for each kind of provision included in this 

account. 

 (d) If employee pension or benefit plan funds are not included among the assets 

of the service company but are held by outside trustees, payments into such funds, or 

accruals therefore, must be included in this account. 

§ 367.2300 Account 230, Asset retirement obligations. 

(a) This account must include the amount of liabilities for the recognition of 
Docket No. RM06-11-000 - 223 -

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 (§ 367.4118), 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 Account 232, Accounts payable. 

This account must include all amounts payable by the service company within one 

year that are not provided for in other accounts. 

§ 367.2330 Account 233, Notes payable to associate companies. 

(a) This account must include amounts owing to associate companies on notes, 
Docket No. RM06-11-000 - 224 -

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). 

§ 367.2340 Account 234, Accounts payable to associate companies. 

This account must include all amounts payable to associate companies by the 

service company within one year, which are not provided for in other accounts. 

§ 367.2360 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). 
Docket No. RM06-11-000 - 225 -

(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 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 Account 238, Dividends declared. 

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 Account 241, Tax collections payable. 

(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. 

(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. 

§ 367.2420 Account 242, Miscellaneous current and accrued liabilities. 

This account must include the amount of all other current and accrued liabilities 
Docket No. RM06-11-000 - 226 -

not provided for elsewhere, 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). 

§ 367.2440 Account 244, Derivative instrument liabilities.

This account must include the change in the fair value of all derivative instrument 

liabilities not designated as cash flow or fair value hedges. Account 426.5, Other 

deductions, must be debited or credited as appropriate with the corresponding amount of 

the change in the fair value of the derivative instrument. 

§ 367.2450 Account 245, Derivative instrument liabilities – Hedges

(a) This account must include the change in the fair value of derivative 

instrument liabilities designated by the service company as cash flow or fair value 

hedges. 

(b) A service company must 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 219, Accumulated other comprehensive income (§ 367.2190), with the 

effective portion of the derivative’s gain or loss. The ineffective portion of the cash flow 

hedge must be charged to the same income or expense account that will be used when the 

hedged item enters into the determination of net income. 
Docket No. RM06-11-000 - 227 -

(c) A service company must 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 of the fair value hedge must be charged to the same income or 

expense account that will be used when the hedged item enters into the determination of 

net income. 

DEFERRED CREDITS 

§ 367.2530 Account, 253, Other deferred credits. 

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. 

§ 367.2540 Account 254, Other regulatory liabilities.

(a) This account must include the amounts of regulatory liabilities, not 

includible in other accounts, imposed on the service company by the ratemaking actions 

of regulatory agencies. (See Definitions § 367.1(a)(38).) 

(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 

USofA but for it being probable that: Such items will be included in a different period(s) 

for purposes of developing the rates that the service company is authorized to charge for 

its services; or 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 
Docket No. RM06-11-000 - 228 -

made or when the liability arises from revenues collected pursuant to tariffs on file at a 

regulatory agency, account 407.3, Regulatory debits (§ 367.4073), must 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: All regulatory 

liabilities established through the use of account 407.3 (§ 367.4073) must be credited to 

account 407.4, Regulatory credits (§ 367.4074); and in the case of refunds, a cash account 

or other appropriate account should be credited when the obligation is satisfied. 

(c) If it is later determined that the amounts recorded in this account will not be 

returned to customers through rates or refunds, such amounts must be credited to Account 

421, Miscellaneous income or loss (§ 367.4210), or Account 434, Extraordinary income 

(§ 367.4340), as appropriate, in the year such determination is made. 

(d) The records supporting the entries to this account must be so kept that the 

service company can furnish full information as to the nature and amount of each 

regulatory liability included in this account, including justification for inclusion of such 

amounts in this account. 

§ 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 
Docket No. RM06-11-000 - 229 -

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 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 section. It must not transfer the balance in 
Docket No. RM06-11-000 - 230 -

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 section 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, operating income (§ 367.4111), or 411.2, Income taxes deferred in prior yearsCredit, 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. 

§ 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 

account 282, Accumulated deferred 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 section where taxable income is 
Docket No. RM06-11-000 - 231 -

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 section, 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 section. 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 
Docket No. RM06-11-000 - 232 -

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 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 
Docket No. RM06-11-000 - 233 -

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). 

(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. 

§ 367.3060 Account 306, Leasehold improvements. 

This account must include all costs incurred by the service company in 
Docket No. RM06-11-000 - 234 -

improvements of, remodeling of, or installation of additional facilities in rented offices or 

buildings to suit tenant's needs, placed in service prior to January 1, 2008. 

§ 367.3890 Account 389, Land and land rights. 

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. 
Docket No. RM06-11-000 - 235 -

(6) Library and library equipment. 

(7) Mechanical office equipment, such as accounting machines, typewriters, 

and other similar items.

(8) Safes. 

(9) Tables. 

§ 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, 
Docket No. RM06-11-000 - 236 -

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. 
Docket No. RM06-11-000 - 237 -

(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 
Docket No. RM06-11-000 - 238 -

(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. 

(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. 
Docket No. RM06-11-000 - 239 -

(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. 
Docket No. RM06-11-000 - 240 -

(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. 

(b) This account must include the following items: 

(1) Air compressors, including driving unit and vehicle. 
Docket No. RM06-11-000 - 241 -

(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. 

§ 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. 
Docket No. RM06-11-000 - 242 -

(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. 
Docket No. RM06-11-000 - 243 -

(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 

similar items, used in the service company’s operations that are 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 Account 399, Other tangible property. 

This account must include the cost of tangible service company property not 

provided for elsewhere. 
Docket No. RM06-11-000 - 244 -

§ 367.3991 Account 399.1, Asset retirement costs for service company property. 

This account must include asset retirement costs on service company property. 

Subpart H – Income Statement Chart of Accounts

SERVICE COMPANY OPERATING INCOME 

§ 367.4000 Account 400, Operating revenues. 

 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 Account 401, Operation expense. 

 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 Account 402, Maintenance expense. 

 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 Account 403, Depreciation expense. 

 (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 except the depreciation expense that is charged to clearing 

accounts or to account 416, Costs and expenses of merchandising, jobbing and contract 
Docket No. RM06-11-000 - 245 -

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 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)). 
Docket No. RM06-11-000 - 246 -

§ 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. 

§ 367.4073 Account 407.3, Regulatory debits.

This account shall be debited, when appropriate, with amounts credited to Account 

254, Other Regulatory Liabilities, to record regulatory liabilities imposed on the service 

company by the ratemaking actions of regulatory agencies. This account shall also be 

debited, when appropriate, with the amounts credited to Account 182.3, Other Regulatory 

Assets, concurrent with the recovery of such amounts in rates. 

§ 367.4074 Account 407.4, Regulatory credits.

This account shall be credited, when appropriate, with amounts debited to Account 

182.3, Other Regulatory Assets, to establish regulatory assets. This account shall also be 

credited, when appropriate, with the amounts debited to Account 254, Other Regulatory 

Liabilities, concurrent with the return of such amounts to customers through rates. 

§ 367.4081 Account 408.1, Taxes other than income taxes, operating income. 

 This account must include those taxes, other than income taxes, that relate to 
Docket No. RM06-11-000 - 247 -

service company operating income. This account must be maintained so as to allow 

ready identification of the various classes of taxes. 

§ 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. 
Docket No. RM06-11-000 - 248 -

 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. 

 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. 

§ 367.4114 Account 411.4, Investment tax credit adjustments, service company 

property. 

 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. 

 This account must include the amount of those investment tax credit adjustments 

not properly included in other accounts. 

§ 367.4116 Accounts 411.6, Gains from disposition of service company plant. 

(a) The service company must record in this account gains resulting from the 
Docket No. RM06-11-000 - 249 -

settlement of asset retirement obligations related to service company plant in accordance 

with the accounting prescribed in General Instructions in § 367.22. 

(b) Income taxes relating to losses, recorded in this account must be recorded 

in Account 409.1, Income Taxes, operating income (§367.4091). 

§ 367.4117 Accounts 411.7, Losses from disposition of service company plant. 

(a) The service company must record in this account losses resulting from the 

settlement of asset retirement obligations related to service company plant in accordance 

with the accounting prescribed in General Instructions in § 367.22. 

(b) Income taxes relating to losses, recorded in this account must be recorded 

in Account 409.1, Income Taxes, operating income (§ 367.4091). 

§ 367.4118 Account 411.10, Accretion expense. 

 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. 

§ 367.4120 Account 412, Cost and expenses of construction or other services.

 (a) This account must include expenditures related to the performance of 

construction or service contracts, under which the service company undertakes projects to 

construct physical property for associate or non-associate companies (see General 

Instructions § 367.24, Construction and service contracts for other companies) and the 

cost of services performed for others not provided for elsewhere. 

§ 367.4160 Account 416, Costs and expenses of merchandising, jobbing and 

contract work. 
Docket No. RM06-11-000 - 250 -

 (a) This account must include the following labor items for services provided: 

 (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 for 

purchasers of appliances from the associated company. 

 (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. 
Docket No. RM06-11-000 - 251 -

 (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 

associated company’s facilities. 

 (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. 

§367.4180 Account 418, Non-operating rental income. 

(a) The expenses shall include all elements of costs incurred in the ownership 
Docket No. RM06-11-000 - 252 -

and rental of property and the accounts shall be maintained so as to permit ready 

summarization of operation, maintenance, rents, depreciation, and amortization. 

(b) Related taxes shall 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. 

§ 367.4181 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. 

§ 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 
Docket No. RM06-11-000 - 253 -

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. 

§ 367.4191 Account 419.1, Allowance for other funds used during construction. 

 This account must include concurrent credits for allowance for other funds used 

during construction. 

§ 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). 
Docket No. RM06-11-000 - 254 -

§ 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 
Docket No. RM06-11-000 - 255 -

employees where the service company is beneficiary (net premiums less increase in cash 

surrender value of policies). 

§ 367.4263 Account 426.3, 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 Account 427, Interest on long-term debt. 

 (a) This account must include the amount of interest on outstanding long-term 
Docket No. RM06-11-000 - 256 -

debt issued or assumed by the service company, the liability for which is included in 

account 224, Other long-term 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 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. 
Docket No. RM06-11-000 - 257 -

 (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 written-off 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 who 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 Account 431, Other interest expense. 

 This account must include all interest charges not provided for elsewhere. 

§ 367.4320 Account 432, Allowance for borrowed funds used during 

construction—Credit. 

 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.
Docket No. RM06-11-000 - 258 -

This account must include the net credit or debit transferred from income for the 

year. 

§ 367.4340 Account 434, Extraordinary income. 

 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. 
Docket No. RM06-11-000 - 259 -

§ 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. 

§ 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. 
Docket No. RM06-11-000 - 260 -

 (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 companies. 

 This account must include amounts billed to associate 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 companies. 

 This account must include those direct costs that can be identified through a cost 

allocation system as being applicable to services performed for associate companies. 

This account must not include any compensation for use of equity capital or intercompany interest on indebtedness. 

§ 367.4572 Account 457.2, Indirect costs charged to associate 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 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. 
Docket No. RM06-11-000 - 261 -

§ 367.4573 Account 457.3, Compensation for use of capital-associate 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 each associate company. 

§ 367.4580 Account 458, Services rendered to non-associate companies. 

 This account must include amounts billed for services rendered to non-associate 

companies (See accounts 458.1 through 458.4 (§§ 367.4581 through 367.4584)). 

§ 367.4581 Account 458.1, Direct costs charged to non-associate companies. 

 This account must include those direct costs that can be identified through a cost 

allocation system as being applicable to services performed for non-associate companies. 

This account must not include any compensation for use of equity capital or interest on 

indebtedness. 

§ 367.4582 Account 458.2, Indirect costs charged to non-associate companies. 

 This account must include recovery of those indirect costs of services performed 

for non-associate 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 

companies. 
Docket No. RM06-11-000 - 262 -

 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. 

§ 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 non-associate 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 367.4583) and 

General Instructions in § 367.23). 

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 
Docket No. RM06-11-000 - 263 -

appropriate (See Operating Expense Instructions in § 367.80). 

§ 367.9020 Account 902, Meter reading expenses. 

 (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 (§ 367.5000), 

account 878, Meter and house regulator expenses (§ 367.8000), 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. 

 (7) Maintaining record of customers’ keys. 

 (8) Computing estimated or average consumption when performed by 
Docket No. RM06-11-000 - 264 -

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. 

§ 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. 
Docket No. RM06-11-000 - 265 -

 (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. 

 (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. 
Docket No. RM06-11-000 - 266 -

 (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 (§ 367.5000) or account 878, Meter and house regulator 
Docket No. RM06-11-000 - 267 -

expenses (§ 367.8000). 

§ 367.9040 Account 904, Uncollectible accounts. 

 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 

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 
Docket No. RM06-11-000 - 268 -

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. 
Docket No. RM06-11-000 - 269 -

 (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 (§ 367.5870), 879, Customer 

installations expenses (§ 367.8790), and 912, Demonstrating and selling expenses 

(§ 367.9120). 

§ 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 
Docket No. RM06-11-000 - 270 -

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 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 
Docket No. RM06-11-000 - 271 -

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 
Docket No. RM06-11-000 - 272 -

incurred in promotional, demonstrating, and selling activities, except by merchandising, 

the object of which is to promote or retain the business of present and prospective 

customers of the service company and the companies within the holding company system 

that is not recorded in Accounts 416, Costs and expenses of merchandising, jobbing and 

contract work (§ 367.4160), or 930.1, General advertising expenses for associated 

companies (§ 367.9301). 

 (b) This account must include the following labor items: 

 (1) Demonstrating uses of services provided by companies within the holding 

company system. 

 (2) Conducting cooking schools, preparing recipes, and related home service 

activities. 

 (3) Exhibitions, displays, lectures, and other programs to promote the services 

provided by the service company or the companies within the holding company system. 

 (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 services. 

 (7) Special customer canvasses when their primary purpose is the retention of 

business or the promotion of new business. 
Docket No. RM06-11-000 - 273 -

 (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 Account 913, Advertising expenses.

 (a) This account must include the cost of labor, materials used and expenses 

incurred in advertising designed to promote or retain the use of services provided by the 

service company or the companies within the holding company system, except 

advertising the sale of merchandise. 

 (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 
Docket No. RM06-11-000 - 274 -

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 

(§ 367.9301). 

 (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. 

 (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 

offered services without reference to specific appliances or the promotion of appliances 

must be considered sales promotion advertising and charged to this account. However, 

advertisements that are limited to specific makes of appliances sold by any company and 
Docket No. RM06-11-000 - 275 -

prices, terms, and other similar items, without referring to the value or advantages of 

offered services, must be considered as merchandise advertising and the cost must be 

charged to account 416, Costs and expenses of merchandising, jobbing and contract work 

(§ 367.4160). 

 (e) Advertisements that substantially mention or refer to the value or 

advantages of offered services, together with specific reference to makes of appliances 

sold by any company and the price, terms, and other similar items, and designed for the 

joint purpose of increasing the use of offered services 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. 

 (b) This account must include the following labor items: 

 (1) General clerical and stenographic work not assigned to specific functions. 
Docket No. RM06-11-000 - 276 -

 (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, Administrative 

and general salaries (§ 367.9200). 
Docket No. RM06-11-000 - 277 -

 (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. 

 (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 
Docket No. RM06-11-000 - 278 -

the nature of the expense and identity of the person furnishing the service. 

§ 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 expenses (§ 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 the 

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 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 
Docket No. RM06-11-000 - 279 -

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 projects 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. 

§ 367.9250 Account 925, Injuries and damages. 

 (a) This account must include the cost of insurance or reserve accruals to 
Docket No. RM06-11-000 - 280 -

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 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 
Docket No. RM06-11-000 - 281 -

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 projects 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 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 
Docket No. RM06-11-000 - 282 -

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 non-accrual 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. 
Docket No. RM06-11-000 - 283 -

 (e) Salaries paid to employees during periods of non-occupational sickness 

may be charged to the appropriate labor account rather than to employee benefits. 

§ 367.9280 Account 928, Regulatory commission expenses. 

 (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. 
Docket No. RM06-11-000 - 284 -

§ 367.9301 Account 930.1, General advertising expenses for associated companies. 

 (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 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. 
Docket No. RM06-11-000 - 285 -

 (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 
Docket No. RM06-11-000 - 286 -

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. 

 (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 
Docket No. RM06-11-000 - 287 -

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. 
Docket No. RM06-11-000 - 288 -

 This part is prescribed and promulgated as the regulations 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 Public 

Utility Holding Company Act of 2005 (42 U.S.C. §§ 16451 et seq.). 

§ 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 (16 U.S.C. §§ 824 et seq.), the Natural Gas Act (15 U.S.C. §§ 717 et 

seq.), 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 this chapter. 
Docket No. RM06-11-000 - 289 -

 (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 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 
Docket No. RM06-11-000 - 290 -

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 of this chapter 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 
Docket No. RM06-11-000 - 291 -

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 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 records 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. 
Docket No. RM06-11-000 - 292 -

 (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 or for 10 years after property is retired, whichever 

is longer. 

§ 368.3 Schedule of records and periods of retention.
Docket No. RM06-11-000 - 293 -

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. 

5 years. 

2. Organizational documents: 

 (a) Minute books of stockholders, 

directors' and directors' 

committee meetings. 

5 years or termination of the 

corporation's existence, whichever 

occurs first. 

 (b) Title, franchises, and licenses: 

Copies of formal orders of 

regulatory commissions served 

upon the company. 

6 years after final non-appealable order. 

 (1) Certificates of incorporation, 

or equivalent agreements and 

amendments thereto. 

Life of corporation. 

 (2) Deeds, leases and other title 

papers (including abstracts of 

title and supporting data), and 

contracts and agreements 

related to the acquisition or 

6 years after property or investment is 

disposed of unless delivered to 

transferee. 
Docket No. RM06-11-000 - 294 -

Item no. and description Retention period 

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. 

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. 

 (b) Memoranda essential to clarify 

or explain provisions of contracts 

and agreements. 

For same period as contract to which 

they relate. 

 (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. 

For the same periods as contracts to 

which they relate. 
Docket No. RM06-11-000 - 295 -

Item no. and description Retention period 

 (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). 

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. 

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). 

5 years after the date of the report. 

 (b) Internal audit reports and 

working papers. 

5 years after the date of the report. 

Information Technology 

Management 

5. Automatic data processing records Retain as long as it represents an active 
Docket No. RM06-11-000 - 296 -

Item no. and description Retention period 

(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. 

viable program or for periods 

prescribed for related output data, 

whichever is shorter. 

General Accounting Records 

6. General and subsidiary ledgers: 

 (a) Ledgers. 

 (1) General ledgers. 10 years. 

 (2) Ledgers subsidiary or 

auxiliary to general ledgers 

except ledgers provided for 

elsewhere. 

10 years. 

 (b) Indexes: 

 (1) Indexes to general ledgers. 10 years. 

 (2) Indexes to subsidiary ledgers 

except ledgers provided for 

elsewhere. 

10 years. 
Docket No. RM06-11-000 - 297 -

Item no. and description Retention period 

 (c) Trial balance sheets of general 

and subsidiary ledgers. 

2 years. 

7. Journals: General and subsidiary. 10 years. 

8. Journal vouchers and journal entries 

including supporting detail: 

 (a) Journal vouchers and journal 

entries. 

10 years. 

 (b) Analyses, summarization, 

distributions, and other 

computations which support 

journal vouchers and journal 

entries: 

 (1) Charging property accounts. 25 years. See §§ 125.2(g) and 225.2(g) 

of this chapter for public utilities and 

licensees and natural gas companies. 

 (2) Charging all other accounts. 6 years. 

9. Cash books: General and subsidiary 

or auxiliary books. 

5 years after close of fiscal year. 

10. Voucher registers: Voucher registers 

or similar records when used as a 

5 years. See §§ 125.2(g) and 225.2(g) of 

this chapter for public utilities and 
Docket No. RM06-11-000 - 298 -

Item no. and description Retention period 

source document. licensees and natural gas companies. 

11. Vouchers: 

 (a) Paid and canceled vouchers (one 

copy-analysis sheets showing 

detailed distribution of charges on 

individual vouchers and other 

supporting papers). 

5 years. See §§ 125.2(g) and 225.2(g) of 

this chapter for public utilities and 

licensees and natural gas companies. 

 (b) Original bills and invoices for 

materials, services, etc., paid by 

vouchers. 

5 years. See §§ 125.2(g) and 225.2(g) of 

this chapter for public utilities and 

licensees and natural gas companies. 

 (c) Paid checks and receipts for 

payments of specific vouchers. 

5 years. 

 (d) Authorization for the payment 

of specific vouchers. 

5 years. See §§ 125.2(g) and 225.2(g) of 

this chapter for public utilities and 

licensees and natural gas companies. 

 (e) Lists of unaudited bills 

(accounts payable), list of 

vouchers transmitted, and 

memoranda regarding changes in 

audited bills. 

Destroy at option. 
Docket No. RM06-11-000 - 299 -

Item no. and description Retention period 

 (f) Voucher indexes. Destroy at option. 

 (g) Purchases and stores records 

related to disbursement vouchers. 

5 years. 

Insurance 

12. Insurance records: 

 (a) Records of insurance policies in 

force, showing coverage, 

premiums paid, and expiration 

dates. 

Destroy at option after expiration of 

such policies. 

 (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. 

6 years. See §§ 125.2(g) and 225.2(g) of 

this chapter for public utilities and 

licensees and natural gas companies. 

 (c) Records of self-insurance 

against: 

 (1) losses from fire and casualty, 6 years after date of last accounting 

entry with respect thereto. 

 (2) damage to property of others, 6 years after date of last accounting 
Docket No. RM06-11-000 - 300 -

Item no. and description Retention period 

and entry with respect thereto. 

 (3) personal injuries. 6 years after date of last accounting 

entry with respect thereto. 

 (d) Inspectors' reports and reports of 

condition of property. 

Destroy when superseded. 

Maintenance 

13. Maintenance project and work 

orders: 

 (a) Authorizations for expenditures 

for maintenance work to be 

covered by project or work 

orders, including memoranda 

showing the estimates of costs to 

be incurred. 

5 years. 

 (b) Project or 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.

5 years. 
Docket No. RM06-11-000 - 301 -

Item no. and description Retention period 

 (c) Summaries of expenditures on 

maintenance and job orders and 

clearances to operating other 

accounts (exclusive of property 

accounts). 

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. 

25 years. See §§ 125.2(g) and 225.2(g) 

of this chapter for public utilities and 

licensees and natural gas companies. 

 (b) Continuing property inventory 

ledger, book or card records 

showing description, location, 

quantities, cost, etc., of physical 

units (or items) of property 

owned. 

25 years. See §§ 125.2(g) and 225.2(g) 

of this chapter for public utilities and 

licensees and natural gas companies. 

 (c) Operating equipment records. 3 years after disposition, termination of 
Docket No. RM06-11-000 - 302 -

Item no. and description Retention period 

lease, or write-off of property or 

investment. 

 (d) Office furniture and equipment 

records. 

3 years after disposition, termination of 

lease or write-off of property or 

investment. 

 (e) Automobiles, other vehicles and 

related garage equipment records. 

3 years after disposition, termination of 

lease or write-off of property or 

investment. 

 (f) Aircraft and airport equipment 

records. 

3 years after disposition, termination of 

lease or write-off of property or 

investment. 

 (g) Other property records not 

defined elsewhere. 

3 years after disposition, termination of 

lease or write-off of property or 

investment. 

15. Construction work in progress 

ledgers, project or work orders, and 

supplemental records: 

 (a) Construction work in progress 

ledgers. 

5 years after clearance to property 

account, provided continuing 

inventory records are maintained; 
Docket No. RM06-11-000 - 303 -

Item no. and description Retention period 

otherwise 5 years after property is 

retired. 

 (b) Project or 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 project 

or work orders to property 

records at completion. 

5 years after clearance to property 

account, provided continuing 

inventory records are maintained; 

otherwise 5 years after property is 

retired. 

 (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). 

5 years after clearance to property 

account. 

 (d) Requisitions and registers of 

authorizations for property 

expenditures. 

5 years after clearance to property 

account. 
Docket No. RM06-11-000 - 304 -

Item no. and description Retention period 

 (e) Completion or performance 

reports showing comparison 

between authorized estimates and 

actual expenditures for property 

additions. 

5 years after clearance to property 

account. 

 (f) Analysis or cost reports showing 

quantities of materials used, unit 

costs, number of man-hours etc., 

in connection with completed 

construction project. 

5 years after clearance to property 

account. 

 (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. 

Destroy at option. 

16. Retirement work in progress 

ledgers, project or work orders, and 

supplemental records: 

 (a) Project or work order sheets to 5 years after the property is retired. 
Docket No. RM06-11-000 - 305 -

Item no. and description Retention period 

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. 

5 years after the property is retired. 

 (c) Registers of retirement work. 5 years. 

17. Summary sheets, distribution 

sheets, reports, statements, and 

papers directly supporting debits and 

credits to property accounts not 

covered by construction or retirement 

project or work orders and their 

supporting records. 

5 years. 

18. Appraisals and valuations: 
Docket No. RM06-11-000 - 306 -

Item no. and description Retention period 

 (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.). 

3 years after appraisal. 

 (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. 10 years after completion of transaction 

or as ordered by the Commission. 

 (2) Asset impairments. 10 years after recognition of asset 

impairment. 

 (3) Other bases. 10 years after the asset was written up 

or down. 

19. Production maps, geological maps, 

reproductions, including aerial 

6 years after completion of project or 

work order. 
Docket No. RM06-11-000 - 307 -

Item no. and description Retention period 

photographs, showing the location of 

all facilities the subject matter of 

which falls within the project or 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 project or work 

order system. 

6 years after completion of project or 

work order. 

21. Records of building space occupied 

by various departments of the 

company. 

6 years. 

22. Contracts relating to property: 

 (a) Contracts relating to acquisition 

or sale of property. 

6 years after property is retired or sold. 

 (b) Contracts and other agreements 

relating to services performed in 

6 years after property is retired or sold. 
Docket No. RM06-11-000 - 308 -

Item no. and description Retention period 

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. 

6 years. 

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 

3 years after retirement or disposition of 

property 
Docket No. RM06-11-000 - 309 -

Item no. and description Retention period 

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. 

3 years after retirement or disposition of 

property 

25. Investment records: 

 (a) Records of investment in 

associate companies. 

3 years after disposition of investment. 

 (b) Records of other investments, 

including temporary investments 

of cash. 

3 years after disposition of investment. 

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 
Docket No. RM06-11-000 - 310 -

Item no. and description Retention period 

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. 

6 years. See §§ 125.2(g) and 225.2(g) of 

this chapter for public utilities and 

licensees and natural gas companies. 

 (2) For other goods or services 6 years. 

 (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. 

6 years. See §§ 125.2(g) and 225.2(g) of 

this chapter for public utilities and 

licensees and natural gas companies. 

27. Material ledgers: Ledger sheets of 

materials and supplies received, 

issued, and on hand. 

6 years after the date the records/ledgers 

were created. 
Docket No. RM06-11-000 - 311 -

Item no. and description Retention period 

28. Materials and supplies received and 

issued: Records showing the detailed 

distribution of materials and supplies 

issued during accounting periods 

6 years. See §§ 125.2(g) and 225.2(g) of 

this chapter for public utilities and 

licensees and natural gas companies). 

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. 

5 years. 

5 years. 

Tax 

31. Tax records: 

 (a) Copies of tax returns and 

supporting schedules filed with 

taxing authorities, supporting 

working papers, records of 
Docket No. RM06-11-000 - 312 -

Item no. and description Retention period 

appeals of tax bills, and receipts 

for payment. See Item 11 for 

vouchers evidencing 

disbursements: 

 (1) Income tax returns. 2 years after final tax liability is 

determined. 

 (2) Agreements between and 

schedule of allocation by 

associate companies of 

consolidated Federal income 

taxes. 

2 years after final tax liability is 

determined. 

 (b) Other taxes, including State or 

local property or income taxes. 

 (1) Property tax returns. 2 years after final tax liability is 

determined. 

 (2) Sales and other use taxes. 2 years. 

 (3) Other Taxes. 2 years after final tax liability is 

determined. 

 (c) Filings with taxing authorities to 

qualify employee benefit plans. 

5 years after discontinuance of plan. 
Docket No. RM06-11-000 - 313 -

Item no. and description Retention period 

 (d) Information returns and reports 

to taxing authorities. 

3 years after final tax liability is 

determined. 

Treasury 

32. Statements of funds and deposits. 

 (a) Summaries and periodic 

statements of cash balances on 

hand and with depositories for 

company or associate. 

Destroy at option after completion of 

audit by independent accountants. 

 (b) Requisitions and receipts for 

funds furnished associates and 

others. 

Destroy at option after funds have been 

returned or accounted for. 

 (c) Statements of periodic deposits 

with external fund administrators 

or trustees. 

Retain records for the most recent 3 

years. 

 (d) Statements of periodic 

withdrawals from external fund. 

Retain records for the most recent 3 

years. 

33. Records of deposits with banks and 

others: 

 (a) Statements from depositories 

showing the details of funds 

Destroy at option after completion of 

audit by independent accountants. 
Docket No. RM06-11-000 - 314 -

Item no. and description Retention period 

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. 

Payroll Records 

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. 

6 years. 

 (b) Records showing the 

distribution of salaries and wages 

paid for each payroll period and 

summaries or recapitulations of 

such distribution. 

6 years. 

Miscellaneous 

35. Financial, operating and statistical 5 years. 
Docket No. RM06-11-000 - 315 -

Item no. and description Retention period 

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. 

3 years. 

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 

5 years. 
Docket No. RM06-11-000 - 316 -

Item no. and description Retention period 

annual financial, operating and 

statistical reports. 

 (b) Monthly and quarterly reports of 

operating revenues, expenses, and 

statistics. 

5 years. 

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). 

2 years. 
Docket No. RM06-11-000 - 317 -

7. Part 369 is added to read as follows: 

PART 369 – STATEMENTS AND REPORTS (SCHEDULES)

Authority: 42 U.S.C. 16451-16463 

§ 369.1 FERC Form No. 60, Annual report of centralized service company. 

(a) Prescription. The form of annual report for centralized service companies, 

designated as FERC Form No. 60, is prescribed for the reporting year 2008 and each 

subsequent year. 

(b) Filing requirements. (1) Who must file. Unless the holding company system is 

exempted or granted a waiver by Commission rule or order pursuant to §§ 366.3 and 

366.4, every 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 then in effect 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, 2008 must be filed by 

May 1, 2009. The annual report for each year thereafter must be filed by May 1 of the 

following years. 

(ii) The annual report in effect 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 verified. Filing on electronic media pursuant to 

§ 385.2011 of this chapter is required. 
Docket No. RM06-11-000 - 318 -

PART 375 – THE COMMISSION

8. The authority citation for part 375 continues to read as follows: 

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; 42 U.S.C. 16451-16463. 

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 Systems 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. 

(e) Pass upon applications to increase the size or combine property units of 

jurisdictional companies. 

(f) Accept for filing FERC Form No. 60, FERC-61, 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 
Docket No. RM06-11-000 - 319 -

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 and requests for extensions of time for the filing of the forms under 

§§ 141.400, 260.300, 357.4, 366.23 and part 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 that, if the matters involve 

unusually large transactions or unique or controversial features, the Chief Accountant 

must present the matters to the Commission for consideration. 
Note: The following Appendices will not be published in the Code of Federal 

Regulations

APPENDIX A--FERC FORM No. 60

 Form 60 Approved 

 OMB No. 1902-0215 

 Expires 02/28/2009 

THIS FILING IS 

□ An Initial (Original) Submission 

OR 

□ Resubmission No. ______ 

FERC FINANCIAL REPORT 

FERC FORM No. 60: 

Annual Report of Centralized Service Companies 

This report is mandatory under the Public Utility 

Holding Company Act of 2005, Section 1270, 

Section 309 of the Federal Power Act and 18 

C.F.R. § 366.23. Failure to report may result in 

criminal fines, civil penalties, and other 

sanctions as provided by law. The Federal 

Energy Regulatory Commission does not 

consider this report to be of a confidential 

nature. 

Exact Legal Name of Respondent (Company) For the Year Ending 

December 31, ________ 
Docket No. RM06-11-000 - 321 -

GENERAL INSTRUCTIONS FOR FILING FERC FORM NO. 60 

I. Purpose 

Form No. 60 is an annual regulatory support requirement under 18 CFR 369.1 for centralized service 

companies. The report is designed to collect financial information from centralized service companies 

subject to the jurisdiction of the Federal Energy Regulatory Commission. The report is considered to be a 

non-confidential public use form. 

II. Who Must Submit 

Unless the holding company system is exempted or granted a waiver by Commission rule or order 

pursuant to §§ 18 CFR 366.3 and 366.4 of this chapter, every centralized service company (see § 367.2 ) 

in a holding company system must prepare and file electronically with the Commission the FERC Form 

No. 60 then in effect pursuant to the General Instructions set out in this form. 

III. How to Submit 

Submit FERC Form No. 60 electronically through the Form No. 60 Submission Software. Retain one 

copy of each report for your files. For any resubmissions, submit the filing using the Form No. 60 

Submission Software including a justification. Respondents must submit the Corporate Officer 

Certification electronically. 

IV. When to Submit 

Submit FERC Form No. 60 according to the filing date contained § 18 CFR 369.1 of the Commission’s 

regulations. 

V. Preparation

Prepare this report in conformity with the Uniform System of Accounts (18 CFR 367) (USof A). Interpret 

all accounting words and phrases in accordance with the USof A. 

VI. Time Period 

This report covers the entire calendar year. 

VII. Whole Dollar Usage

Enter in whole numbers (dollars) only, except where otherwise noted. The amounts shown on all 

supporting pages must agree with the amounts entered on the statements that they support. When 

applying thresholds to determine significance for reporting purposes, use for balance sheet accounts the 

balances at the end of the current reporting period, and use for statement of income accounts the current 

year's amounts. 

VIII. Accurateness

Complete each question fully and accurately, even if it has been answered in a previous report. Enter the 

word "None" where it truly and completely states the fact. 
Docket No. RM06-11-000 - 322 -

IX. Applicability

For any page(s) that is not applicable to the respondent, omit the page(s) and enter "NONE," or "Not 

Applicable" in column (c) on the List of Schedules, page 2. 

X. Date Format

Enter the month, day, and year for all dates. Use customary abbreviations. The "Resubmission Date" 

included in the header of each page is to be completed only for resubmissions (see III above). 

XI. Number Format

Generally, except for certain schedules, all numbers, whether they are expected to be debits or credits, 

must be reported as positive. Numbers having a sign that is different from the expected sign must be 

reported by use of a minus sign. 

XII. Required Entries

Do not make references to reports of previous years or to other reports instead of required entries, except 

as specifically authorized. 

XIII. Prior Year References 

Wherever (schedule) pages refer to figures from a previous year, the figures reported must be based upon 

those shown by the report of the previous year, or an appropriate explanation given as to why the different 

figures were used. 

XIV. Where to Send Comments on Public Reporting Burden

The public reporting burden for the Form No. 60 collection of information is estimated to average 75 

hours per response, including 

• the time for reviewing instructions, searching existing data sources, 

• gathering and maintaining the data-needed, and 

• completing and reviewing the collection of information. 

Send comments regarding these burden estimates or any aspect of this collection of information, 

including suggestions for reducing burden, to: 

Federal Energy Regulatory Commission, 

888 First Street NE 

Washington, DC 20426 

(Attention: Mr. Michael Miller, ED-33); 

And to: 

Office of Information and Regulatory Affairs, 

Office of Management and Budget, Washington, DC 20503 (Attention: Desk Officer for the Federal 

Energy Regulatory Commission). 

No person shall be subject to any penalty if any collection of information does not display a valid control 

number (44 U.S.C. 3512(a)). 

DEFINITIONS 

I. Respondent -- The person, corporation, or other legal entity in whose behalf the report is made. 
Docket No. RM06-11-000 - 323 -

FERC FORM NO. 60 

ANNUAL REPORT FOR SERVICE COMPANIES 

IDENTIFICATION 

01 Exact Legal Name of Respondent 02 Year of Report 

December 31, _____

03 Previous Name (If name changed during the year) 04 Date of Name Change 

(Month, Day, Year) 

05 Address of Principal Office at End of Year 

 (Street, City, State, Zip Code) 

06 Name of Contact Person 

07 Title of Contact Person 08 Address of Contact Person 

 (Street, City, State, Zip Code) 

09 Telephone Number of Contact Person 

 (Including Area Code) 

10 E-mail Address of Contact Person 

11 This Report is: 

(1) An Original Γ 

(2) A Resubmission Γ

 

12 Resubmission Date 

(Month, Day, Year) 

13 Date of Incorporation 14 If Not Incorporated, Date of Organization 

15 State or Sovereign Power Under Which Incorporated or Organized 

16 Name of Principal Holding Company Under Which Reporting Company is Organized: 

CORPORATE OFFICER CERTIFICATION

The undersigned officer certifies that: 

I have examined this report and to the best of my knowledge, information, and belief all statements of fact 

contained in this report are correct statements of the business affairs of the respondent and the financial 

statements, and other financial information contained in this report, conform in all material respects to the 

Uniform System of Accounts. 

17 Name of Certifying Official 

 

18 Title of Certifying Official 

19 Signature of Certifying Official 20 Date Signed 

 (Month, Day, Year) 

FERC FORM 60 (REVISED 12-07) Page 1 
Docket No. RM06-11-000 - 324 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year) 

Year of Report 

Dec 31, _____ 

LIST OF SCHEDULES

1. Enter in Column (c) the terms “None” or “Not Applicable” as appropriate, where no information or amounts have been reported for certain 

pages. Omit pages where the responses are “None” or “Not Applicable.” 

Line 

No. 

Title of Schedule 

(a) 

Reference Page 

No. 

(b) 

Remarks 

(c) 

1 Schedule I – Comparative Balance Sheet 101-102 

2 Schedule II – Service Company Property 103 

3 Schedule III – Accumulated Provision for Depreciation and Amortization of Service Company 

Property 104 

4 Schedule IV – Investments 105 

5 Schedule V – Accounts Receivable from Associate Companies 106 

6 Schedule VI – Fuel Stock Expenses Undistributed 107 

7 Schedule VII – Stores Expense Undistributed 108 

8 Schedule VIII - Miscellaneous Current and Accrued Assets 109 

9 Schedule IX - Miscellaneous Deferred Debits 110 

10 Schedule X - Research, Development, or Demonstration Expenditures 111 

11 Schedule XI - Proprietary Capital 201 

12 Schedule XII – Long Term Debt 202 

13 Schedule XIII – Current and Accrued Liabilities 203 

14 Schedule XIV- Notes to Financial Statements 204 

15 Schedule XV- Comparative Income Statement 301-302 

16 Schedule XVI- Analysis of Charges for Service- Associate and Non-Associate Companies 303-306 

17 Schedule XVII – Analysis of Billing – Associate Companies (Account 457) 307 

18 Schedule XVIII – Analysis of Billing – Non-Associate Companies (Account 458) 308 

19 Schedule XIX - Miscellaneous General Expenses (Account 930.2) 309 

20 Schedule XX - Organization Chart 401 

21 Schedule XXI - Methods of Allocation 402 

FERC FORM 60 (REVISED 12-07) Page 2 

 Year of Report 
Docket No. RM06-11-000 - 325 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year) Dec 31, _____ 

SCHEDULE I – COMPARATIVE BALANCE SHEET

1. Give balance sheet of the Company as of December 31 of the current and prior year. 

 As of December 31, 

Line 

No. 

Account 

Number 

(a) 

Title of Account 

(b) 

Reference 

Page No. 

(c) 

Current 

(d) 

Prior 

(e) 

1 Service Company Property

2 101 Service Company Property 103 

3 101.1 Property Under Capital Leases 103 

4 106 Completed Construction Not Classified 

5 107 Construction Work In Progress 103 

6 Total Property (Total Of Lines 2-5) 

7 108 Less: Accumulated Provision for Depreciation of Service Company Property 104 

8 111 Less: Accumulated Provision for Amortization of Service Company Property 

9 Net Service Company Property (Total of Lines 6-8) 

10 Investments

11 123 Investment In Associate Companies 105 

12 124 Other Investments 105 

13 128 Other Special Funds 105 

14 Total Investments (Total of Lines 11-13) 

15 Current And Accrued Assets

16 131 Cash 

17 134 Working Funds 

18 135 Other Special Deposits 

19 136 Temporary Cash Investments 105 

20 141 Notes Receivable 

21 142 Customer Accounts Receivable 

22 143 Accounts Receivable 

23 144 Less: Accumulated Provision for Uncollectible Accounts 

24 146 Accounts Receivable From Associate Companies 106 

25 152 Fuel Stock Expenses Undistributed 107 

26 154 Materials And Supplies 

27 163 Stores Expense Undistributed 108 

29 165 Prepayments 

30 171 Interest And Dividends Receivable 

31 172 Rents Receivable 

32 173 Accrued Revenues 

33 174 Miscellaneous Current and Accrued Assets 109 

34 175 Derivative Instrument Assets 

35 176 Derivative Instrument Assets – Hedges 

36 Total Current and Accrued Assets (Total of Lines 16-35) 

37 Deferred Debits

38 181 Unamortized Debt Expense 

39 182.3 Other Regulatory Assets 

40 183 Preliminary Survey And Investigation Charges 

41 184 Clearing Accounts 

42 185 Temporary Facilities 

43 186 Miscellaneous Deferred Debits 110 

44 188 Research, Development, or Demonstration Expenditures 111 

45 189 Unamortized loss on reacquired debt 

46 190 Accumulated Deferred Income Taxes 
Docket No. RM06-11-000 - 326 -

47 Total Deferred Debits (Total of Lines 38-46) 

48 TOTAL ASSETS AND OTHER DEBITS (TOTAL OF LINES 9, 14, 36 and 47) 

FERC FORM 60 (NEW 12-07) Page 101 
Docket No. RM06-11-000 - 327 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE I – COMPARATIVE BALANCE SHEET

 As of December 31, 

Line 

No. 

Account 

Number 

(a) 

Title of Account 

(b) 

Reference 

Page No. 

(c) 

Current 

(d) 

Prior 

(e) 

49 Proprietary Capital 

50 201 Common Stock Issued 201 

51 204 Preferred Stock Issued 201 

52 211 Miscellaneous Paid-In-Capital 201 

53 215 Appropriated Retained Earnings 201 

54 216 Unappropriated Retained Earnings 201 

55 219 Accumulated Other Comprehensive Income 201 

56 Total Proprietary Capital (Total of Lines 50-55) 

57 Long-Term Debt 

58 223 Advances From Associate Companies 202 

59 224 Other Long-Term Debt 202 

60 225 Unamortized Premium on Long-Term Debt 

61 226 Less: Unamortized Discount on Long-Term Debt-Debit 

62 Total Long-Term Debt (Total of Lines 58-61) 

63 Other Non-current Liabilities 

64 227 Obligations Under Capital Leases-Non-current 

65 228.2 Accumulated Provision for Injuries and Damages 

66 228.3 Accumulated Provision For Pensions and Benefits 

67 230 Asset Retirement Obligations 

68 Total Other Non-current Liabilities (Total of 

Lines 64-67)

 

69 Current and Accrued Liabilities 

 

 

70 231 Notes Payable 

71 232 Accounts Payable 

72 233 Notes Payable to Associate Companies 203 

73 234 Accounts Payable to Associate Companies 203 

74 236 Taxes Accrued 

75 237 Interest Accrued 

76 241 Tax Collections Payable 

77 242 Miscellaneous Current and Accrued Liabilities 203 

78 243 Obligations Under Capital Leases – Current 

79 244 Derivative Instrument Liabilities 

80 245 Derivative Instrument Liabilities – Hedges 

81 Total Current and Accrued Liabilities (Total of 

Lines 70-80)

 

82 Deferred Credits 

83 253 Other Deferred Credits 

84 254 Other Regulatory Liabilities 

85 255 Accumulated Deferred Investment Tax Credits

86 257 Unamortized Gain on Reacquired Debt 

87 282 Accumulated deferred income taxes-Other property 

88 283 Accumulated deferred income taxes-Other 
Docket No. RM06-11-000 - 328 -

89 Total Deferred Credits (Total of Lines 83-88) 

90 TOTAL LIABILITIES AND PROPRIETARY 

CAPITAL (TOTAL OF LINES 56, 62, 68, 81, AND 89)

 

FERC FORM 60 (REVISED 12-07) Page 102 

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE II - SERVICE COMPANY PROPERTY

1. Provide an explanation of Other Changes recorded in Column (f) considered material in a footnote. 

2. Describe each construction work in progress on lines 18 through 34 in Column (b).

Line 

No. 

Account 

Number 

(a) 

Title of Account 

(b) 

Balance at 

Beginning 

of Year 

(c) 

Additions 

(d) 

Retirements 

or 

Sales 

(e) 

Other 

Changes 

(f) 

Balance 

At Close 

of Year 

(g) 

1 301 Organization 

2 303 Miscellaneous Intangible Plant 

3 306 Leasehold Improvements 

4 389 Land and Land Rights 

5 390 Structures and Improvements 

6 391 Office Furniture and Equipment 

7 392 Transportation Equipment 

8 393 Stores equipment 

9 394 Tools, Shop and Garage 

Equipment 

 

10 395 Laboratory Equipment 

11 396 Power Operated Equipment 

12 397 Communications Equipment 

13 398 Miscellaneous Equipment 

14 399 Other Tangible Property 

15 399.1 Asset Retirement Costs 

16 Total Service Company Property 

(Total of Lines 1-15) 

 

17 107 Construction Work in Progress: 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 Total Account 107 (Total of 

Lines 18-34) 

 

36 Total (Lines 16 and Line 35) 
Docket No. RM06-11-000 - 329 -

FERC FORM 60 (REVISED 12-07) Page 103 

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE III – ACCUMULATED PROVISION FOR DEPRECIATION AND AMORTIZATION OF SERVICE 

COMPANY PROPERTY

1. Provide an explanation of Other Changes in Column (f) considered material in a footnote.

Line 

No. 

Account 

Number 

(a) 

Description 

(b) 

Balance at 

Beginning 

of Year 

(c) 

Additions 

Charged 

to 

Account 

403-403.1 

404-405 

(d) 

Retirements 

(e) 

Other 

Changes 

Additions 

(Deductions) 

(f) 

Balance 

At Close 

of Year 

(g) 

1 301 Organization 

2 303 Miscellaneous Intangible 

Plant 

 

3 306 Leasehold Improvements 

4 389 Land and Land Rights 

5 390 Structures and 

Improvements 

 

6 391 Office Furniture and 

Equipment 

7 392 Transportation Equipment 

8 393 Stores equipment 

9 394 Tools, Shop and Garage 

Equipment 

 

10 395 Laboratory Equipment 

11 396 Power Operated Equipment 

12 397 Communications Equipment 

13 398 Miscellaneous Equipment 

14 399 Other Tangible Property 

15 399.1 Asset Retirement Costs 

 Total 

 

FERC FORM 60 (NEW 12-05) Page 104 
Docket No. RM06-11-000 - 330 -

Name of Respondent 

This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

 (Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE IV – INVESTMENTS

1. For other investments (Account 124), in a footnote state each investment separately, with description including the name of 

issuing company, number of shares held or principal investment amount. 

2. For temporary cash investments (Account 136), list each investment separately in a footnote. 

3. Investments less than $50,000 may be grouped, showing the number of items in each group. 

Line 

No. 

Account 

Number 

(a) 

Title of Account 

(b) 

Balance at 

Beginning 

of Year 

(c) 

Balance 

At Close 

of Year 

(d) 

1 123 Investment In Associate Companies 

2 124 Other Investments 

3 128 Other Special Funds 

4 136 Temporary Cash Investments 

5 (Total of Lines 1-4) 

 

FERC FORM 60 (REVISED 12-07) Page 105 
Docket No. RM06-11-000 - 331 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE V – ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES

1. List the accounts receivable from each associate company. 

2. If the service company has provided accommodation or convenience payments for associate companies, provide in a separate 

footnote a listing of total payments for each associate company. 

Line 

No. 

Account 

Number 

(a) 

Title of Account 

(b) 

Balance at 

Beginning 

of Year 

(c) 

Balance 

At Close 

of Year 

(d) 

1 146 Accounts Receivable From Associate Companies 

2 Associate Company: 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 TOTAL 

FERC FORM 60 (REVISED 12-07) Page 106 
Docket No. RM06-11-000 - 332 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE VI – FUEL STOCK EXPENSES UNDISTRIBUTED

1. List the amount of labor in Column (c) and expenses in Column (d) incurred with respect to fuel stock expenses during the 

year and indicate amount attributable to each associate company. 

2. In a separate footnote, describe in a narrative the fuel functions performed by the service company. 

Line 

No. 

Account 

Number 

(a) 

Title of Account 

(b) 

Labor 

(c) 

Expenses 

(d) 

Total 

(e) 

1 152 Fuel Stock Expenses Undistributed 

2 Associate Company: 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 

38 

39 TOTAL 

FERC FORM 60 (REVISED 12-07) Page 107 
Docket No. RM06-11-000 - 333 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE VII – STORES EXPENSE UNDISTRIBUTED

1. List the amount of labor in Column (c) and expenses in Column (d) incurred with respect to stores expense during the year and 

indicate amount attributable to each associate company. 

Line 

No. 

Account 

Number 

(a) 

Title of Account 

(b) 

Labor 

(c) 

Expenses 

(d) 

Total 

(e) 

1 163 Stores Expense Undistributed 

2 Associate Company: 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 TOTAL 

FERC FORM 60 (REVISED 12-07) Page 108 
Docket No. RM06-11-000 - 334 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE VIII – MISCELLANEOUS CURRENT AND ACCRUED ASSETS

1. Provide detail of items in this account. Items less than $50,000 may be grouped, showing the number of items in each group.

Line 

No. 

Account 

Number 

(a) 

Title of Account 

(b) 

Balance at 

Beginning 

of Year 

(c) 

Balance 

At Close 

of Year 

(d) 

1 174 Miscellaneous Current and Accrued Assets 

2 Items List: 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 

38 

39 

40 TOTAL 

FERC FORM 60 (NEW 12-07) Page 109
Docket No. RM06-11-000 - 335 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE IX – MISCELLANEOUS DEFERRED DEBITS

1. Provide detail of items in this account. Items less than $50,000 may be grouped, showing the number of items in each group.

Line 

No. 

Account 

Number 

(a) 

Title of Account 

(b) 

Balance at 

Beginning 

of Year 

(c) 

Balance 

At Close 

of Year 

(d) 

1 186 Miscellaneous Deferred Debits 

2 Items List: 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 

38 

39 

40 

41 

42 TOTAL 

FERC FORM 60 (REVISED 12-07) Page 110 
Docket No. RM06-11-000 - 336 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE X – RESEARCH, DEVELOPMENT OR DEMONSTRATION EXPENDITURES

1. Describe each material research, development, or demonstration project that incurred costs by the service corporation during

the year. Items less than $50,000 may be grouped, showing the number of items in each group. 

Line 

No. 

Account 

Number 

(a) 

Title of Account 

(b) 

Amount 

(c) 

1 188 Research, Development, or Demonstration Expenditures 

2 Project Description: 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 

38 

39 

40 TOTAL 

FERC FORM 60 (REVISED 12-07) Page 111 
Docket No. RM06-11-000 - 337 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE XI – PROPRIETARY CAPITAL 

1. For miscellaneous paid-in capital (Account 211) and appropriate retained earnings (Account 215), classify amounts in each 

account, with a brief explanation, disclosing the general nature of transactions which give rise to the reported amounts. 

2. For the unappropriated retained earnings (Account 216), in a footnote, give particulars concerning net income or (loss) during 

the year, distinguishing between compensation for the use of capital owed or net loss remaining from servicing non-associates 

per the General Instructions of the Uniform System of Accounts. For dividends paid during the year in cash or otherwise, 

provide rate percentages, amount of dividend, date declared and date paid.

Line 

No. 

Account 

Number 

(a) 

Title of Account 

(b) 

Description 

(c) 

Amount 

(d) 

1 201 Common Stock Issued Number of Shares Authorized 

2 Par or Stated Value per Share 

3 Outstanding Number of Shares 

4 Close of Period Amount 

5 204 Preferred Stock Issued Number of Shares Authorized 

6 Par or Stated Value per Share 

7 Outstanding Number of Shares 

8 Close of Period Amount 

9 211 Miscellaneous Paid-In Capital 

10 215 Appropriated Retained 

Earnings 

11 219 Accumulated Other 

Comprehensive Income 

12 216 Unappropriated Retained 

Earnings 

Balance at Beginning of Year 

13 Net Income or (Loss) 

14 Dividend Paid 

15 Balance at Close of Year 
Docket No. RM06-11-000 - 338 -

 

FERC FORM 60 (REVISED 12-07) Page 201 
Docket No. RM06-11-000 - 339 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE XII – LONG-TERM DEBT

1. Advances from associate companies should be reported separately for advances on notes, and advances on open accounts. 

Names of associate companies from which advances were received shall be shown under the class and series of obligation in 

Column (c). 

2. For the deductions in Column (h), please give an explanation in a footnote. 

3. For other long-term debt (Account 224), list the name of the creditor company or organization in Column (b). 

Line 

No. 

Account 

Number 

(a) 

Title of 

Account 

(b) 

Term of 

Obligation 

Class & 

Series of 

Obligation 

(c) 

Date of 

Maturity 

(d) 

Interest 

Rate 

(e) 

Amount 

Authorized 

(f) 

Balance at 

Beginning 

of Year 

(g) 

Additions 

Deductions 

(h) 

Balance 

at Close 

of Year 

(i) 

1 223 Advances 

from 

Associate 

Companies 

2 Associate 

Company: 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 TOTAL 

14 224 Other LongTerm Debt 

15 List 

Creditor: 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 TOTAL 

FERC FORM 60 (REVISED 12-07) Page 202 
Docket No. RM06-11-000 - 340 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE XIII – CURRENT AND ACCRUED LIABILITIES

1. Provide the balance of notes and accounts payable to each associate company (Accounts 233 and 234). 

2. Give description and amount of miscellaneous current and accrued liabilities (Account 242). Items less than $50,000 may be grouped, showing the 

number of items in each group. 

Line 

No. 

Account 

Number 

(a) 

Title of Account 

(b) 

Balance at Beginning of Year 

(c) 

Balance at Close of Year 

(d) 

1 233 Notes Payable to Associates Companies: 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 234 Accounts Payable to Associate Companies: 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 

38 

39 

40 

41 

42 

43 

44 

45 

46 

47 

48 

49 

50 

51 242 Miscellaneous Current and Accrued Liabilities: 

52 

53 

54 

55 
Docket No. RM06-11-000 - 341 -

56 

57 

58 

59 

FERC FORM 60 (NEW 12-07 Page 203 
Docket No. RM06-11-000 - 342 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE XIV – NOTES TO FINANCIAL STATEMENTS

1. Use the space below for important notes regarding the financial statements or any account thereof. 

2. Furnish particulars as to any significant contingent assets or liabilities existing at the end of the year. 

3. Furnish particulars as to any significant increase in services rendered or expenses incurred during the year. 

4. Furnish particulars as to any amounts recorded in Account 434, Extraordinary Income, or Account 435, Extraordinary 

Deductions. 

5. Notes relating to financial statements shown elsewhere in this report may be indicated here by reference. 
Docket No. RM06-11-000 - 343 -

FERC FORM 60 (REVISED 12-07) Page 204 

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE XV – COMPARATIVE INCOME STATEMENT

Line 

No. 

Account 

Number 

(a) 

Title of Account 

(b) 

Current Year 

(c) 

Prior Year 

(d) 

1 SERVICE COMPANY OPERATING REVENUES 

2 400 Service Company Operating Revenues 

3 SERVICE COMPANY OPERATING EXPENSES 

4 401 Operation Expenses 

5 402 Maintenance Expenses 

6 403 Depreciation Expenses 

7 403.1 Depreciation Expense for Asset Retirement Costs 

8 404 Amortization of Limited-Term Property 

9 405 Amortization of Other Property 

10 407..3 Regulatory Debits 

11 407.4 Regulatory Credits 

12 408.1 Taxes Other Than Income Taxes, Operating Income 

13 409.1 Income Taxes, Operating Income 

14 410.1 Provision for Deferred Income Taxes, Operating Income 

15 411.1 Provision for Deferred Income Taxes – Credit , Operating 

Income 

 

16 411.4 Investment Tax Credit, Service Company Property 

17 411.6 Gains from Disposition of Service Company Plant 

18 411.7 Losses from Disposition of Service Company Plant 

19 411.10 Accretion Expense 

20 412 Costs and Expenses of Construction or Other Services 

21 416 Costs and Expenses of Merchandising, Jobbing, and Contract 

Work 

 

22 TOTAL SERVICE COMPANY OPERATING EXPENSES 

(Total of Lines 4-21) 

 

23 NET SERVICE COMPANY OPERATING INCOME (Total of 

Lines 2 less 22) 

 

24 OTHER INCOME 

25 418.1 Equity in Earnings of Subsidiary Companies

26 419 Interest and Dividend Income 

27 419.1 Allowance for Other Funds Used During Construction 

28 421 Miscellaneous Income or Loss 

29 421.1 Gain on Disposition of Property

30 TOTAL OTHER INCOME (Total of Lines 25-29) 

31 OTHER INCOME DEDUCTIONS 

32 421.2 Loss on Disposition of Property 

33 425 Miscellaneous Amortization 

34 426.1 Donations 

35 426.2 Life Insurance 

36 426.3 Penalties 

37 426.4 Expenditures for Certain Civic, Political and Related Activities 

38 426.5 Other Deductions 

39 TOTAL OTHER INCOME DEDUCTIONS (Total of Lines 32-

38) 

 

FERC FORM 60 (REVISED 12-07) Page 301 
Docket No. RM06-11-000 - 344 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE XV – COMPARATIVE INCOME STATEMENT

Line 

No. 

Account 

Number 

(a) 

Title of Account 

(b) 

Current Year 

(c) 

Prior Year 

(d) 

40 TAXES APPLICABLE TO OTHER INCOME AND 

DEDUCTIONS 

41 408.2 Taxes Other Than Income Taxes, Other Income and Deductions 

42 409.2 Income Taxes, Other Income and Deductions 

43 410.2 Provision for Deferred Income Taxes, Other Income and 

Deductions 

44 411.2 Provision for Deferred Income Taxes – Credit, Other Income 

and Deductions 

 

45 411.5 Investment Tax Credit, Other Income Deductions 

46 TOTAL TAXES APPLICABLE TO OTHER INCOME AND 

DEDUCTIONS (Total of Lines 41-45) 

 

47 INTEREST CHARGES

48 427 Interest on Long-Term Debt 

49 428 Amortization of Debt Discount and Expense 

50 429 (less) Amortization of Premium on Debt- Credit 

51 430 Interest on Debt to Associate Companies 

52 431 Other Interest Expense 

53 432 (less) Allowance for Borrowed Funds Used During 

Construction-Credit 

 

54 TOTAL INTEREST CHARGES (Total of Lines 48-53) 

55 NET INCOME BEFORE EXTRAORDINARY ITEMS (Total 

of Lines 21, 28, 37, 44, and 52) 

 

56 EXTRAORDINARY ITEMS 

57 434 Extraordinary Income 

58 435 (less) Extraordinary Deductions 

59 Net Extraordinary Items (Line 57 less Line 58) 

60 409.4 (less) Income Taxes, Extraordinary 

61 Extraordinary Items After Taxes (Line 59 less Line 60) 

62 NET INCOME OR LOSS/COST OF SERVICE (Total of Lines 

55-61) 

 

FERC FORM 60 (REVISED 12-07) Page 302 
Docket No. RM06-11-000 - 345 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE XVI - ANALYSIS OF CHARGES FOR SERVICE – ASSOCIATE AND NON-ASSOCIATE COMPANIES

Line 

No. 

Acct Description Associate Company Non-associate Company Total Charges For Services 

 Direct 

Cost 

Indirect 

Cost 

Total 

Cost 

Direct 

Cost 

Indirect 

Cost 

Total 

Cost 

Direct 

Cost 

Indirect 

Cost 

Total 

Cost 

1 403- 

403.1 Depreciation Expense 

2 404- 

405 Amortization Expense 

3 407.3-

407.4 Regulatory Debits/Credits – Net 

4 408.1- 

408.2 Taxes Other Than Income Taxes 

5 409.1- 

409.3 Income Taxes 

6 410.1- 

411.2 Provision for Deferred Taxes 

7 411.1- 

411.2 Provision for Deferred Taxes – Credit 

8 411.6 Gain from Disposition of Service Company Plant 

9 411.7 Losses from Disposition of Service Company Plant 

10 411.4- 

411.5 Investment Tax Credit Adjustment 

11 411.10 Accretion Expense 

12 412 Costs and Expenses of Construction or Other 

Services 

13 416 Costs and Expenses of Merchandising, Jobbing, and 

Contract Work for Associated Companies 

11 418 Non-operating Rental Income 

12 418.1 Interest and Dividend Income 

13 419.1 Allowance for Other Funds Used During 

Construction 

14 421 Miscellaneous Income or Loss 

15 421.1 Gain on Disposition of Property 

16 421.2 Loss on Disposition Of Property 

17 425 Miscellaneous Amortization 

18 426.1 Donations 

19 426.2 Life Insurance 

20 426.3 Penalties 

21 426.4 Expenditures for Certain Civic, Political and Related 

Activities 

22 426.5 Other Deductions 

23 427 Interest On Long-Term Debt 

24 428 Amortization of Debt Discount and Expense 

25 429 Amortization of Premium on Debt – Credit 

26 430 Interest on Debt to Associate Companies 

27 431 Other Interest Expense 

28 500- 

509 Total Steam Power Generation Operation Expenses 

29 510-515 Total Steam Power Generation Maintenance 

Expenses 

30 517- Total Nuclear Power Generation Operation Expenses 
Docket No. RM06-11-000 - 346 -

525 

31 528-532 Total Nuclear Power Generation Maintenance 

Expenses 

32 535- 

540.1 

Total Hydraulic Power Generation Operation 

Expenses 

33 541- 

545.1 

Total Hydraulic Power Generation Maintenance 

Expenses 

FERC FORM 60 (REVISED 12-07) Page 303 

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE XVI - ANALYSIS OF CHARGES FOR SERVICE – ASSOCIATE AND NON-ASSOCIATE COMPANIES

Line 

No. 

Acct Description Associate Company Non-associate Company Total Charges For Services 

 Direct 

Cost 

Indirect 

Cost 

Total 

Cost 

Direct 

Cost 

Indirect 

Cost 

Total 

Cost 

Direct 

Cost 

Indirect 

Cost 

Total 

Cost 

34 546- 

550.1 Total Other Power Generation Operation Expenses 

35 551- 

554.1 Total Other Power Generation Maintenance Expenses 

36 555-

557 Total Other Power Supply Operation Expenses 

37 560 Operation Supervision and Engineering 

38 561.1 Load Dispatch-Reliability 

39 561.2 Load Dispatch-Monitor and Operate Transmission 

System. 

40 561.3 Load Dispatch-Transmission Service and Scheduling 

41 561.4 Scheduling, System Control and Dispatch Services 

42 561.5 Reliability Planning and Standards Development 

43 561.6 Transmission Service Studies 

44 561.7 Generation Interconnection Studies 

45 561.8 Reliability Planning and Standards Development 

Services 

46 562 Station Expenses (Major Only) 

47 563 Overhead Line Expenses (Major Only) 

48 564 Underground Line Expenses (Major Only) 

49 565 Transmission of Electricity by Others (Major Only) 

50 566 Miscellaneous Transmission Expenses (Major Only) 

51 567 Rents 

52 567.1 Operation Supplies and Expenses (Nonmajor Only) 

53 Total Transmission Operation Expenses 

54 568 Maintenance Supervision and Engineering (Major 

Only) 

55 569 Maintenance of Structures (Major Only) 

56 569.1 Maintenance of Computer Hardware 

57 569.2 Maintenance of Computer Software 

58 569.3 Maintenance of Communication Equipment 

59 569.4 Maintenance of Miscellaneous Regional Transmission 

Plant 

60 570 Maintenance of Station Equipment (Major Only) 

61 571 Maintenance of Overhead Lines (Major Only) 
Docket No. RM06-11-000 - 347 -

62 572 Maintenance of Underground Lines (Major Only) 

63 573 Maintenance of Miscellaneous Transmission Plant 

(Major Only) 

64 574 Maintenance of Transmission Plant (Nonmajor Only) 

65 Total Transmission Maintenance Expenses 

66 575.1- 

575.8 Total Regional Market Operation Expenses 

67 576.1- 

576.5 Total Regional Market Maintenance Expenses 

68 580- 

589 Total Distribution Operation Expenses 

69 590- 

598 Total Distribution Maintenance Expenses 

70 Total Electric Operation and Maintenance Expenses 

FERC FORM 60 (REVISED 12-07) Page 304 

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE XVI - ANALYSIS OF CHARGES FOR SERVICE – ASSOCIATE AND NON-ASSOCIATE COMPANIES

Line 

No. 

Acct Description Associate Company Non-associate Company Total Charges For Services 

 Direct 

Cost 

Indirect 

Cost 

Total 

Cost 

Direct 

Cost 

Indirect 

Cost 

Total 

Cost 

Direct 

Cost 

Indirect 

Cost 

Total 

Cost 

71 800- 

812 Total Other Gas Supply Operation Expenses 

72 814- 

826 Total Underground Storage Operation Expenses 

73 830- 

837 Total Underground Storage Maintenance Expenses 

74 840-

842.3 Total Other Storage Operation Expenses 

75 843.1- 

843.9 Total Other Storage Maintenance Expenses 

76 844.1- 

846.2 

Total Liquefied Natural Gas Terminaling and 

Processing Operation Expenses 

77 847.1- 

847.8 

Total Liquefied Natural Gas Terminaling and 

Processing Maintenance Expenses 

78 850 Operation Supervision and Engineering 

79 851 System Control and Load Dispatching. 

80 852 Communication System Expenses 

81 853 Compressor Station Labor and Expenses 

82 854 Gas for Compressor Station Fuel 

83 855 Other Fuel and Power for Compressor Stations 

84 856 Mains Expenses 

85 857 Measuring and Regulating Station Expenses 

86 858 Transmission and Compression of Gas By Others 

87 859 Other Expenses 

88 860 Rents 

89 Total Gas Transmission Operation Expenses 

90 861 Maintenance Supervision and Engineering 
Docket No. RM06-11-000 - 348 -

91 862 Maintenance of Structures and Improvements 

92 863 Maintenance of Mains 

93 864 Maintenance of Compressor Station Equipment 

94 865 Maintenance of Measuring And Regulating Station 

Equipment 

95 866 Maintenance of Communication Equipment 

96 867 Maintenance of Other Equipment 

97 Total Gas Transmission Maintenance Expenses 

98 871- 

881 Total Distribution Operation Expenses 

99 885- 

894 Total Distribution Maintenance Expenses 

100 Total Natural Gas Operation and Maintenance 

Expenses 

101 901 Supervision 

102 902 Meter reading expenses 

103 903 Customer records and collection expenses 

104 904 Uncollectible accounts 

105 905 Miscellaneous customer accounts expenses 

106 906 Total Customer Accounts Operation Expenses 

107 907 Supervision 

FERC FORM 60 (REVISED 12-07) Page 305 

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE XVI - ANALYSIS OF CHARGES FOR SERVICE – ASSOCIATE AND NON-ASSOCIATE COMPANIES

Line 

No. 

Acct Description Associate Company Non-associate Company Total Charges For Services 

 Direct 

Cost 

Indirect 

Cost 

Total 

Cost 

Direct 

Cost 

Indirect 

Cost 

Total 

Cost 

Direct 

Cost 

Indirect 

Cost 

Total 

Cost 

108 908 Customer assistance expenses 

109 909 Informational And Instructional Advertising Expenses 

110 910 Miscellaneous Customer Service And Informational 

Expenses 

111 Total Service and Informational Operation Accounts 

112 911 Supervision 

113 912 Demonstrating and Selling Expenses 

114 913 Advertising Expenses 

115 916 Miscellaneous Sales Expenses 

116 Total Sales Operation Expenses 

117 920 Administrative and General Salaries 

118 921 Office Supplies and Expenses 

119 923 Outside Services Employed 

120 924 Property Insurance 

121 925 Injuries and Damages 

122 926 Employee Pensions and Benefits 
Docket No. RM06-11-000 - 349 -

123 928 Regulatory Commission Expenses 

124 930.1 General Advertising Expenses 

125 930.2 Miscellaneous General Expenses 

126 931 Rents 

127 Total Administrative and General Operation Expenses 

128 935 Maintenance of Structures and Equipment 

129 Total Administrative and General Maintenance 

Expenses 

130 Total Cost of Service 

FERC FORM 60 (REVISED 12-07) Page 306 
Docket No. RM06-11-000 - 350 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE XVII - ANALYSIS OF BILLING - ASSOCIATE COMPANIES (ACCOUNT 457)

Report in a footnote the basis of how the amounts of compensation for use capital are assigned to the associate and 

non-associate companies. If amounts are allocated differently for certain companies, please provide all details 

regarding the difference. 

Line 

No. 

Name of Associate Company Direct Costs 

Charged 

Indirect Costs 

Charged 

Compensation 

For Use 

Of Capital 

Total 

Amount 

Billed 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

36 

37 

38 

39 

40 
Docket No. RM06-11-000 - 351 -

42 

43 

44 

FERC FORM 60 (REVISED 12-07) Page 307 

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE XVIII - ANALYSIS OF BILLING - NON-ASSOCIATE COMPANIES (ACCOUNT 458)

1. Provide a brief description of the services rendered to each non-associate company in a footnote. 

2. Report in a footnote the basis of how the amounts of compensation for use capital are assigned to the associate and non-associate companies. If amounts are 

allocated differently for certain companies, please provide all details regarding the difference.

Line 

No. 

Name of Non-associate Company Direct Costs 

Charged 

Indirect 

Costs 

Charged 

Compensation 

For Use 

Of Capital 

Excess or 

Deficiency on 

Servicing Nonassociate Utility 

Companies 

Total 

Amount 

Billed 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 
Docket No. RM06-11-000 - 352 -

35 

36 

37 

38 

39 

40 

41 

42 

43 

44 

FERC FORM 60 (REVISED 12-07) Page 308 

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE XIX - MISCELLANEOUS GENERAL EXPENSES - ACCOUNT 930.2

1. Provide a listing of the amount included in Account 930.2, "Miscellaneous General Expenses" classifying such expenses according 

to their nature. Amounts less than $50,000 may be grouped showing the number of items and the total for the group. 

2. Payments and expenses permitted by Section 321 (b)(2) of the Federal Election Campaign Act, as amended by Public Law 94-283 

in 1976 (2 U.S.C. 441(b)(2)) shall be separately classified.

Line 

No. 

Description 

(a) 

Amount 

(b) 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 
Docket No. RM06-11-000 - 353 -

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

FERC FORM 60 (REVISED 12-07) Page 309 
Docket No. RM06-11-000 - 354 -

Name of Respondent This Report is: 

 (1) Γ An Original 

 (2) Γ A Resubmission 

Resubmission Date 

(Month, Day, Year)

Year of Report 

Dec 31, _____ 

SCHEDULE XX - ORGANIZATION CHART

1. Provide a graphical presentation of the relationships and inter relationships within the service company that identifies lines of 

authority and responsibility in the organization. 

FERC FORM 60 (REVISED 12-07) Page 401 
RM06-11-000 

Appendix B 

List of Commenters

1. American Public Power Association and the Florida Municipal Power Agency 

jointly filed Comments (APPA) 

2. Edison Electric Institute (EEI) 

3. National Association of Regulatory Utility Commissioners (NARUC) 

4. National Grid USA (National Grid) 

5. NiSource, Inc. (NiSource) 

6. Progress Energy, Inc. (Progress Energy) 

7. Public Service Enterprise Group Incorporated (PSEG Companies) 

8. Southern Company Services and Southern Nuclear Operating Company 

(Southern) 

9. Xcel Energy Services, Inc. (XES) 

List of Supplemental Commenters

1. CMS Energy Corporation and Consumers Energy Company jointly filed 

Supplemental Comments (CMS) 

2. Edison Electric Institute (EEI) 

3. FirstEnergy Service Company (FirstEnergy) 

4. National Association of Regulatory Utility Commissioners (NARUC) 

5. National Rural Electric Cooperative Association (NRECA) 

6. NiSource, Inc. (NiSource) 

7. Pepco Holdings and PHI Service Company jointly filed Supplemental Comments 

(PHI Companies) 

8. Seminole Electric Cooperative, Inc. (Seminole) 

9. Southern Company Services and Southern Nuclear Operating Company 

(Southern) 

10.Xcel Energy Services, Inc. (XES)