42284 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1767

RIN 0572–AB36

Accounting Requirements for RUS

Electric Borrowers

AGENCY: Rural Utilities Service, USDA.

ACTION: Final rule.

SUMMARY: This final rule amends the

Rural Utilities Service’s regulations on

accounting policies and procedures for

RUS electric borrowers. This final rule

amends the regulations pertaining to

departures from the prescribed RUS

Uniform System of Accounts (USoA), by

allowing RUS borrowers to implement

certain revenue and expense deferral

plans without obtaining prior RUS

approval. It also institutes activity-based

costing (functional accounting)

requirements for employee pensions

and benefits, payroll taxes, and

insurance and establishes a new

accounting interpretation that addresses

the accounting requirements set forth in

Statement of Financial Accounting

Standards No. 121, Accounting for the

Impairment of Long-Lived Assets and

for Long-Lived Assets to be Disposed of,

within the framework of the RUS USoA.

This final rule also establishes uniform

accounting procedures for the National

Rural Electric Cooperative Association’s

(NRECA) Split-Dollar life insurance

program, the NRECA Special Early

Retirement program, and the automatic

meter reading system developed by

Hunt Technologies, Inc., global

positioning systems, and radio-based

remote meter reading systems. This final

rule also amends Accounting

Interpretation No. 104 to record plant

contributed by an RUS electric

cooperative as an intangible asset.

EFFECTIVE DATE: September 5, 1997.

FOR FURTHER INFORMATION CONTACT: Ms.

Roberta D. Purcell, Director, Program

Accounting Services Division, Rural

Utilities Service, Stop 1523, Room 2221,

South Building, U.S. Department of

Agriculture, 1400 Independence

Avenue, SW., Washington, DC 20250–

1523, telephone number (202) 720–

9450.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This final rule has been determined to

be not significant for the purposes of

Executive Order 12866 and therefore

has not been reviewed by the Office of

Management and Budget (OMB).

Regulatory Flexibility Act Certification

The Administrator of RUS has

determined that a rule relating to the

RUS electric loan program is not a rule

as defined in the Regulatory Flexibility

Act (5 U.S.C. 601 et seq.), and, therefore,

the Regulatory Flexibility Act does not

apply to this final rule.

Information Collection and

Recordkeeping Requirements

The reporting and recordkeeping

requirements contained in this final rule

were approved by OMB pursuant to the

Paperwork Reduction Act of 1995 (44

U.S.C. Chapter 35, as amended) under

control number 0572–0002.

Send questions or comments

regarding this burden or any aspect of

this information collection, including

suggestions for reducing the burden to

F. Lamont Heppe, Jr., Director, Program

Support and Regulatory Analysis, Rural

Utilities Service, U.S. Department of

Agriculture, 1400 Independence Ave.,

SW., STOP 1522, Room 4034,

Washington, DC 20250–1522.

National Environment Policy Act

Certification

The Administrator, RUS, has

determined that this final rule will not

significantly affect the quality of the

human environment as defined by the

National Environmental Policy Act of

1969 (42 U.S.C. 4321 et seq.). Therefore,

this action does not require an

environmental impact statement or

assessment.

Catalog of Federal Domestic Assistance

The program described by this final

rule is listed in the Catalog of Federal

Domestic Assistance Program under

number 10.850—Rural Electrification

Loans and Loan Guarantees. This

catalog is available on a subscription

basis from the Superintendent of

Documents, the United States

Government Printing Office,

Washington, DC 20402–9325.

Executive Order 12372

This final rule is excluded from the

scope of Executive Order 12372,

Intergovernmental Consultation. A

notice of final rule entitled Department

Programs and Activities Excluded from

Executive Order 12372 (50 FR 47034)

exempts RUS electric loans and loan

guarantees to governmental and

nongovernmental entities from coverage

under this order.

National Performance Review

This regulatory action is being taken

as part of the National Performance

Review program to eliminate

unnecessary regulations and improve

those that remain in force.

Civil Justice Reform

This final rule has been reviewed

under Executive Order 12988, Civil

Justice Reform. RUS has determined

that this final rule meets the applicable

standards provided in Sec. 3, of the

Executive Order.

Background

In order to facilitate the effective and

economical operation of a business

enterprise, adequate and reliable

financial records must be maintained.

Accounting records must provide a

clear, accurate picture of current

economic conditions from which

management can make informed

decisions in charting the company’s

future. The rate-regulated environment

in which an electric utility operates

causes an even greater need for financial

information that is accurate, complete,

and comparable with that of other

electric utilities.

RUS, as a Federal lender and

mortgagee, and in furthering the

objectives of the Rural Electrification

Act (RE Act) (7 U.S.C. 901 et seq.) has

a legitimate programmatic interest and a

substantial financial interest in

requiring adequate records to be

maintained. In order to provide RUS

with financial information that can be

analyzed and compared with the

operations of other borrowers in the

RUS program, all RUS borrowers must

maintain financial records that utilize

uniform accounts and uniform

accounting policies and procedures. The

standard RUS security instrument,

therefore, requires borrowers to

maintain their books, records, and

accounts in accordance with methods

and principles of accounting prescribed

by RUS in the RUS USoA for its electric

borrowers.

To ensure that borrowers consistently

account for their financial operations

and keep pace with the ever-changing

environment in which they operate, as

well as apply the provisions of recent

pronouncements of the Financial

Accounting Standards Boards, the USoA

must be revised and updated as changes

in the industry and generally accepted

accounting principles occur. RUS is,

therefore, revising Section 1767.13,

Departures from the Prescribed RUS

Uniform System of Accounts, to identify

certain revenue and expense deferral

plans that may be implemented without

the prior written approval of RUS.

When RUS adopted the requirements set

forth in Section 1767.13 in 1993, RUS

borrowers were implementing a variety

of revenue and expense deferral plans,
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42285

many without RUS knowledge or

approval. Since the adoption of these

requirements, RUS has been able to

better determine the types of deferral

plans being routinely adopted by its

borrowers and the impact of these plans

on loan security. History has shown that

RUS has routinely approved the deferral

of certain revenues and expenses and

the accelerated amortization of

previously deferred costs that have a

minimal impact on loan security,

provided that the information necessary

for RUS to evaluate the action was

submitted. In an effort to reduce

paperwork requirements for both RUS

and its borrowers, RUS is eliminating

the requirement to obtain prior RUS

approval to implement certain specific

types of deferrals and accelerated

amortizations of previously deferred

expenses that have been routinely

approved for all borrowers in the past.

With the issuance, by the Federal

Energy Regulatory Commission (FERC),

of Orders 888 and 889 on April 24, 1996

(61 FR 21540–21736; 21737–21854 (May

10, 1996) on open access, it is essential

that rural electric cooperatives

effectively and efficiently cost their

products and services if they are to

compete in an open market. Before

products and services may be effectively

priced in an open market, management

must have reliable financial information

concerning the actual cost of the

products and services it provides. Costs,

therefore, must be accumulated on a

functional basis. Salaries, materials, and

many other expenses incurred in utility

operations are already accounted for on

a functional basis. Employee pensions

and benefits, payroll taxes, and

insurance costs, however, are not,

except to the extent that they are

charged to construction and retirement

activities. RUS is, therefore, revising its

USoA to require borrowers to allocate

employee pensions and benefits

expense, as well as payroll taxes and

insurance costs currently recorded in

Accounts 408, Taxes Other than Income

Taxes; 924, Property Insurance; 925,

Injuries and Damages; and 926,

Employee Pensions and Benefits; to the

appropriate functional operations,

maintenance, and administrative

expense accounts. Additionally, RUS is

amending the operations, maintenance,

and administrative expense accounts to

which labor charges are accrued to

reflect this activity-based costing

methodology. Accordingly, RUS is also

amending the accounting interpretations

that address insurance and pensions

and benefits expense to reflect this cost

allocation procedure.

This rule also revises Section 1767.41

by establishing a new accounting

interpretation that addresses the

provisions of the recently issued

pronouncement of the Financial

Accounting Standards Board, Statement

of Financial Accounting Standards No.

121, Accounting for the Impairment of

Long-Lived Assets and for Long-Lived

Assets to be Disposed of. RUS instructs

its borrowers, with qualifying assets, as

to the proper accounts to be used within

the framework of the RUS USoA. Copies

of Statements of Financial Accounting

Standards may be obtained from the

Order Department of the Financial

Accounting Standards Board, 401

Merritt 7, P.O. Box 5116, Norwalk,

Connecticut 06856–5116.

RUS is also adopting new accounting

interpretations that establish the

accounting policies and procedures for

the NRECA Split-Dollar life insurance

program and the NRECA Special Early

Retirement (SERP) program. The SplitDollar life insurance program and the

Special Early Retirement program are

benefits packages established by NRECA

for borrowers to offer to their

employees. The benefits provided under

the Split-Dollar life insurance program

consist of two components, the face

value of the insurance policy which is

payable to the employee’s heirs and the

accumulated cash surrender value.

While the employee is the owner of the

policy, the employee must sign a

collateral assignment that gives the

employer, the RUS borrower, an

absolute right to the cash surrender

value of the policy. Under the terms of

this collateral assignment, the employee

must reimburse the cooperative for the

premiums paid upon the employee’s

termination of employment or

attainment of the age of 62, if the

employee wishes to maintain the

insurance coverage. If death occurs prior

to either of these events, the premiums

paid to date by the borrower are

deducted from the death benefits

payable to the policy beneficiary. The

accounting interpretation details the

accounting journal entries necessary to

record the cash surrender value of the

policy and the expenses incurred by the

borrower in providing the policy.

The SERP is a vehicle through which

the cooperative may reduce the size of

its workforce or replace more highly

paid employees with lower paid entrylevel employees. If an employee covered

by an NRECA retirement plan chooses

to retire before the employee’s normal

retirement date, that employee would

receive an actuarially reduced benefit.

However, when a cooperative elects to

offer a SERP, no such reduction is

required. The accounting interpretation

details the accounting for the benefits

package, itself, as well as the reduction

in postretirement benefit costs that may

result from an employee accepting the

SERP.

This rule also establishes an

accounting interpretation for the

automatic meter reading system

developed by Hunt Technologies, Inc.

The system transmits continuous

information one way from the meter to

a receiver located in the substation. The

receiver constantly monitors each meter

served by the substation. The data is

then transmitted to the headquarters

monitoring equipment via telephone

line or an equivalent communication

system. The accounting records the

various components of the system in the

primary plant accounts based upon their

functions.

This rule establishes an accounting

interpretation for Global Positioning

Systems (GPS). The GPS is a worldwide

radio-navigation system formed from a

network of 24 satellites and their ground

stations that utilities are using to update

and modernize their system maps. GPS

uses a system of satellites orbiting the

earth to establish plant locations with

pinpoint accuracy. By triangulating

from three satellites and using radio

signals to measure distances and locate

items, system-wide maps can be created

of the utility’s service area. The

accounting records the various

components of the system in the

primary plant accounts based upon their

functions.

This rule also adopts an accounting

interpretation for radio-based automatic

meter reading systems. Radio-based

automatic meter reading technology

allows meters equipped with a lowpower radio device called an ERT

(Encoder, Receiver, Transmitter) to be

read from a remote location. The ERT

device ‘‘encodes’’ energy consumption

and transmits this information to a radio

transceiver equipped handheld

computer. The data collected and stored

in the handheld computer is then

uploaded to a billing computer using

specialized software for that purpose.

The accounting records the various

components of the system in the

primary plant accounts based upon their

functions.

This rule revises Interpretation No.

104, Terminal Facilities, to comply with

guidance provided by FERC for public

utilities on the accounting for plant

contributed by one electric cooperative

to another. Previously, contributed plant

was recorded as a deferred charge in

Account 186, Miscellaneous Deferred

Debits. FERC issuances, however, direct

public utilities to record contributed

plant as an intangible asset in Account

303, Miscellaneous Intangible Plant.

Upon review, RUS has determined that
42286 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

the classification of contributed plant as

an intangible asset is more appropriate

and is, therefore, revising its accounting

interpretations for RUS borrowers found

in Interpretation No. 104.

Comments

A proposed rule entitled Accounting

Requirements for RUS Electric

Borrowers, published April 29, 1997, at

62 FR 23298, invited interested parties

to submit comments on or before May

29, 1997. Twenty-seven comments were

received which included submissions

from NRECA, RUS electric borrowers,

certified public accounting firms, and a

statewide organization. The comments

submitted by NRECA were based upon

a joint review of the proposed rule by

the Generation and Transmission

Managers’ Accounting and Depreciation

Subcommittee and the Distribution

Systems Accounting and Tax

Committee. The following paragraphs

address the various topics that were

discussed by the commenters.

Implementation Date

Comment. The majority of

commenters requested that RUS

recognize that implementing the

functional accounting requirements set

forth in the proposed rule would require

borrowers to make significant computer

programming and accounting changes

and, as a consequence, requested that

implementation be delayed until no

earlier than January 1, 1998. One

borrower recommended a transition

period of from 1 to 3 years for

implementation, during which time

either the current accounting

methodologies or the functional

approach could be utilized provided

that adequate disclose of the method

utilized was made. One commenter

recommended an implementation date

of January 1, 1999, with earlier

implementation encouraged and one

commenter requested 3 years to allow

borrowers to implement the required

accounting systems without unduly

interfering with their other required

workloads. No commenters expressed a

need to delay the other proposed

revisions to the USoA.

Response. RUS is sympathetic to the

commenters’ concerns and believes, as

do the majority of commenters, that a

January 1, 1998, implementation date is

appropriate and achievable. The vast

majority of RUS borrowers’ accounting

systems are based upon computerized

accounting models designed by a few

data processing centers. Because of the

importance, to their clients, of adopting

a functional approach to accounting for

expenses, these centers have already

begun reformatting their accounting

systems and software. Several are

previewing the new systems within the

next 30 to 60 days.

It is also important to note that the

managerial benefits to be derived from

a functional accounting system should

not be delayed. The sooner these

systems are providing RUS borrowers’

management with the cost data critical

to operating in a deregulated industry,

the greater benefits that are to be

derived.

It is for these reasons that RUS will

grant an automatic departure from the

functional accounting requirements of

this final rule for any borrower electing

to delay implementation until January 1,

1998.

Comment. Many of the commenters

requested relief from restating prior

periods’ financial statements in the RUS

Form 7, Financial and Statistical Report;

the RUS Form 12, Operating Report—

Financial; and the audited financial

statements prepared and submitted in

accordance with 7 CFR part 1773, Policy

on Audits of RUS Borrowers (part 1773).

Response. The security instruments

utilized by RUS require borrowers to

prepare and furnish to RUS, at least

once during each 12-month period, a

full and complete report of its financial

condition, operations, and cash flows,

in form and substance satisfactory to

RUS, audited and certified by an

independent CPA satisfactory to RUS,

and accompanied by a report of such

audit, in form and substance satisfactory

to RUS. RUS has implemented these

requirements through regulations

published in part 1773. In Section 8 of

part 1773, borrowers are required to

prepare comparative financial

statements for the 12-month period as of

their audit date and for the immediately

preceding 12-month period. It is this

comparative financial information that

permits RUS to analyze a borrower’s

financial progress and monitor any

changes, either positive or negative, in

operations from one year to the next. We

believe the importance of this

information to RUS in analyzing a

borrower’s continuing loan security

status significantly outweighs the cost to

the borrowers of providing this

information.

After adoption of the functional

accounting requirements, borrowers will

be able to determine the percentage of

general and administrative costs

allocated to the various functional

operations, maintenance, and

administrative expense accounts. These

same percentages could be applied to

the prior year’s financial statements to

prepare comparative data. Since there is

no net effect on a borrower’s operating

or net margins for the year, we believe

the impact will be immaterial to the

financial statements taken as a whole,

thereby allowing CPAs to provide the

audit opinions necessary to allow

borrowers to comply with the

requirements set forth in part 1773 and,

ultimately, their security instrument

provisions. To alleviate any further

reporting burden, however, RUS will

not require restatement of prior years’

financial statements in the RUS Forms

7 and 12.

Functional Accounting

Comment. A majority of the

commenters disagreed with RUS’’

proposal to allocate labor related

expenses such as employee pensions

and benefits, payroll taxes, and

employee insurance on the basis of

direct labor hours. Rather, commenters

recommended that those costs

specifically identifiable with a

particular employee be charged to the

same accounts charged with that

employee’s labor and that those costs

not specifically identifiable be allocated

on the basis of direct labor dollars or

hours, depending upon which

allocation technique provides the most

equitable distribution.

Response. RUS agrees with the

recommendation and has revised the

final rule accordingly.

Comment. Two commenters argued

that property taxes and property

insurance are more typically grouped

with other types of fixed costs such as

depreciation and interest and that either

all of these ‘‘fixed costs’’ should be

allocated or none.

Response. Property taxes and property

insurance are costs that are readily

identifiable with the various

components of generation, transmission,

and distribution plant thereby making

their allocation a rational and

elementary step toward a true functional

accounting of costs. While we agree that

depreciation expense should be readily

identifiable with the various plant

components, RUS has not required such

specific identification in the past and to

do so currently would dramatically

change the depreciation accounting

methodology for the majority of RUS

borrowers. Depreciation expense is

currently recorded by overall function;

for example, steam production plant,

nuclear production plant, hydraulic

production plant, other production

plant, transmission plant, distribution

plant, and general plant and RUS has

determined that the cost of requiring

any further allocation by primary plant

account would, for the majority of RUS

borrowers, outweigh the benefits to be

derived. For those borrowers that have

this capability, however, RUS would, on
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42287

an individual borrower basis, consider

requests for approval of a further

allocation of depreciation expense.

With regard to interest expense, this

allocation process would not only be

cumbersome but would, more

importantly, render invalid RUS’

financial test requirements as set forth

in its security instruments. For these

reasons, RUS will not adopt an

allocation procedure for depreciation or

interest expense in this final rule.

Comment. One commenter

recommended that property insurance

premiums be charged directly to the

operations expense accounts associated

with insured substations and lines

rather than to the miscellaneous

transmission and distribution

operations expense account. The

commenter believes that this further

allocation of these costs would be

beneficial in establishing rates and in

developing cost of service studies in the

future.

Response. RUS agrees with this

recommendation; however, believes that

additional informational benefits could

be derived by extending the allocation

process beyond substations and lines.

We have, therefore, revised the final

rule to require the allocation of property

insurance premiums and reserve

accruals to the individual generation,

transmission, and distribution operating

expense accounts associated with the

plant items insured. Property insurance

premiums or reserve accruals associated

with general plant items will continue

to be charged to the miscellaneous

administrative expense accounts as no

further allocation is available under the

current USoA.

Comment. Two commenters

recommended that additional general

and administrative costs be allocated to

operations and maintenance activities;

specifically, Accounts 920,

Administrative and General Salaries;

921, Office Supplies and Expenses; 923,

Outside Services Employed;, 930,

General Advertising Expense; 931,

Rents; and 935, Maintenance of General

Plant.

Response. The descriptions of the

aforementioned accounts, as currently

set forth in the USoA, allow general and

administrative costs that are assignable

to specific functions to be so charged.

Only those costs attributable to the

general administration of the borrowers’

activities must remain unallocated in

these accounts. While some may argue

that all general and administrative costs

could be allocated on an indirect basis

to the specific functional accounts, the

USoA is structured so as to maintain the

integrity of the administrative and

general costs incurred in the overall

operations of the cooperative. For these

reasons, no revisions were made to the

final rule.

Comment. One commenter

recommended that the administrative

and accounting fees related to 401(k)

plans be allocated to the functional

operations and maintenance accounts.

Response. As previously indicated,

the current USoA allows for the

assignment of general and

administrative costs when a direct

functional relationship exists.

Therefore, if a borrower can specifically

assign accounting and administrative

fees associated with 401(k) plans to the

applicable operations, maintenance, and

administrative accounts, no further

revision to the USoA is required. Costs

that cannot be specifically assigned are

more accurately reflected as costs

applicable to the general administration

of the borrowers’ operations and should

remain in the general and

administrative account categories.

Comment. One commenter

recommended that Account 405,

Amortization of Other Electric Plant, be

subaccounted similarly to Account 403,

Depreciation Expense, to facilitate cost

identification between the plant

categories and facilities.

Response. While RUS encourages the

use of subaccounts to provide borrower

management with the level of detail

necessary to make informed business

decisions, we are reluctant to require

specific subaccounts that may not be

reflective of an individual borrower’s

intangible or other electric plant

facilities. For this reason, no revision

was made in the final rule.

Comment. Two commenters

recommended the use of subaccounts to

facilitate specific cost identification.

Response. While RUS encourages the

use of subaccounts to provide borrower

management with the level of detail

needed to make informed business

decisions, we are reluctant to require

specific subaccounts that may not apply

or be easily adaptable to an individual

borrower’s accounting system. For this

reason, no revision was made in the

final rule.

Comment. Two commenters noted

that payments made under workmen’s

compensation laws were excluded from

allocation to the maintenance accounts.

Response. RUS agrees with the

recommendation and has revised the

final rule to allocate all costs of injuries

and damages to the various operations,

maintenance, and administrative

expense accounts.

Section 1767.13, Departures From the

Prescribed RUS USoA

Comment. In its proposed rule, RUS

advocated eliminating the requirement

for RUS borrowers to obtain prior RUS

approval to implement certain, specific

types of deferrals. Included among the

deferrals proposed to be exempted was

the deferral of any current period

expense provided that a borrower would

have met its financial tests (Times

Interest Earned Ratio (TIER) or Debt

Service Charge (DSC) ratio) for the year

had the deferral not been made. Two

commenters pointed out that several

generation and transmission borrowers

have or are negotiating new indentures

that invoke a Margins for Interest

requirement rather that the standard

TIER requirement. In addition, in the

new form of mortgage and loan contract

applicable to RUS distribution

borrowers, borrowers not only have a

TIER and DSC requirement but an

Operating TIER and DSC requirement.

The commenters recommended

language that would focus on the

financial covenants or financial tests

applicable to each borrower during the

year the deferral is made.

Response. RUS agrees with the

recommendation and has revised the

final rule accordingly.

To further clarify this exemption, it

was RUS’ intent to apply this provision

to the cumulative total of all individual

deferrals made pursuant to this

exemption during the reporting year.

That is, not only must each deferral

made during the year meet this

requirement but the cumulative total of

all deferrals made pursuant to this

exemption during the reporting year

must meet this requirement.

Comment. Two commenters

recommended that RUS exempt from its

approval process, all revenue deferral

plans provided that the borrower

continued to meet RUS financial

covenants after consideration of the

revenue deferral. In addition, one of

these commenters recommended

exempting revenue deferrals that would

be fully amortized within 12 months.

Response. RUS’ purpose in

exempting, from RUS approval

requirements, certain, specific revenue

and expense deferral plans was to

minimize the paperwork requirements

for both RUS and its borrowers. The

deferral plans selected for exemption

were ordinary in the course of business

and provided little risk to RUS’ loan

security interests. Requests for

approvals of revenue deferral plans

other than those associated with the

NRECA moratorium on pension plan

payments are minimal. Due to the
42288 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

infrequency of the requests and

typically, the special nature of the

requests, RUS has determined that all

other revenue deferral plans should

continue to be approved by RUS.

Comment. One commenter

recommended a revision to the language

exempting, from RUS approval

requirements, revenue deferrals

coincident with a moratorium imposed

by NRECA on its Retirement and

Security Program. The proposed

language exempted the deferral of

revenues coincident with a moratorium

imposed by the NRECA on its

Retirement and Security Program,

provided, however, that the deferral is

for the sole purpose of offsetting future

pension cost increases. The commenter

requested that ‘‘increases’’ be deleted

from the provision.

Response. RUS has no objection to

this recommendation and has revised

the final rule accordingly.

Comment. Two commenters

recommended that RUS clarify that

those deferrals exempted from the RUS

approval process must still comply with

the provisions of Statement of Financial

Accounting Standards No. 71,

Accounting for the Effects of Certain

Types of Regulation, and that the

entities implementing such deferrals

must continue to meet the requirements

for doing so.

Response. RUS agrees with this

recommendation and has revised the

final rule accordingly.

Comment. One commenter

recommended that the expense deferral

plans exempted from RUS approval

requirements be cross-referenced to the

appropriate accounting interpretations.

Response. RUS agrees with the

recommendation and has revised the

final rule accordingly.

Section 1767.41, Accounting Methods

and Procedures Required of All RUS

Borrowers

Comment. One commenter expressed

its concerns that RUS should not

interpret generally accepted accounting

principles (GAAP) through its

accounting interpretations but should

merely require its borrowers to follow

GAAP. The commenter expressed

concern that any interpretation that

does not mirror a standard issued by the

Financial Accounting Standards Board

provides the opportunity for a conflict

to exist.

Response. Each accounting

interpretation addressing a FASB

standard includes a synopsis of the

requirements of the standard. While we

understand the commenter’s concern

that this synopsis could alter the intent

of the FASB standard, we expose, for

public comment, all interpretations to

ensure that no apparent conflicts exist.

The purpose of the interpretations is to

alert borrowers to recent issuances that

may impact upon their operations and

to provide guidance on recording the

applicable transactions within the

framework of the USoA. Our purpose is

not to alter the FASB standard unless it

is necessary to do so to accommodate

the cooperative organizational structure

of our borrowers. To ensure that our

intent was clear, we proposed

introductory language to Section

1767.41 detailing our purpose and

allowing borrowers to request a specific

interpretation if they feel a conflict

exists. For this reason, we have made no

revision to the final rule.

Comment. One commenter

recommended that the introductory

language to Section 1767.41 be

amended. The commenter focused on

the language concerning requests for

interpretations when a borrower feels

that the accounting prescribed in the

USoA conflicts with GAAP. The

proposed language requires a borrower

to request this interpretation in writing.

The commenter is concerned that

requiring only written requests may

stifle questions posed to RUS and

recommended language that focuses on

resolution of issues.

Response. It is and has always been

RUS’ intention to encourage borrower

questions, not to stifle them and we are

receptive to any action that will

enhance interaction between RUS and

its borrowers. Therefore, we are revising

the final rule to incorporate the

commenter’s recommended language.

We would, however, caution borrowers

that, due to the regulatory nature of the

USoA, specific interpretations thereof or

departures therefrom must be requested,

in writing, in accordance with Sections

1767.13 and 1767.14. Written

interpretations of this USoA ensure

consistency in the application of

accounting methodologies among RUS

borrowers, thereby enhancing financial

analysis and ultimately, loan security.

Interpretation No. 137, Impairment of

Long-Lived Assets

Comment. While agreeing with our

accounting interpretation, one

commenter recommended that we

expand our guidance to address the

potential impairment of a distribution

cooperative’s investment in a generation

and transmission (G&T) cooperative.

The commenter expressed concern that

with the changes occurring in the

electric utility industry, additional

guidance should be formulated to

indicate what accounting should be

applied if an investment in a G&T

becomes impaired.

Response. The interrelationship

between a G&T and its distribution

members is a complex one and

encompasses many far-ranging issues in

addition to the distribution

cooperatives’ investments in their G&Ts.

While we share the commenter’s

concern, due to this complex

interrelationship and the electric utility

industry’s constantly changing

environment, we believe any guidance

issued at this time may prove

imprudent. It is our intention, therefore,

to monitor the deregulation process

closely, review all of the accounting

consequences, and issue guidance in

future rulemakings as more of the issues

are resolved.

Interpretation No. 104, Terminal

Facilities

Comment. One commenter stated that

it is probable that power supply

contracts resulting in the construction of

terminal facilities will not be renewed.

This commenter recommended that the

amortization period be associated with

contract life if it is shorter than the

average service life of the plant

constructed.

Response. RUS agrees with the

recommendation and has revised the

final rule accordingly.

Interpretations No. 138, Automatic

Meter Reading Systems—Turtles, and

140, Radio-Based Automatic Meter

Reading Systems

Comment. Several commenters

requested reconsideration of

Interpretations 138, Automatic Meter

Reading Systems—Turtles, and 140,

Radio-Based Automatic Meter Reading

Systems. The commenters addressed a

number of concerns including the

functional classification of equipment,

depreciation period of equipment, and

the need for a generic interpretation to

address all types of automatic meter

reading devices. The commenters

believe that the primary purpose of both

the Turtle and Radio-Based Automatic

Meter Reading Systems are to facilitate

the meter reading function and should

be recorded in Account 370, Meters.

They expressed concern, however, that

the depreciation rate applicable to

metering equipment was not reflective

of the average service lives of these

devices and the associated computer

software.

Response. RUS agrees with the

commenters that the underlying

function of these systems is meter

reading and that these types of devices

and the associated software have vastly

different service lives than the other
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42289

equipment recorded in Account 370.

RUS has, therefore, revised

Interpretations 138 and 140 to require

that all equipment be classified in a

separate subaccount of Account 370,

Meters. RUS has further revised its

interpretation to require depreciation of

the meter reading devices over the

manufacturer’s suggested service life

and, in accordance with Interpretation

No. 401, Computer Software Costs,

depreciation of the associated software

over its estimated useful service life not

to exceed 5 years.

In response to the commenters’

request that we provide a generic

accounting interpretation to address all

types of automatic meter reading

devices, RUS is hesitant to provide

generic interpretations that may be

inappropriately applied to differing

types of equipment. As technologies

constantly improve, many of the

systems and equipment that are in use

in today’s environment may be replaced

by significantly different devices that

provide a range of functions currently

unanticipated by the industry. To avoid

the application of accounting

instructions to systems or devices to

which they do not apply, RUS has

decided to continue its practice of

addressing specific, new technologies as

they arise.

Interpretation No. 610, Financial

Forecasts

Comment. One commenter expressed

the view that labor and related expenses

pertaining to the completion of a

financial forecast should be capitalized.

Response. While comments on

Interpretation No. 610 were outside the

scope of this proposal, the preparation

of financial forecasts are necessary in

the normal and usual operations of any

business enterprise and are considered

common business practice. Financial

forecasts are managerial tools used to

direct the course of an enterprise and to

evaluate its performance. Costs incurred

in the normal course of business are

expensed in the period in which they

are incurred.

Interpretation No. 627, Postretirement

Benefits

Comment. One commenter suggested

that the accounting journal entries for

the transition obligation associated with

postretirement benefits be amended to

require the various operations,

maintenance, and administrative

expense accounts to be charged rather

than Account 926, Employee Pensions

and Benefits.

Response. The adoption of Statement

of Financial Accounting Standards No.

106, Employers’ Accounting for

Postretirement Benefits Other Than

Pension (Statement No. 106), was

effective for most RUS borrowers

beginning with fiscal years after

December 15, 1994. The journal entry

reference by the commenter addresses

the current period expensing of the

transition obligation, which, due to the

passage of time, is no longer an

appropriate option for borrowers.

Borrowers that failed to adopt Statement

No. 106 within the required timeframe

have erred in the preparation of their

financial statements and must account

for such error as a prior period

adjustment. For this reason, no revision

was made to the final rule.

Interpretation No. 630, Split Dollar Life

Insurance

Comment. Two commenters

recommended that Interpretation No.

630, Split Dollar Life Insurance, be

revised to apply to all split dollar life

insurance programs, regardless of the

service provider.

Response. While there are a number

of split dollar life insurance programs

available in the marketplace, the

majority of RUS borrowers participate in

the program offered by NRECA. The

accounting guidance provided in

Interpretation No. 630 is based upon

information provided by NRECA on

their program and is, therefore, specific

to their plan. If, however, a borrower is

currently participating in a program

offered by another provider that

parallels the NRECA program, the

borrower should use the accounting

provided in this interpretation. If the

borrower’s current program differs from

that provided by NRECA, the borrower

should request specific accounting

guidance for that program. For this

reason, no revision was made in the

final rule.

Comment. One commenter

recommended that Interpretation No.

630, Split Dollar Life Insurance, be

expanded to provide a standard expense

reference. This commenter

recommended the use of Account 926,

Employee Pensions and Benefits, or

Account 165, Prepayaments.

Response. RUS agrees that an expense

account reference should be added to

this interpretation. However, in keeping

with the functional approach to

accounting established in this rule, RUS

will revise the final rule to require that

various operations, maintenance, and

administrative expense accounts be

charged for the expenses associated

with split dollar life insurance.

Interpretation No. 631, Special Early

Retirement Plan

Comment. One commenter

recommended that Interpretation No.

631, Special Early Retirement Plan

(SERP), be revised to apply to all plans,

regardless of the provider of the service.

Response. While there are a number

of SERP programs available, the vast

majority of RUS borrowers participate in

the program offered by NRECA. The

accounting guidance provided in

Interpretation No. 631 is based upon

information provided by NRECA on

their program and is, therefore, specific

to their plan. If, however, a borrower is

currently participating in a program

offered by another provider that mirrors

the NRECA program, the borrower

should use the accounting provided in

this interpretation. If the borrower’s

current program differs from that

provided by NRECA, the borrower

should request specific accounting

guidance for that program. For this

reason, no revision was made in the

final rule.

List of Subjects in 7 CFR Part 1767

Electric power, Loan programs—

energy, Reporting and recordkeeping

requirements, Rural areas, Uniform

System of Accounts.

For the reasons set forth in the

preamble, RUS hereby amends 7 CFR

chapter XVII as follows:

PART 1767—ACCOUNTING

REQUIREMENTS FOR RUS ELECTRIC

BORROWERS

1. The authority citation for part 1767

is revised to read as follows:

Authority: 7 U.S.C. 901 et seq., 1921 et

seq., 6941 et seq.

2. Section 1767.13 is amended by

revising paragraphs (a) and (d) to read

as follows:

§ 1767.13 Departures from the prescribed

RUS Uniform System of Accounts.

(a) No departures are to be made to

the prescribed RUS USoA without the

prior written approval of RUS. RUS

grants a departure to any borrower

electing to delay implementation of the

functional (activity-based) accounting

requirements of this part through

December 31, 1997. Requests for

departures from the RUS USoA shall be

addressed, in writing, to the Director,

Program Accounting Services Division

(PASD).

* * * * *

(d) RUS borrowers will not implement

the provisions of Statement of Financial

Accounting Standards (SFAS) No. 71,

Accounting for the Effects of Certain
42290 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

Types of Regulation, SFAS No. 90,

Regulated Enterprises—Accounting for

Abandonments and Disallowances of

Plant Costs, SFAS No. 92, Regulated

Enterprises—Accounting for Phase-in

Plans, without the prior written

approval of RUS except as provided for

in paragraphs (d)(1) through (d)(5) of

this section. Requests for approval shall

be addressed, in writing, to the Director,

PASD. The specific deferrals set forth in

paragraphs (d)(1) through (d)(5) of this

section may be implemented without

the prior written approval of RUS

provided that the deferrals comply with

Statement No. 71 and that the RUS

borrowers implementing such deferrals

continue to meet the requirements set

forth in Statement No. 71 for doing so:

(1) The deferral and amortization of

prior service pension costs (See

§ 1767.41, Interpretation No. 606,

Pension Costs), remapping expenses

(See § 1767.41, Interpretation No. 613,

Mapping Costs), and preliminary survey

and investigation charges (See

§ 1767.17, Interpretation No. 111,

Engineering Contracts for System

Planning);

(2) The deferral of any current period

expense or expenses, on a cumulative

basis for the fiscal year, only if a

borrower would have met each of its

financial tests or coverage ratios that it

has covenanted with RUS to meet for

that fiscal year, had the deferral not

been made;

(3) The deferral of any cost that will

be fully amortized within the next 12

succeeding months;

(4) The accelerated amortization of

any previously deferred expense; and

(5) The deferral of revenues

coincident with a moratorium imposed

by the National Rural Electric

Cooperative Association on its

Retirement and Security Program,

provided, however, that the deferral is

for the sole purpose of offsetting future

pension costs.

* * * * *

3. Section 1767.17 is amended by

revising paragraphs (a) and (b) to read

as follows:

§ 1767.17 Operating expense instructions.

(a) Supervision and engineering. The

supervision and engineering includible

in the operating expense accounts shall

consist of the salary, employee pensions

and benefits, social security and other

payroll taxes, injuries and damages, and

other expenses of superintendents,

engineers, clerks, other employees, and

consultants engaged in supervising and

directing the operation and maintenance

of each utility function. Whenever

allocations are necessary in order to

arrive at the amount to be included in

any account, the method and basis of

allocation shall be reflected by

underlying records.

(1) Labor items:

(i) Special tests to determine

efficiency of equipment operation;

(ii) Preparing or reviewing budgets,

estimates, and drawings relating to

operation or maintenance for

departmental approval;

(iii) Preparing instructions for

operations and maintenance activities;

(iv) Reviewing and analyzing

operating results;

(v) Establishing organizational setup

of departments and executing changes

therein;

(vi) Formulating and reviewing

routines of departments and executing

changes therein;

(vii) General training and instruction

of employees by supervisors whose pay

is chargeable hereto. Specific

instructions and training in a particular

type of work is chargeable to the

appropriate functional account (See

paragraph (c) (19) of this section); and

(viii) Secretarial work for supervisory

personnel, but not general clerical and

stenographic work chargeable to other

accounts.

(2) Expense items:

(i) Employee pensions and benefits;

(ii) Social security and other payroll

taxes;

(iii) Injuries and damages;

(iv) Consultants’ fees and expenses;

and

(v) Meals, traveling, and incidental

expenses.

(b) Maintenance. (1) The cost of

maintenance chargeable to the various

operating expense and clearing accounts

includes labor, employee pensions and

benefits, social security and other

payroll taxes, injuries and damages,

materials, overheads, and other

expenses incurred in maintenance work.

A list of work operations applicable

generally to utility plant is included in

this paragraph (b). Other work

operations applicable to specific classes

of plant are listed in functional

maintenance expense accounts.

(2) Materials recovered in connection

with the maintenance of property shall

be credited to the same account to

which the maintenance cost was

charged.

(3) If the book cost of any property is

carried in Account 102, Electric Plant

Purchased or Sold, the cost of

maintaining such property shall be

charged to the accounts for maintenance

of property of the same class and use,

the book cost of which is carried in

other electric plant in service accounts.

Maintenance of property leased from

others shall be treated as provided in

paragraph (c) of this section.

(4) Items:

(i) Direct field supervision of

maintenance;

(ii) Inspecting, testing, and reporting

on condition of plant specifically to

determine the need for repairs,

replacements, rearrangements, and

changes and inspecting and testing the

adequacy of repairs which have been

made;

(iii) Work performed specifically for

the purpose of preventing failure,

restoring serviceability or maintaining

life of plant;

(iv) Rearranging and changing the

location of plant not retired;

(v) Repairing for reuse materials

recovered from plant;

(vi) Testing for, locating, and clearing

trouble;

(vii) Net cost of installing,

maintaining, and removing temporary

facilities to prevent interruptions in

service; and

(viii) Replacing or adding minor items

of plant which do not constitute a

retirement unit.

* * * * *

4. Section 1767.21 is amended by

revising Account 408 to read as follows:

§ 1767.21 Operating income.

* * * * *

408 Taxes Other Than Income Taxes

A. This account shall 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

thereto, with concurrent credits to

Account 236, Taxes Accrued, or

Account 165, Prepayments, 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. The charges to these accounts shall

be made or supported so as to show the

amount of each tax and the basis upon

which each charge is made. In the case

of a utility rendering more than one

utility service, taxes of the kind

includible in these accounts shall be

assigned directly to the utility

department the operation of which gave

rise to the tax, in so far as practicable.

Where the tax is not attributable to a

specific utility department, it shall be

distributed among the utility

departments or nonutility operations on
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42291

an equitable basis after appropriate

study to determine such basis.

Note A: Special assessments for street and

similar improvements shall be included in

the appropriate utility plant or nonutility

property account.

Note B: Taxes specifically applicable to

construction and retirement activities shall

be included in the cost of construction or the

retirement.

Note C: Gasoline and other sales taxes shall

be charged as far as practicable to the same

account as the materials on which the tax is

levied.

Note D: Social security and other forms of

payroll taxes shall be charged to nonutility

operations, the specific functional

operations, maintenance, and administrative

expense accounts, and to construction and

retirement activities on a basis related to

payroll either directly or by transfers from

this account.

Note E: Property taxes applicable to the

various utility functions shall be charged to

the specific functional operations and

administrative expense accounts either

directly or by transfers from this account.

Note F: Interest on tax refunds or

deficiencies shall not be included in these

accounts but in Account 419, Interest and

Dividend Income, or Account 431, Other

Interest Expense, as appropriate.

D. Account 408 shall be subaccounted

as follows:

408.1 Taxes—Property

408.2 Taxes—U.S. Social Security—

Unemployment

408.3 Taxes—U.S. Social Security—F.I.C.A.

408.4 Taxes—State Social Security—

Unemployment

408.5 Taxes—State Sales—Consumers

408.6 Taxes—Gross Revenue or Gross

Receipts Tax

408.7 Taxes—Other

* * * * *

5. Section 1767.27 is amended by

revising Accounts 500, 501, 502, 505,

506, 510, 511, 512, 513, 514, 517, 519,

520, 523, 524, 528, 529, 530, 531, 532,

535, 537, 538, 539, 541, 542, 543, 544,

545, 546, 548, 549, 551, 552, 553, 554,

556, 560, 561, 562, 563, 564, 566, 568,

569, 570, 571, 572, 573, 580, 581, 582,

583, 584, 585, 586, 587, 588, 590, 591,

592, 593, 594, 595, 596, 597, and 598 to

read as follows:

§ 1767.27 Operation and maintenance

expense.

* * * * *

500 Operation Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and expenses

incurred in the general supervision and

direction of the operation of steam

power generating stations. Direct

supervision of specific activities, such

as fuel handling, boiler-room

operations, and generator operations

shall be charged to the appropriate

account. (See § 1767.17(a).)

501 Fuel

A. This account shall include the cost

of fuel used in the production of steam

for the generation of electricity,

including expenses in unloading fuel

from the shipping media and handling

thereof up to the point where the fuel

enters the first boiler plant bunker,

hopper, bucket, tank, or holder of the

boiler-house structure. Records shall be

maintained to show the quantity, B.t.u.

content and cost of each type of fuel

used.

B. The cost of fuel shall be charged

initially to Account 151, Fuel Stock, and

cleared to this account on the basis of

the fuel used. Fuel handling expenses

may be charged to this account as

incurred or charged initially to Account

152, Fuel Stock Expenses Undistributed.

In the latter event, they shall be cleared

to this account on the basis of the fuel

used. Respective amounts of fuel stock

and fuel stock expenses shall be readily

available.

Items

Labor:

1. Supervising, purchasing, and

handling of fuel.

2. All routine fuel analyses.

3. Unloading from shipping facility

and placing in storage.

4. Moving of fuel in storage and

transferring fuel from one station to

another.

5. Handling from storage or shipping

facility to first bunker, hopper, bucket,

tank, or holder of boiler-house structure.

6. Operation of mechanical

equipment, such as locomotives, trucks,

cars, boats, barges, and cranes.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Operating, maintenance, and

depreciation expenses and ad valorem

taxes on utility-owned transportation

equipment used to transport fuel from

the point of acquisition to the unloading

point.

2. Lease or rental costs of

transportation equipment used to

transport fuel from the point of

acquisition to the unloading point.
42292 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

3. Cost of fuel including freight,

switching, demurrage, and other

transportation charges.

4. Excise taxes, insurance, purchasing

commissions, and similar items.

5. Stores expenses to extent

applicable to fuel.

6. Transportation and other expenses

in moving fuel in storage.

7. Tools, lubricants, and other

supplies.

8. Operating supplies for mechanical

equipment.

9. Residual disposal expenses less any

proceeds from sale of residuals.

Note: Abnormal fuel handling expenses

occasioned by emergency conditions shall be

charged to expense as incurred.

502 Steam Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, materials

used, and expenses incurred in

production of steam for electric

generation. This includes all expenses

of handling and preparing fuel

beginning at the point where the fuel

enters the first boiler plant bunker,

hopper, tank, or holder of the boilerhouse structure.

Items

Labor:

1. Supervising steam production.

2. Operating fuel conveying, storage,

weighing, and processing equipment

within boiler plant.

3. Operating boiler and boiler

auxiliary equipment.

4. Operating boiler feed water

purification and treatment equipment.

5. Operating ash-collecting and

disposal equipment located inside the

plant.

6. Operating boiler plant electrical

equipment.

7. Keeping boiler plant log and

records and preparing reports on boiler

plant operations.

8. Testing boiler water.

9. Testing, checking, and adjusting

meters, gauges, and other instruments

and equipment in boiler plant.

10. Cleaning boiler plant equipment

when not incidental to maintenance

work.

11. Repacking glands and replacing

gauge glasses where the work involved

is of a minor nature and is performed by

regular operating crews. Where the work

is of a major character, such as that

performed on high-pressure boilers, the

item should be considered as

maintenance.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Chemicals and boiler inspection

fees.

2. Lubricants.

3. Boiler feed water purchased and

pumping supplies.

* * * * *

505 Electric Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, and materials

used, and expenses incurred in

operating prime movers, generators, and

their auxiliary apparatus, switch gear,

and other electric equipment to the

points where electricity leaves for

conversion for transmission or

distribution.

Items

Labor:

1. Supervising electric production.

2. Operating turbines, engines,

generators, and exciters.

3. Operating condensers, circulating

water systems, and other auxiliary

apparatus.

4. Operating generator cooling system.

5. Operating lubrication and oil

control system, including oil

purification.

6. Operating switchboards, switch

gear and electric control, and protective

equipment.

7. Keeping electric plant log and

records and preparing reports on

electric plant operations.

8. Testing, checking, and adjusting

meters, gauges, and other instruments,

relays, controls, and other equipment in

the electric plant.

9. Cleaning electric plant equipment

when not incidental to maintenance

work.

10. Repacking glands and replacing

gauge glasses.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Taxes.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42293

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Lubricants and control system oils.

2. Generator cooling gases.

3. Circulating water purification

supplies.

4. Cooling water purchased.

5. Motor and generator brushes.

506 Miscellaneous Steam Power

Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and materials

used and expenses incurred which are

not specifically provided for or not

readily assignable to other steam

generation operation expense accounts.

Items

Labor:

1. General clerical and stenographic

work.

2. Guarding and patrolling plant and

yard.

3. Building service.

4. Care of grounds including snow

removal, and grass cutting.

5. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

Materials and Expenses:

1. General operating supplies, such as

tools, gaskets, packing waste, gauge

glasses, hose, indicating lamps, record

and report forms.

2. First-aid supplies and safety

equipment.

3. Employees’ service facilities

expenses.

4. Building service supplies.

5. Communication service.

6. Miscellaneous office supplies and

expenses, printing, and stationery.

7. Transportation expenses.

8. Meals, traveling, and incidental

expenses.

9. Research, development, and

demonstration expenses.

* * * * *

510 Maintenance Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and expenses

incurred in the general supervision and

direction of maintenance of steam

generation facilities. Direct field

supervision of specific jobs shall be

charged to the appropriate maintenance

account. (See § 1767.17(a).)

511 Maintenance of Structures

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and materials

used and expenses incurred in the
42294 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

maintenance of steam structures, the

book cost of which is includible in

Account 311, Structures and

Improvements. (See § 1767.17(b).)

512 Maintenance of Boiler Plant

A. This account shall include the cost

of labor, employee pensions and

benefits, social security and other

payroll taxes, injuries and damages, and

materials used and expenses incurred in

the maintenance of steam plant, the

book cost of which is includible in

Account 312, Boiler Plant Equipment.

(See § 1767.17(b).)

B. For the purpose of making charges

hereto and to Account 513, Maintenance

of Electric Plant, the point at which

steam plant is distinguished from

electric plant is defined as follows:

1. Inlet flange of throttle valve on

prime mover.

2. Flange of all steam extraction lines

on prime mover.

3. Hotwell pump outlet on condensate

lines.

4. Inlet flange of all turbine-room

auxiliaries.

5. Connection to line side of motor

starter for all boiler-plant equipment.

513 Maintenance of Electric Plant

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and materials

used and expenses incurred in the

maintenance of electric plant, the book

cost of which is includible in Account

313, Engines and Engine-Driven

Generators; Account 314,

Turbogenerator Units; and Account 315,

Accessory Electric Equipment. (See

§ 1767.17(b) and Paragraph B of

Account 512.)

514 Maintenance of Miscellaneous

Steam Plant

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and materials

used and expenses incurred in

maintenance of miscellaneous steam

generation plant, the book cost of which

is includible in Account 316,

Miscellaneous Power Plant Equipment.

(See § 1767.17(b).)

* * * * *

517 Operation Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and expenses

incurred in the general supervision and

direction of the operation of nuclear

power generating stations. Direct

supervision of specific activities, such

as fuel handling, reactor operations, and

generator operations shall be charged to

the appropriate account. (See

§ 1767.17(a).)

* * * * *

519 Coolants and Water

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, and materials

used and expenses incurred for heat

transfer materials and water used for

steam and cooling purposes.

Items

Labor:

1. Operation of water supply facilities.

2. Handling of coolants and heat

transfer materials.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Taxes.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Chemicals.

2. Additions to or refining of fluids

used in reactor systems.

3. Lubricants.

4. Pumping supplies and expenses.

5. Miscellaneous supplies and

expenses.

6. Purchased water.

Note: Do not include in this account water

for general station use or the initial charge for

coolants, heat transfer, or moderator fluids,

chemicals, or other supplies capitalized.

520 Steam Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, and materials

used and expenses incurred in

production of steam through nuclear

processes, and similar expenses for

operation of any auxiliary superheat

facilities.

Items

Labor:

1. Supervising steam production.

2. Fuel handling including removal,

insertion, disassembly, and preparation

for cooling operations and shipment.

3. Testing instruments and gauges.

4. Health, safety, monitoring, and

decontamination activities.
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42295

5. Waste disposal.

6. Operating steam boilers and

auxiliary steam, superheat facilities.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Chemical supplies.

2. Charts and logs.

3. Health, safety, monitoring, and

decontamination supplies.

4. Boiler inspection fees.

5. Lubricants.

* * * * *

523 Electric Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, materials

used, and expenses incurred in

operating turbogenerators, steam

turbines and their auxiliary apparatus,

switch gear, and other electric

equipment to the points where

electricity leaves for conversion for

transmission or distribution.

Items

Labor:

1. Supervising electric production.

2. Operating turbines, engines,

generators, and exciters.

3. Operating condensers, circulating

water systems, and other auxiliary

apparatus.

4. Operating generator cooling system.

5. Operating lubrication and oil

control system, including oil

purification.

6. Operating switchboards, switch

gear, and electric control and protective

equipment.

7. Keeping plant log and records and

preparing reports on electric plant

operations.

8. Testing, checking and adjusting

meters, gauges, and other instruments,

relays, controls, and other equipment in

the electric plant.

9. Cleaning electric plant equipment

when not incidental to maintenance.

10. Repacking glands and replacing

gauge glasses.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.
42296 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Lubricants and control system oils.

2. Generator cooling gases.

3. Log sheets and charts.

4. Motor and generator brushes.

524 Miscellaneous Nuclear Power

Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred which are not

specifically provided for or are not

readily assignable to other nuclear

generation operation accounts.

Items

Labor:

1. General clerical and stenographic

work.

2. Plant security.

3. Building service.

4. Care of grounds, including snow

removal, and grass cutting

5. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

Materials and Expenses:

1. General operating supplies, such as

tools, gaskets, hose, indicating lamps,

records and reports forms.

2. First-aid supplies and safety

equipment.

3. Employees’ service facilities

expenses.

4. Building service supplies.

5. Communication service.

6. Miscellaneous office supplies and

expenses, printing and stationery.

7. Transportation expenses.

8. Meals, traveling, and incidental

expenses.

9. Research, development, and

demonstration expenses.

* * * * *

528 Maintenance Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and expenses

incurred in the general supervision and

direction of maintenance of nuclear

generation facilities. Direct field

supervision of specific jobs shall be

charged to the appropriate maintenance

account. (See § 1767.17(a).)

529 Maintenance of Structures

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in the

maintenance of structures, the book cost

of which is includible in Account 321,

Structures and Improvements. (See

§ 1767.17(b).)

530 Maintenance of Reactor Plant

Equipment

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in the

maintenance of reactor plant, the book

cost of which is includible in Account

322, Reactor Plant Equipment. (See

§ 1767.17(b).)

531 Maintenance of Electric Plant

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in the

maintenance of electric plant, the book

cost of which is includible in Account

323, Turbogenerator Units, and Account

324, Accessory Electric Equipment. (See

§ 1767.17(b).)

532 Maintenance of Miscellaneous

Nuclear Plant

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of miscellaneous nuclear generating

plant, the book cost of which is

includible in Account 325,

Miscellaneous Power Plant Equipment.

(See § 1767.17(b).)

* * * * *

535 Operation Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and expenses

incurred in the general supervision and

direction of the operation of hydraulic

power generating stations. Direct

supervision of specific activities, such

as hydraulic operation, and generator

operation shall be charged to the

appropriate account. (See § 1767.17(a).)

* * * * *

537 Hydraulic Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, materials

used, and expenses incurred in

operating hydraulic works including

reservoirs, dams, and waterways, and in

activities directly relating to the

hydroelectric development outside the
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42297

generating station. It shall also include

the cost of labor, materials used, and

other expenses incurred in connection

with the operation of (1) fish and

wildlife, and (2) recreation facilities.

Separate subaccounts shall be

maintained for each of the above.

Items

Labor:

1. Supervising hydraulic operation.

2. Removing debris and ice from trash

racks, reservoirs, and waterways.

3. Patrolling reservoirs and

waterways.

4. Operating intakes, spillways,

sluiceways, and outlet works.

5. Operating bubbler, heater, or other

deicing systems.

6. Ice and log jam work.

7. Operating navigation facilities.

8. Operations relating to conservation

of game, fish, and forests.

9. Insect control activities.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Insect control materials.

2. Lubricants, packing, and other

supplies used in the operation of

hydraulic equipment.

3. Transportation expense.

538 Electric Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, materials

used, and expenses incurred in

operating prime movers, generators, and

their auxiliary apparatus, switchgear,

and other electric equipment, to the

point where electricity leaves for

conversion for transmission or

distribution.

Items

Labor:

1. Supervising electric production.

2. Operating prime movers,

generators, and auxiliary equipment.

3. Operating generator cooling system.

4. Operating lubrication and oil

control systems, including oil

purification.

5. Operating switchboards,

switchgear, and electric control and

protection equipment.

6. Keeping plant log and records and

preparing reports on plant operations.

7. Testing, checking and adjusting

meters, gauges, and other instruments,

relays, controls, and other equipment in

the plant.

8. Cleaning plant equipment when not

incidental to maintenance work.

9. Repacking glands.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.
42298 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Lubricants and control system oils.

2. Motor and generator brushes.

539 Miscellaneous Hydraulic Power

Generation Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred which are not

specifically provided for or are not

readily assignable to other hydraulic

generation operation expense accounts.

Items

Labor:

1. General clerical and stenographic

work.

2. Guarding and patrolling plant and

yard.

3. Building service.

4. Care of grounds including snow

removal, and grass cutting.

5. Snow removal from roads and

bridges.

6. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

Materials and Expenses:

1. General operating supplies, such as

tools, gaskets, packing, waste, hose,

indicating lamps, record and report

forms.

2. First-aid supplies and safety

equipment.

3. Employees’ service facilities

expenses.

4. Building service supplies.

5. Communication service.

6. Office supplies, printing and

stationery.

7. Transportation expenses.

8. Fuel.

9. Meals, traveling, and incidental

expenses.

10. Research, development, and

demonstration expenses.

* * * * *

541 Maintenance Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and expenses

incurred in the general supervision and

direction of the maintenance of

hydraulic power generating stations.

Direct field supervision of specific jobs

shall be charged to the appropriate

maintenance account. (See § 1767.17(a).)

542 Maintenance of Structures

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of hydraulic structures, the book cost of

which is includible in Account 331,

Structures and Improvements. (See

§ 1767.17 (b).) However, the cost of

labor, materials used, and expenses

incurred in the maintenance of fish and

wildlife and recreation facilities, the

book cost of which is includible in

Account 331, Structures and

Improvements, shall be charged to

Account 545, Maintenance of

Miscellaneous Hydraulic Plant.

543 Maintenance of Reservoirs, Dams,

and Waterways

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of plant includible in Account 332,

Reservoirs, Dams, and Waterways. (See

§ 1767.17(b).) However, the cost of

labor, materials used, and expenses

incurred in the maintenance of fish and

wildlife and recreation facilities, the

book cost of which is includible in

Account 332, Reservoirs, Dams, and

Waterways, shall be charged to Account

545, Maintenance of Miscellaneous

Hydraulic Plant.

544 Maintenance of Electric Plant

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of plant includible in Account 333,

Water Wheels, Turbines and Generators,

and Account 334, Accessory Electric

Equipment, (See § 1767.17(b).)

545 Maintenance of Miscellaneous

Hydraulic Plant

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of plant, the book cost of which is

includible in Account 335,

Miscellaneous Power Plant Equipment,

and Account 336, Roads Railroads and
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42299

Bridges. (See § 1767.17(b).) It shall also

include the cost of labor, materials used,

and other expenses incurred in the

maintenance of (1) fish and wildlife,

and (2) recreation facilities. Separate

subaccounts shall be maintained for

each of the above.

* * * * *

546 Operation Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and expenses

incurred in the general supervision and

direction of the operation of other

power generating stations. Direct

supervision of specific activities, such

as fuel handling and engine and

generator operation shall be charged to

the appropriate account. (See

§ 1767.17(a).)

* * * * *

548 Generation Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, materials

used, and expenses incurred in

operating prime movers, generators, and

electric equipment in other power

generating stations, to the point where

electricity leaves for conversion for

transmission or distribution.

Items

Labor:

1. Supervising other power generation

operation.

2. Operating prime movers,

generators, and auxiliary apparatus and

switching and other electric equipment.

3. Keeping plant log and records and

preparing reports on plant operations.

4. Testing, checking, cleaning, oiling,

and adjusting equipment.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Dynamo, motor, and generator

brushes.

2. Lubricants and control system oils.

3. Water for cooling engines and

generators.

549 Miscellaneous Other Power

Generation Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in the operation

of other power generating stations

which are not specifically provided for

or are not readily assignable to other

generation expense accounts.

Items

Labor:

1. General clerical and stenographic

work.

2. Guarding and patrolling plant and

yard.

3. Building service.

4. Care of grounds, including snow

removal, and grass cutting.

5. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.
42300 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

Materials and Expenses:

1. Building service supplies.

2. First-aid supplies and safety

equipment. 3. Communication service.

4. Employees’ service facilities

expenses. 5. Office supplies, printing and

stationery. 6. Transportation expense.

7. Meals, traveling, and incidental

expenses. 8. Fuel for heating.

9. Water for fire protection or general

use.

10. Miscellaneous supplies, such as

hand tools, drills, saw blades, and files.

11. Research, development, and

demonstration expenses.

* * * * *

551 Maintenance Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and expenses

incurred in the general supervision and

direction of the maintenance of other

power generating stations. Direct field

supervision of specific jobs shall be

charged to the appropriate maintenance

account. (See § 1767.17(a).)

552 Maintenance of Structures

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of facilities used and expenses incurred

in maintenance of facilities used in

other power generation, the book cost of

which is includible in Account 341,

Structures and Improvements, and

Account 342, Fuel Holders, Producers

and Accessories. (See § 1767.17(b).)

553 Maintenance of Generating and

Electric Equipment

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of plant, the book cost of which is

includible in Account 343, Prime

Movers; Account 344, Generators; and

Account 345, Accessory Electric

Equipment. (See § 1767.17(b).)

554 Maintenance of Miscellaneous

Other Power Generation Plant

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of other power generation plant, the

book cost of which is includible in

Account 346, Miscellaneous Power

Plant Equipment. (See § 1767.17(b).)

* * * * *

556 System Control and Load

Dispatching

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, and expenses

incurred in load dispatching activities

for system control. Utilities having an

interconnected electric system or

operating under a central authority

which controls the production and

dispatching of electricity may apportion

these costs to this account and Account

561, Load Dispatching, and Account

581, Load Dispatching.

Items

Labor:

1. Allocating loads to plants and

interconnections with others.

2. Directing switching.

3. Arranging and controlling

clearances for construction,

maintenance, test, and emergency

purposes. 4. Controlling system voltages.

5. Recording loadings, and water

conditions.

6. Preparing operating reports and

data for billing and budget purposes. 7. Obtaining reports on the weather

and special events.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42301

Expenses:

1. Communication service provided

for system control purposes.

2. System record and report forms.

3. Meals, traveling, and incidental

expenses.

4. Obtaining weather and special

events reports.

* * * * *

560 Operation Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and expenses

incurred in the general supervision and

direction of the operation of the

transmission system as a whole. Direct

supervision of specific activities, such

as station operation and line operation

shall be charged to the appropriate

account. (See § 1767.17(a).)

561 Load Dispatching

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, materials

used, and expenses incurred in load

dispatching operations pertaining to the

transmission of electricity.

Items

Labor:

1. Direct switching.

2. Arranging and controlling

clearances for construction,

maintenance, test, and emergency

purposes.

3. Controlling system voltages.

4. Obtaining reports on the weather

and special events.

5. Preparing operating reports and

data for billing and budget purposes.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Expenses:

1. Communication service provided

for system control purposes.

2. System record and report forms.

3. Meals, traveling, and incidental

expenses.

4. Obtaining weather and special

events reports.

562 Station Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, materials

used, and expenses incurred in

operating transmission substations and

switching stations. If transmission

station equipment is located in or

adjacent to a generating station, the

expenses applicable to transmission

station operations shall nevertheless be

charged to this account.

Items

Labor:

1. Supervising station operation.

2. Adjusting station equipment where

such adjustment primarily affects

performance, such as regulating the flow

of cooling water, adjusting current in

fields of a machine or changing voltage

of regulators, changing station

transformer taps.

3. Inspecting, testing, and calibrating

station equipment for the purpose of

checking its performance.

4. Keeping station log and records and

preparing records on station operation.

5. Operating switching and other

station equipment.

6. Standing watch, guarding, and

patrolling station and station yard.

7. Sweeping, mopping, and tidying

station.

8. Care of grounds, including snow

removal, and grass cutting.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. Payments to employees

incapacitated for service or on leave of

absence beyond periods normally
42302 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

allowed when not the result of

occupational injuries or in excess of

statutory awards.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Building service expenses.

2. Operating supplies, such as

lubricants, commutator brushes, water,

and rubber goods.

3. Station meter and instrument

supplies, such as ink and charts.

4. Station record and report forms.

5. Tool expense.

6. Transportation expenses.

7. Meals, traveling, and incidental

expenses.

563 Overhead Line Expenses

564 Underground Line Expenses

A. These accounts shall include the

cost of labor, employee pensions and

benefits, social security and other

payroll taxes, injuries and damages,

property insurance, property taxes,

materials used, and expenses incurred

in the operation of transmission lines.

B. If the expenses are not substantial

for both overhead and underground

lines, these accounts may be combined.

Items

Labor:

1. Supervising line operation.

2. Inspecting and testing lightning

arresters, circuit breakers, switches, and

grounds.

3. Load tests of circuits.

4. Routine line patrolling.

5. Routine voltage surveys made to

determine the condition or efficiency of

transmission system.

6. Transferring loads, switching and

reconnecting circuits and equipment for

operating purposes. (Switching for

construction or maintenance purposes is

not includible in this account.)

7. Routine inspection and cleaning of

manholes, conduit, network, and

transformer vaults.

8. Electrolysis surveys.

9. Inspecting and adjusting linetesting equipment, such as voltmeters,

ammeters, and wattmeters.

10. Regulation and addition of oil or

gas in high-voltage cable systems.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Transportation expenses.

2. Meals, traveling, and incidental

expenses.

3. Tool expenses.

4. Operating supplies, such as

instrument charts, and rubber goods.

* * * * *

566 Miscellaneous Transmission

Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damage, materials used,

and expenses incurred in transmission

map and record work, transmission

office expenses, and other transmission

expenses not provided for elsewhere.

Items

Labor:

1. General records of physical

characteristics of lines and stations,

such as capacities.
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42303

2. Ground resistance records.

3. Janitor work at transmission office

buildings, including care of grounds,

snow removal, and grass cutting.

4. Joint pole maps and records.

5. Line load and voltage records.

6. Preparing maps and prints.

7. General clerical and stenographic

work.

8. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

Materials and Expenses:

1. Communication service.

2. Building service supplies.

3. Map and record supplies.

4. Transmission office supplies and

expenses, printing and stationery.

5. First-aid supplies.

6. Research, development, and

demonstration expenses.

* * * * *

568 Maintenance Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and expenses

incurred in the general supervision and

direction of maintenance of the

transmission system. Direct field

supervision of specific jobs shall be

charged to the appropriate maintenance

account. (See § 1767.17(a).)

569 Maintenance of Structures

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in the

maintenance of structures, the book cost

of which is includible in Account 352,

Structures and Improvements. (See

§ 1767.17(b).)

570 Maintenance of Station

Equipment

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of station equipment, the book cost of

which is includible in Account 353,

Station Equipment. (See § 1767.17(b).)

571 Maintenance of Overhead Lines

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of transmission plant, the book cost of

which is includible in Accounts 354,

Towers and Fixtures; 355, Poles and

Fixtures; 356, Overhead Conductors and

Devices; and 359, Roads and Trails. (See

§ 1767.17(b).)

Items

1. Work of the following character on

poles, towers, and fixtures:

a. Installing or removing additional

clamps or strain insulators on guys in

place.

b. Moving line or guy pole in

relocation of the same pole or section of

line.

c. Painting poles, towers, crossarms,

or pole extensions.

d. Readjusting and changing position

of guys or braces.

e. Realigning and straightening poles,

crossarms braces, and other pole

fixtures.

f. Reconditioning reclaimed pole

fixtures.

g. Relocating crossarms, racks,

brackets, and other fixtures on poles.

h. Repairing or realigning pins, racks,

or brackets.

i. Repairing pole supported platform.

j. Repairs by others to jointly owned

poles.

k. Shaving, cutting rot, or testing

poles or crossarms in use or salvaged for

reuse.

l. Stubbing poles already in service.

m. Supporting fixtures and

conductors and transferring them to

new poles during pole replacements.

n. Maintenance of pole signs, stencils,

and tags.

2. Work of the following character on

overhead conductors and devices:

a. Overhauling and repairing line

cutouts, line switches, and line

breakers.

b. Cleaning insulators and bushings.

c. Refusing cutouts.

d. Repairing line oil circuit breakers

and associated relays and control

wiring.

e. Repairing grounds.

f. Resagging, retyping, or rearranging

position or spacing of conductors.

g. Standing by phones, going to calls,

cutting faulty lines clear, or similar

activities at times of emergencies.

h. Sampling, testing, changing,

purifying, and replenishing insulating

oil.

i. Repairing line testing equipment.

j. Transferring loads, switching and

reconnecting circuits and equipment for

maintenance purposes.

k. Trimming trees and clearing brush.

l. Chemical treatment of right of way

areas when occurring subsequent to

construction of line.

3. Work of the following character on

roads and trails:

a. Repairing roadways and bridges.

b. Trimming trees and brush to

maintain previous roadway clearance.

c. Snow removal from roads and

trails.

d. Maintenance work on publicly

owned roads and trails when done by

utility at its expense.

Taxes:
42304 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 services 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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

572 Maintenance of Underground

Lines

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of transmission plant, the book cost of

which is includible in Accounts 357,

Underground Conduit, and Account

358, Underground Conductors and

Devices. (See § 1767.17(b).)

Items

1. Work of the following character on

underground conduit:

a. Cleaning ducts, manholes, and

sewer connections.

b. Minor alterations of handholes,

manholes, or vaults.

c. Refastening, repairing, or moving

racks, ladders, hangers in manholes, or

vaults.

d. Plugging and shelving or

replugging ducts.

e. Repairs to sewers and drains, walls

and floors, rings and covers.

2. Work of the following character on

underground conductors and devices:

a. Repairing oil circuit breakers,

switches, cutouts, and control wiring.

b. Repairing grounds.

c. Retraining and reconnecting cables

in manholes, including transfer of

cables from one duct to another.

d. Repairing conductors and splices.

e. Repairing or moving junction boxes

and potheads.

f. Refireproofing of cables and

repairing supports.

g. Repairing electrolysis preventive

devices for cables.

h. Repairing cable bonding systems.

i. Sampling, testing, changing,

purifying, and replenishing insulating

oil.

j. Transferring loads, switching and

reconnecting circuits, and equipment

for maintenance purposes.

k. Repairing line testing equipment.

l. Repairs to oil or gas equipment in

high-voltage cable system and

replacement of oil or gas.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

573 Maintenance of Miscellaneous

Transmission Plant

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of owned or leased plant which is

assignable to transmission operations

and is not provided for elsewhere. (See

§ 1767.17(b).)

* * * * *

580 Operation Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and expenses

incurred in the general supervision and

direction of the operation of the
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42305

distribution system. Direct supervision

of specific activities, such as station

operation, line operation, and meter

department operation shall be charged

to the appropriate account. (See

§ 1767.17(a).)

581 Load Dispatching

This account (the keeping of which is

optional with the utility) shall include

the cost of labor, employee pensions

and benefits, social security and other

payroll taxes, injuries and damages,

property insurance, property taxes,

materials used, and expenses incurred

in load dispatching operations

pertaining to the distribution of

electricity.

Items

Labor:

1. Direct switching.

2. Arranging and controlling

clearances for construction,

maintenance, test, and emergency

purposes.

3. Controlling system voltages.

4. Preparing operating reports.

5. Obtaining reports on the weather

and special events.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Expenses:

1. Communication service provided

for system control purposes.

2. System record and report forms.

3. Meals, traveling, and incidental

expenses.

582 Station Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, materials

used, and expenses incurred in the

operation of distribution substations.

Items

Labor:

1. Supervising station operation.

2. Adjusting station equipment where

such adjustment primarily affects

performance, such as regulating the flow

of cooling water, adjusting current in

fields of a machine, changing voltage of

regulators, or changing station

transformer taps.

3. Keeping station log and records and

preparing reports on station operation.

4. Inspecting, testing, and calibrating

station equipment for the purpose of

checking its performance.

5. Operating switching and other

station equipment.

6. Standing watch, guarding, and

patrolling station and station yard.

7. Sweeping, mopping, and tidying

station.

8. Care of grounds, including snow

removal, and grass cutting.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated
42306 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Building service expenses.

2. Operating, supplies, such as

lubricants, commutator brushes, water,

and rubber goods.

3. Station meter and instrument

supplies, such as ink and charts.

4. Station record and report forms.

5. Tool expense.

6. Transportation expense.

7. Meals, traveling, and incidental

expenses.

Note: If the utility owns storage battery

equipment used for supplying electricity to

customers in periods of emergency, the cost

of operating labor and of supplies, such as

acid, gloves, hydrometers, thermometers,

soda, automatic cell fillers, and acid proof

shoes shall be included in this account. If

significant in amount, a separate subdivision

shall be maintained for such expenses.

583 Overhead Line Expenses

584 Underground Line Expenses

These accounts shall include,

respectively, the cost of labor, employee

pensions and benefits, social security

and other payroll taxes, injuries and

damages, property insurance, property

taxes, materials used, and expenses

incurred in the operation of overhead

and underground distribution lines.

Items

Labor:

1. Supervising line operation.

2. Changing line transformer taps.

3. Inspecting and testing lightning

arresters, line circuit breakers, switches,

and grounds.

4. Inspecting and testing line

transformers for the purpose of

determining load, temperature, or

operation performance.

5. Patrolling lines.

6. Load tests and voltage surveys of

feeders, circuits, and line transformers.

7. Removing line transformers and

voltage regulators with or without

replacement.

8. Installing line transformers or

voltage regulators with or without

change in capacity provided that the

cost of first installation of these items is

included in Account 368, Line

Transformers.

9. Voltage surveys, either routine or

upon request of customers, including

voltage tests at customer’s main switch.

10. Transferring loads, switching and

reconnecting circuits and equipment for

operation purpose.

11. Electrolysis surveys.

12. Inspecting and adjusting line

testing equipment.

Taxes:

1. Federal and State unemployment.

2. F.I.C.A,

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance

premiums (credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Tool expense.

2. Transportation expense.

3. Meals, traveling, and incidental

expenses.

4. Operating supplies, such as

instrument charts, and rubber goods.

585 Street Lighting and Signal System

Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, materials

used, and expenses incurred in: (1) The

operation of street lighting and signal

system plant which is owned or leased

by the utility; and (2) the operation and

maintenance of such plant owned by

customers where such work is done

regularly as a part of the street lighting

and signal system service.

Items

Labor:

1. Supervising street lighting and

signal systems operation.

2. Replacing lamps and incidental

cleaning of glassware and fixtures in

connection therewith.

3. Routine patrolling for lamp

outages, extraneous nuisances, or

encroachments.
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42307

4. Testing lines and equipment

including voltage and current

measurement.

5. Winding and inspection of time

switch and other controls.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance

premiums (credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Street lamp renewals.

2. Transportation and tool expense.

3. Meals, traveling, and incidental

expenses.

586 Meter Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, materials

used, and expenses incurred in the

operation of customer meters and

associated equipment.

Items

Labor:

1. Supervising meter operation.

2. Clerical work on meter history and

associated equipment record cards, test

cards, and reports.

3. Disconnecting and reconnecting,

removing and reinstalling, sealing and

unsealing meters and other metering

equipment in connection with initiating

or terminating services including the

cost of obtaining meter readings, if

incidental to such operation.

4. Consolidating meter installations

due to elimination of separate meters for

different rates of service.

5. Changing or relocating meters,

instrument transformers, time switches,

and other metering equipment.

6. Resetting time controls, checking

operation of demand meters and other

metering equipment, when done as an

independent operation.

7. Inspecting and adjusting meter

testing equipment.

8. Inspecting and testing meters,

instrument transformers, time switches,

and other metering equipment on

premises or in shops excluding

inspecting and testing incidental to

maintenance.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.
42308 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses

1. Meter seals and miscellaneous

meter supplies.

2. Transportation expenses.

3. Meals, traveling, and incidental

expenses.

4. Tool expenses.

Note: The cost of the first setting and

testing of a meter is chargeable to utility

plant, Account 370, Meters.

587 Customer Installations Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, materials

used, and expenses incurred in work on

customer installations in inspecting

premises and in rendering services to

customers of the nature of those

indicated by the list of items hereunder.

Items

Labor

1. Supervising customer installations

work.

2. Inspecting premises, including the

check of wiring for code compliance.

3. Investigating, locating, and clearing

grounds on customers’ wiring.

4. Investigating service complaints,

including load tests of motors and

lighting and power circuits on

customers’ premises; field investigations

of complaints on bills or of voltage.

5. Installing, removing, renewing, and

changing lamps and fuses.

6. Radio, television, and similar

interference work including erection of

new aerials on customers’ premises and

patrolling of lines, testing of lightning

arresters, inspection of pole hardware,

and examination on or off premises of

customers’ appliances, wiring, or

equipment to locate cause of

interference.

7. Installing, connecting, reinstalling,

or removing leased property on

customers’ premises.

8. Testing, adjusting, and repairing

customers’ fixtures and appliances in

the shop or on premises.

9. Cost of changing customers’

equipment due to changes in service

characteristics.

10. Investigation of current diversion

including setting and removal of check

meters and securing special readings

thereon; special calls by employees in

connection with discovery and

settlement of current diversion; changes

in customer wiring; and any other labor

cost identifiable as caused by current

diversion.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Lamp and fuse renewals.

2. Materials used in servicing

customers’ fixtures, appliances, and

equipment.

3. Power, light, heat, telephone, and

other expenses of the appliance repair

department.

4. Tool expense.

5. Transportation expense, including

pickup and delivery charges.

6. Meals, traveling, and incidental

expenses.

7. Rewards paid for discovery of

current diversion.

Note A: Amounts billed customers for any

work, the cost of which is charged to this

account, shall be credited to this account.

Any excess over costs resulting therefrom,

shall be transferred to Account 451,

Miscellaneous Service Revenues.

Note B: Do not include in this account

expenses incurred in connection with

merchandising, jobbing, and contract work.

588 Miscellaneous Distribution

Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in distribution

system operation not provided for

elsewhere.

Items

Labor:

1. General records of physical

characteristics of lines and substations,

such as capacities.

2. Ground resistance records.

3. Joint pole maps and records.

4. Distribution system voltage and

load records.

5. Preparing maps and prints.

6. Service interruption and trouble

records.

7. General clerical and stenographic

work except that chargeable to Account

586, Meter Expenses.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42309

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

Expenses:

1. Operating records covering poles,

transformers, manholes, cables, and

other distribution facilities. Exclude

meter records chargeable to Account

586, Meter Expenses, and station

records chargeable to Account 582,

Station Expenses, and stores records

chargeable to Account 163, Stores

Expense Undistributed.

2. Janitor work at distribution office

buildings including snow removal and

grass cutting.

3. Communication service.

4. Building service expenses.

5. Miscellaneous office supplies and

expenses, printing and stationery, maps

and records, and first-aid supplies.

6. Research, development, and

demonstration expenses.

* * * * *

590 Maintenance Supervision and

Engineering

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, and expenses

incurred in the general supervision and

direction of maintenance of the

distribution system. Direct field

supervision of specific jobs shall be

charged to the appropriate maintenance

account. (See § 1767.17(a).)

591 Maintenance of Structures

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of structures, the book cost of which is

includible in Account 361, Structures

and Improvements. (See § 1767.17(b).)

592 Maintenance of Station Equipment

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of plant, the book cost of which is

includible in Account 362, Station

Equipment, and Account 363, Storage

Battery Equipment. (See § 1767.17(b).)

593 Maintenance of Overhead Lines

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in the

maintenance of overhead distribution

line facilities, the book cost of which is

includible in Account 364, Poles,

Towers and Fixtures; Account 365,

Overhead Conductors and Devices; and

Account 369, Services. (See

§ 1767.17(b).)

Items

1. Work of the following character on

poles, towers, and fixtures:

a. Installing additional clamps or

removing clamps or strain insulators on

guys in place.

b. Moving line or guy pole in

relocation of pole or section of line.

c. Painting poles, towers, crossarms,

or pole extensions.

d. Readjusting and changing position

of guys or braces.

e. Realigning and straightening poles,

crossarms, braces, pins, racks, brackets,

and other pole fixtures.

f. Reconditioning reclaimed pole

fixtures.

g. Relocating crossarms, racks,

brackets, and other fixtures on poles.

h. Repairing pole supported platform.

i. Repairs by others to jointly owned

poles.

j. Shaving, cutting rot, or treating

poles or crossarms in use or salvaged for

reuse.

k. Stubbing poles already in service.

l. Supporting conductors,

transformers, and other fixtures and

transferring them to new poles during

pole replacements.

m. Maintaining pole signs, stencils,

and tags.

2. Work of the following character on

overhead conductors and devices:

a. Overhauling and repairing line

cutouts, line switches, line breakers,

and capacitor installations.

b. Cleaning insulators and bushings.

c. Refusing line cutouts.

d. Repairing line oil circuit breakers

and associated relays and control

wiring.

e. Repairing grounds.

f. Resagging, retying, or rearranging

position or spacing of conductors.

g. Standing by phones, going to calls,

cutting faulty lines clear, or similar

activities at times of emergency.

h. Sampling, testing, changing,

purifying, and replenishing insulating

oil.

i. Transferring loads, switching, and

reconnecting circuits and equipment for

maintenance purposes.

j. Repairing line testing equipment.

k. Trimming trees and clearing brush.

l. Chemical treatment of right-of-way

area when occurring subsequent to

construction of line.

3. Work of the following character on

overhead services:

a. Moving position of service either on

pole or on customers’ premises.

b. Pulling slack in service wire.

c. Retying service wire.

d. Refastening or tightening service

bracket.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and
42310 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

594 Maintenance of Underground

Lines

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in the

maintenance of underground

distribution line facilities, the book cost

of which is includible in Account 366,

Underground Conduit; Account 367,

Underground Conductors and Devices;

and Account 369, Services. (See

§ 1767.17(b).)

Items

1. Work of the following character on

underground conduit:

a. Cleaning ducts, manholes, and

sewer connections.

b. Moving or changing position of

conduit or pipe.

c. Minor alterations of handholes,

manholes, or vaults.

d. Refastening, repairing, or moving

racks, ladders, or hangers in manholes

or vaults.

e. Plugging and shelving ducts.

f. Repairs to sewers, drains, walls, and

floors, rings, and covers.

2. Work of the following character on

underground conductors and devices:

a. Repairing circuit breakers,

switches, cutouts, network protectors,

and associated relays and control

wiring.

b. Repairing grounds.

c. Retraining and reconnecting cables

in manholes including transfer of cables

from one duct to another.

d. Repairing conductors and splices.

e. Repairing or moving junction boxes

and potheads.

f. Refireproofing cables and repairing

supports.

g. Repairing electrolysis preventive

devices for cables.

h. Repairing cable bonding systems.

i. Sampling, testing, changing,

purifying, and replenishing insulating

oil.

j. Transferring loads, switching and

reconnecting circuits and equipment for

maintenance purposes.

k. Repairing line testing equipment.

l. Repairing oil or gas equipment in

high voltage cable systems and

replacement of oil or gas.

3. Work of the following character on

underground services:

a. Cleaning ducts.

b. Repairing any underground service

plant.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

595 Maintenance of Line Transformers

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of distribution line transformers, the

book cost of which is includible in

Account 368, Line Transformers. (See

§ 1767.17(b).)

596 Maintenance of Street Lighting

and Signal Systems

This account shall include the cost of

labor, employee pensions and benefits,
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42311

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of plant, the book cost of which is

includible in Account 373, Street

Lighting and Signal Systems. (See

§ 1767.17(b).)

597 Maintenance of Meters

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in the

maintenance of meters and meter testing

equipment, the book cost of which is

includible in Account 370, Meters, and

Account 395, Laboratory Equipment,

respectively. (See § 1767.17(b).)

598 Maintenance of Miscellaneous

Distribution Plant

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in maintenance

of plant, the book cost of which is

includible in Accounts 371,

Installations on Customers’ Premises,

and Account 372, Leased Property on

Customers’ Premises, and any other

plant the maintenance of which is

assignable to the distribution function

and is not provided for elsewhere. (See

§ 1767.17(b).)

Items

1. Work of similar nature to that listed

in other distribution maintenance

accounts.

2. Maintenance of office furniture and

equipment used by distribution system

department.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

6. Section 1767.28 is amended by

revising Accounts 901, 902, 903, and

905 to read as follows:

2. Changing and collecting meter

charts used for billing purposes.

3. Inspecting time clocks and

checking seals 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, or to

Account 903, Customer Records and

Collection Expenses, 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

employees engaged in reading meters.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)
42312 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

8. Cost of safety, accident prevention,

and similar educational activities.

Materials and Expenses:

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.

903 Customer Records and Collection

Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in work on

customer applications, contracts, orders,

credit investigations, billing and

accounting, collections and complaints.

Items

Labor:

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 such orders, which

is chargeable to the account appropriate

for the work called for by such orders.

2. Investigations of customers’ credit

and keeping of records pertaining

thereto, 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 date.

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 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 such orders.

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.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

Materials and Expenses:

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, including

transportation of customer bills and

meter books under centralized billing

procedures.

7. Transportation, meals expenses,

and incidental expenses.

8. Bank charges, exchange, and other

fees for cashing and depositing

customers’ checks.

9. Forms for recording orders for

services, or removals.

10. Rent of mechanical equipment.

Note. The cost of work on meter history

and meter location records in chargeable to

Account 586, Meter Expenses.

* * * * *

905 Miscellaneous Customer Accounts

Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, materials

used, and expenses incurred not

provided for in other accounts.

Items

Labor:

1. General clerical and stenographic

work.

2. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein,
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42313

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Communication service.

2. Miscellaneous office supplies and

expenses and stationery and printing

other than those specifically provided

for in Account 902 and Account 903.

7. Section 1767.29 is amended by

revising Accounts 907, 908, 909, and

910 to read as follows:

§ 1767.29 Customer service and

informational expenses.

* * * * *

907 Supervision

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, 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 utility’s service.

Direct supervision of a specific activity

within customer service and

informational expense classification

shall be charged to the account wherein

the costs of such activity are included.

(See § 1767.17(a).)

908 Customer Assistance Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, 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

utility’s service.

Items

Labor:

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

such 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 utility’s service.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

Materials and Expenses:

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.
42314 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

3. Office supplies and expenses.

4. Transportation, meals, and

incidental expenses.

Note: 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;

587, Customer Installations Expenses; and

912, Demonstrating and Selling Expenses.

909 Informational and Instructional

Advertising Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in activities

which primarily convey information as

to what the utility urges or suggests

customers should do in utilizing electric

service to protect health and safety, to

encourage environmental protection, to

utilize their electric equipment safely

and economically, or to conserve

electric energy.

Items

Labor:

1. Direct supervision of information

activities.

2. Preparing informational materials

for newspapers, periodicals, and

billboards and preparing and

conducting informational motion

pictures, radio and television programs.

3. Preparing informational booklets

and bulletins used in direct mailings.

4. Preparing informational window

and other displays.

5. Employing agencies, selecting

media, and conducting negotiations in

connection with the placement and

subject matter of information programs.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

Materials and Expenses:

1. Use of newspapers, periodicals,

billboards, and radio for informational

purposes.

2. Postage on direct mailings to

customers exclusive of postage related

to billings.

3. Printing of informational booklets,

dodgers, and bulletins.

4. Supplies and expenses in preparing

informational materials by the utility.

5. Office supplies and expenses.

Note A: 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,

which are includible in such accounts as 913,

Advertising Expenses; 930.1, General

Advertising Expenses; and 426.4,

Expenditures for Certain Civic, Political and

Related Activities.

Note B: Entries relating to informational

advertising included in this account shall

contain or refer to supporting documents

which identify the specific advertising

message. If references are used, copies of the

advertising message shall be readily

available.

910 Miscellaneous Customer Service

and Informational Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, materials

used, and expenses incurred in

connection with customer service and

informational activities which are not

includible in other customer

information expense accounts.

Items

Labor:

1. General clerical and stenographic

work not assigned to specific customer

service and informational programs.

2. Miscellaneous labor.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42315

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Communication service.

2. Printing, postage, and office

supplies expenses.

8. Section 1767.30 is amended by

revising Accounts 911, 912, 913, and

916 to read as follows:

§ 1767.30 Sales expenses

* * * * *

911 Supervision

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, 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 shall be charged

to the account wherein the costs of such

activity are included. (See § 1767.17(a).)

912 Demonstrating and Selling

Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in promotional,

demonstrating, and selling activities,

except by merchandising, the object of

which is to promote or retain the use of

utility services by present and

prospective customers.

Items

Labor:

1. Demonstrating uses of utility

services.

2. Conducting cooking schools,

preparing recipes, and related home

service activities.

3. Exhibitions, displays, lectures, and

other programs designed to promote use

of utility services.

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 utility services.

7. Special customer canvasses when

their primary purpose is the retention of

business or the promotion of new

business.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

Materials and Expenses:

1. Supplies and expenses pertaining

to demonstration, 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.

913 Advertising Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in advertising

designed to promote or retain the use of

utility service, except advertising the

sale of merchandise by the utility.

Items

Labor:

1. Direct supervision of department.

2. Preparing advertising material for

newspapers, periodicals, and billboards,

and preparing and conducting motion

pictures, radio, and television programs.

3. Preparing booklets and bulletins

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

in connection with the placement and

subject matter of sales advertising.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee
42316 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

Materials and Expenses:

1. Advertising in newspapers,

periodicals, billboards, and radio for

sales promotion purposes, but not

including institutional or goodwill

advertising includible in Account 930.1,

General Advertising Expenses.

2. Materials and services given as

prizes or otherwise in connection with

civic lighting contests, canning, or

cooking contests, and bazaars 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 when not offered

as inducement to purchase appliances.

7. Printing booklets, dodgers, and

bulletins.

8. Supplies and expenses in preparing

advertising material.

9. Office supplies and expenses.

Note A: The cost of advertisements which

set forth the value or advantages of utility

service without reference to specific

appliances, or, if reference is made to

appliances, invites the reader to purchase

appliances from his dealer or refer to

appliances not carried for sale by the utility,

shall be considered sales promotion

advertising and charged to this account.

However, advertisements which are limited

to specific makes of appliances sold by the

utility and price and terms, thereof, without

referring to the value or advantages of utility

service, shall be considered as merchandise

advertising and the cost shall be charged to

Costs and Expenses of Merchandising,

Jobbing and Contract Work, Account 416.

Note B: Advertisements which

substantially mention or refer to the value or

advantages of utility service, together with

specific reference to makes of appliance sold

by the utility and the price, and terms,

thereof, and designed for the joint purpose of

increasing the use of utility service and the

sales of appliances, shall be considered as a

combination advertisement and the costs

shall be distributed between this account and

Account 416 on the basis of space, time, or

other proportional factors.

Note C: 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 institutional or goodwill

advertising. (See Account 930.1, General

Advertising Expenses.)

916 Miscellaneous Sales Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, materials

used, and expenses incurred in

connection with sales activities, except

merchandising, which are not

includible in other sales expense

accounts.

Items

Labor:

1. General clerical and stenographic

work not assigned to specific functions.

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.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42317

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Materials and Expenses:

1. Communication service.

2. Printing, postage, office supplies,

and expenses applicable to sales

activities, except those chargeable to

Account 913, Advertising Expenses.

9. Section 1767.31 is amended by

revising Accounts 920, 924, 925, 926,

930.1, 930.2, and 935 to read as follows:

§ 1767.31 Administrative and general

expenses.

* * * * *

920 Administrative and General

Salaries

A. This account shall include the

compensation (salaries, bonuses,

employee pensions and benefits, social

security and other payroll taxes, injuries

and damages, and other consideration

for services, but not including directors’

fees) of officers, executives, and other

employees of the utility properly

chargeable to utility operations and not

chargeable directly to a particular

operating function.

B. This account may be subdivided in

accordance with a classification

appropriate to the departmental or other

functional organization of the utility.

* * * * *

924 Property Insurance

A. This account shall include the cost

of insurance or reserve accruals to

protect the utility against losses and

damages to owned or leased property

used in its utility operations. It shall

also include the cost of labor, employee

pensions and benefits, social security

and other payroll taxes, injuries and

damages, and the related supplies and

expenses incurred in property insurance

activities.

B. Recoveries from insurance

companies or others for property

damages shall be credited to the account

charged with the cost of the damage. If

the damaged property has been retired,

the credit shall be to the appropriate

account for accumulated provision for

depreciation.

C. Records shall 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 distributed by mutual

insurance companies shall be credited

to the accounts to which the insurance

premiums were charged.

Items

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

Note A: The cost of insurance or reserve

accruals capitalized, shall be charged to

construction and retirement either directly or

by transfers to construction and retirement

work orders from this account.

Note B: The cost of insurance or reserve

accruals for the following classes of property

shall be charged as indicated:

1. Materials, supplies, and stores

equipment to Account 163, Stores Expense

Undistributed, or appropriate materials

account.

2. Transportation and other general

equipment to appropriate clearing accounts

that may be maintained.

3. Electric plant leased to others to

Account 413, Expenses of Electric Plant

Leased to Others.

4. Nonutility property to the appropriate

nonutility income account.

5. Merchandise and jobbing property to

Account 416, Costs and Expenses of

Merchandising, Jobbing and Contract Work.

Note C: The cost of labor, employee

pensions and benefits, social security and

other payroll taxes, and the related supplies

and expenses of administrative and general

employees who are only incidentally engaged

in property insurance work may be included

in Account 920 and Account 921, as

appropriate.

Note D: The cost of insurance or reserve

accruals applicable to the various utility

functions shall be charged to the specific

functional operations and the appropropriate

miscellaneous administrative expense

accounts either directly or by transfers from

this account.

925 Injuries and Damages

A. This account shall include the cost

of insurance or reserve accruals to

protect the utility 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 shall also include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, related supplies,

and expenses incurred in injuries and

damages activities.

B. Reimbursements from insurance

companies or others for expenses

charged hereto on account of injuries,

damages, and insurance dividends or

refunds shall be credited to this

account.

Items

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

Note A: Payments to or in behalf of

employees for accident or death benefits,

hospital expenses, medical expenses, or for

salaries while incapacitated for service or on

leave of absence beyond periods normally

allowed, when not the result of occupational

injuries, shall be charged to Account 926,

Employee Pensions and Benefits. (See also

Note B of Account 926.)

Note B: The cost of injuries and damages

or reserve accruals capitalized shall be

charged to construction and retirement

activities either directly or by transfers from

this account to the applicable construction

and retirement work orders.

Note C: The cost of insurance or reserve

accruals applicable to the various utility

functions shall be charged to the specific

functional operations and the appropropriate

miscellaneous administrative expense

accounts either directly or by transfers from

this account.

Note D: Exclude herefrom 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.

Note E: The cost of labor, employee

pensions and benefits, social security and

other payroll taxes, and the related supplies
42318 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

and expenses of administrative and general

employees who are only incidentally engaged

in injuries and damages activities, may be

included in Account 920 and Account 921,

as appropriate.

926 Employee Pensions and Benefits

A. This account shall 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

utility 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 therefor. 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 utility shall maintain a

complete record of accruals or payments

for pensions and be prepared to furnish

full information to RUS of 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. There shall be credited to this

account, the portion of pensions and

benefits expenses which is applicable to

nonutility operations, the specific

functional operations, maintenance, and

administrative expense accounts, and to

construction and retirement activities

unless such amounts are distributed

directly to the accounts involved and

are not included herein in the first

instance.

D. Records in support of this account

shall be so kept that the total pensions

expense, the total benefits expense, the

administrative expenses included

herein, and the amounts of pensions

and benefits expenses transferred to the

operations, maintenance,

administrative, construction or

retirement accounts will be readily

available.

Items

1. Payment of pensions to retirees on

a nonaccrual 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.

Note A: The cost of labor, employee

pensions and benefits, social security and

other payroll taxes, injuries and damages,

and the related supplies and expenses of

administrative and general employees who

are only incidentally engaged in employee

pension and benefit activities may be

included in Account 920 and Account 921,

as appropriate.

Note B: Salaries paid to employees during

periods of nonoccupational sickness may be

charged to the appropriate labor account

rather than to employee benefits.

* * * * *

930.1 General Advertising Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in advertising

and related activities, the cost of which

by their content and purpose are not

provided for elsewhere.

Items

Labor:

1. Supervision.

2. Preparing advertising material for

newspapers, periodicals, and billboards

and preparing or conducting motion

pictures, radio, and television programs.

3. Preparing booklets and bulletins

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.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

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 Account 924,

Note A.)

8. Cost of safety, accident prevention,

and similar educational activities.

Materials and Expenses:

1. Advertising in newspapers,

periodicals, billboards, and radios.

2. Advertising matter such as posters,

bulletins, booklets, and related items.

3. Fees and expenses of advertising

agencies and commercial artists.

4. Postage and direct mail advertising.

5. Printing of booklets, dodgers, and

bulletins.

6. Supplies and expenses in preparing

advertising materials.

7. Office supplies and expenses.

Note A: Properly includible in this account

is the cost of advertising activities on a local

or national basis of a goodwill or institutional

nature, which is primarily designed to

improve the image of the utility or the

industry, including advertisements which

inform the public concerning matters

affecting the company’s operations, such as,

the cost of providing service, the company’s
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42319

efforts to improve the quality of service, and

the company’s efforts to improve and protect

the environment. Entries relating to

advertising included in this account shall

contain or refer to supporting documents

which identify the specific advertising

message. If references are used, copies of the

advertising message shall be readily

available.

Note B: Exclude from this account and

include in Account 426.4, Expenditures for

Certain Civic, Political and Related

Activities, expenses for advertising activities,

which are designed to solicit public support

or the support of public officials in matters

of a political nature.

930.2 Miscellaneous General Expenses

This account shall include the cost of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, property

insurance, property taxes, and expenses

incurred in connection with the general

management of the utility not provided

for elsewhere.

Items

Labor:

1. Miscellaneous labor not elsewhere

provided for.

Taxes:

1. Federal and state unemployment.

2. F.I.C.A.

3. Property.

Employee Pensions and Benefits: The

portion of employee pensions and

benefits specifically identifiable with

employees’ labor costs charged herein

or, in the absence of specific employee

identification, the portion of employee

pensions and benefits, allocated on the

more equitable basis of either direct

labor dollars or direct labor hours,

applicable to the labor items detailed

above, including:

1. Accruals for or payments to

pension funds or to insurance

companies for pension purposes.

2. Group and life insurance premiums

(credit dividends received).

3. Payments for medical and hospital

services and expenses of employees

when not the result of occupational

injuries.

4. Payments for accident, sickness,

hospital, and death benefits or

insurance.

5. 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.

6. Expenses in connection with

educational and recreational activities

for the benefit of employees.

Insurance:

1. Premiums payable to insurance

companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,

and similar insurance.

2. Amounts credited to Account

228.1, Accumulated Provision for

Property Insurance, for similar

protection.

3. Special costs incurred in procuring

insurance.

4. Insurance inspection service.

5. Insurance counsel, brokerage fees,

and expenses.

6. 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, etc., and amounts

credited to Account 228.2, Accumulated

Provision for Injuries and Damage, for

similar protection.

7. 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.

8. Fees and expenses of claim

investigators.

9. Payment of awards to claimants for

court costs and attorneys’ services.

10. Medical and hospital service and

expenses for employees as the result of

occupational injuries or resulting from

claims of others.

11. Compensation payments under

workmen’s compensation laws.

12. Compensation paid while

incapacitated as the result of

occupational injuries. (See Account 924,

Note A.)

13. Cost of safety, accident

prevention, and similar educational

activities.

Expenses:

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.

* * * * *

935 Maintenance of General Plant

A. This account shall include the cost

assignable to customer accounts, sales,

administrative, and general functions of

labor, employee pensions and benefits,

social security and other payroll taxes,

injuries and damages, materials used,

and expenses incurred in the

maintenance of property, the book cost

of which is includible in Account 390,

Structures and Improvements; Account

391, Office Furniture and Equipment;

Account 397, Communication

Equipment; and Account 398,

Miscellaneous Equipment. (See

§ 1767.17(b).)

B. Maintenance expenses on office

furniture and equipment used elsewhere

than in general, commercial, and sales

offices shall be charged to the following

accounts:

1. Steam Power Generation, Account

514.

2. Nuclear Power Generation, Account

532.

3. Hydraulic Power Generation,

Account 545.

4. Other Power Generation, Account

554.

5. Transmission, Account 573.

6. Distribution, Account 598.

7. Merchandise and Jobbing, Account

416.

8. Garages, Shops, etc., Appropriate

clearing account, if used.

Note: Maintenance of plant included in

other general equipment accounts shall be

included herein unless charged to clearing

accounts or to the particular functional

maintenance expense account indicated by

the use of the equipment.

10. In § 1767.41, the introductory text

preceding the Numerical Index is

revised to read as follows:

§ 1767.41 Accounting methods and

procedures required of all RUS borrowers.

All RUS borrowers shall maintain and

keep their books of accounts and all

other books and records which support

the entries in such books of accounts in

accordance with the accounting

principles prescribed in this section.

Interpretations Nos. 133, 134, 137, 403,

404, 602, 606, 618, 627, 628, and 629

adopt and implement the provisions of

standards issued by the Financial

Accounting Standards Board (FASB).

Each interpretation includes a synopsis

of the requirements of the standard as

well as specific accounting

requirements and interpretations

required by RUS. The synopsis provides

general information to assist borrowers

in determining whether the standard

applies to an individual cooperative’s

operations. The synopsis is not intended

to change the requirements of the FASB
42320 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

standards unless it is set forth in the

section entitled RUS Accounting

Requirements in each interpretation. If a

particular borrower believes a conflict

exists between the FASB standard and

an RUS interpretation, the borrower

shall contact the Director, PASD, to seek

resolution of the issue.

* * * * *

11.–20. In § 1767.41, make the

following changes:

a. In the Numerical Index, the entries

No. 137, No. 138, No. 139, No. 140, No.

630, and No. 631, are added in

numerical order.

b. In the Subject Matter Index listing

under ‘‘A’’, entries for ‘‘Automatic

Meter Reading Systems—Radio-Based’’

and ‘‘Automatic Meter Reading

Systems—Turtles’’ are added in

alphabetical order.

c. In the Subject Matter Index listing

under ‘‘E’’, an entry for ‘‘Early

Retirement Plan’’ is added in

alphabetical order.

d. In the Subject Matter Index listing

under ‘‘G’’, an entry for ‘‘Global

Positioning Systems’’ is added in

alphabetical order.

e. In the Subject Matter Index listing

under ‘‘I’’, entries for ‘‘Impairment of

Long-Lived Assets’’ and ‘‘Insurance—

Split Dollar’’ are added in alphabetical

order.

f. In the Subject Matter Index listing

under ‘‘L’’, entries for ‘‘Life Insurance—

Split Dollar’’ and ‘‘Long-Lived Assets—

Impairment’’ are added in alphabetical

order.

g. In the Subject Matter Index listing

under ‘‘M’’, entries for ‘‘Meter Reading

Systems—Radio-Based’’ and ‘‘Meter

Reading Systems—Turtles’’ are added in

alphabetical order.

h. In the Subject Matter Index listing

under ‘‘R’’, an entry for ‘‘Radio-Based

Automatic Meter Reading Systems’’ is

added in alphabetical order.

i. In the Subject Matter Index listing

under ‘‘S’’, entries for ‘‘Special Early

Retirement Plan’’ and ‘‘Split Dollar Life

Insurance’’ are added in alphabetical

order.

j. In the Subject Matter Index listing

under ‘‘T’’, an entry for ‘‘TurtlesAutomatic Meter Reading Systems’’ is

added in alphabetical order.

The additions read as follows:

* * * * *

Numerical Index

Number Title

* * * * *

137 ........................... Impairment of LongLived Assets.

Number Title

138 ........................... Automatic Meter

Reading SystemsTurtles.

139 ........................... Global Positioning

Systems.

140 ........................... Radio-Based Automatic Meter Reading

Systems.

* * * * *

630 ........................... Split Dollar Life Insurance.

631 ........................... Special Early Retirement Plan.

Subject Matter Index

Number

A

* * * * *

Automatic Meter

Reading SystemsRadio-Based.

140.

Automatic Meter

Reading SystemsTurtles.

138.

* * * * *

E

Early Retirement Plan 631.

* * * * *

G

* * * * *

Global Positioning

Systems.

139.

I

Impairment of LongLived Assets.137.

* * * * *

Insurance—Split Dollar.630.

* * * * *

L

* * * * *

Life Insurance—Split

Dollar.

630.

* * * * *

Long-Lived AssetsImpairment.137.

M

* * * * *

Meter Reading Systems—Radio-Based.140.

Meter Reading Systems—Turtles.138.

* * * * *

R

Radio-Based Automatic Meter Reading Systems.140.

Number

* * * * *

S

* * * * *

Special Early Retirement Plan.631.

* * * * *

Split Dollar Life Insurance.630.

* * * * *

T

* * * * *

Turtles—Automatic

Meter Reading Systems.

138.

* * * * *

21. In § 1767.41, Interpretation No.

104 is revised to read as follows:

* * * * *

104 Terminal Facilities

Borrowers are sometimes required to

construct terminal facilities in the

transmission line of another utility in

order to receive power from their power

supplier. The document executed

between the borrower and the utility is

normally referred to as a ‘‘License

Agreement’’. The license agreement may

stipulate that certain items of the

terminal facilities are to be transferred

to, and become the property of, the

other utility upon completion of the

construction. The accounting for this

type of transaction shall be as follows:

1. All construction costs incurred

shall be charged to a work order. Upon

completion of the construction and

accumulation of all costs, the cost of the

facilities that become the property of

another utility shall be transferred from

construction work-in-progress to

Account 303, Miscellaneous Intangible

Plant. The cost of the plant for which

the borrower retains title shall be

charged to the appropriate plant

accounts.

2. The cost of the facilities recorded

in Account 303 shall be amortized to

Account 405, Amortization of Other

Electric Plant, over the contract term or

the estimated useful service life of the

plant, whichever is shorter. If the

related contract or contracts for this

power supply are terminated, the

unamortized balance shall be expensed,

in the current period, in Account 557.

* * * * *

22. In § 1767.41, Interpretation Nos.

137, 138, 139 and 140 are added in

numerical order to read as follows:

* * * * *
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42321

137 Impairment of Long-Lived Assets

Statement of Financial Accounting

Standards No. 121, Accounting for the

Impairment of Long-Lived Assets and

for Long-Lived Assets to be Disposed of

(Statement No. 121), requires reporting

entities to review all long-lived assets

and certain identifiable intangibles that

are to be held, used, or disposed of by

that entity for impairment whenever

events and changes in circumstances

indicate that the carrying amount of the

asset may not be recoverable. If the sum

of the expected future cash flows

(undiscounted and without interest

charges) is less than the carrying value

of the asset, the entity must recognize an

impairment loss. The impairment loss is

measured as the amount by which the

carrying amount of the asset exceeds the

fair value of the asset. The impairment

loss is reported as a component of

income from continuing operations

before income taxes for entities

presenting an income statement and in

the statement of activities of not-forprofit organizations. Statement No. 121

does not apply to assets included in the

scope of Statement of Financial

Accounting Standards No. 90, Regulated

Enterprises—Accounting for

Abandonments and Disallowances of

Plant Costs.

Assets To Be Held or Used

Entities are required to review longlived assets and certain identifiable

intangibles whenever events or changes

in circumstances indicate that the

carrying value of the asset may not be

recoverable. For example:

1. A significant decrease in the market

value of an asset;

2. A significant change in the extent

or manner in which an asset is used;

3. A significant physical change in an

asset;

4. A significant adverse change in

legal factors or in the business climate

that could affect the value of an asset;

5. An adverse action or assessment by

a regulator;

6. An accumulation of costs

significantly in excess of the amount

originally expected to acquire or

construct an asset; and

7. A current period operating or cash

flow loss combined with a history of

operating or cash flow losses or a

projection or forecast that demonstrates

continued losses associated with an

asset used for the purpose of producing

revenue.

The impairment of the asset is

measured by estimating the future cash

flows expected to result from the use of

the asset and its disposition. Assets are

grouped at the lowest level for which

there are identifiable cash flows that are

largely independent of the cash flows of

other groups of assets. Future cash flows

are those cash inflows that are expected

to be generated by the asset less the cash

outflows expected to be necessary to

maintain those inflows. If the future

cash flows (undiscounted and without

interest charges) are less than the

carrying value of the asset, an

impairment loss must be recognized. If

the expected future cash flows are

greater than the carrying value of the

asset, no impairment loss exists.

The impairment loss is the amount by

which the carrying amount (acquisition

cost less accumulated depreciation) of

the asset exceeds the fair value of the

asset. The fair value of the asset is the

amount for which the asset could be

bought or sold in an arms-length

transaction between willing parties. A

quoted market price is the best evidence

of fair value. If this information is not

available, the fair value should be based

upon the best information available.

Consideration should be given to the

price of similar assets and valuation

techniques such as the present value of

the expected future cash flows

discounted at a rate representative of the

risk involved, option-pricing models,

matrix pricing, option-adjusted spread

models, and fundamental analysis. All

available information should be

considered when using the above

pricing techniques.

If an impairment is recognized, the

carrying value of the asset is reduced to

the lower of its fair value or its carrying

value and, if depreciable, depreciated

over the remaining useful life.

Previously recognized impairment

losses cannot be restored. If the asset

was acquired in a business combination

and there is goodwill resulting from the

transaction, the goodwill is included in

the asset grouping and reduced or

eliminated before any adjustment is

made to the carrying value of the asset.

The following financial statement

disclosures are required in the period in

which the impairment is recognized:

1. A description of the impaired assets

and the facts and circumstances

surrounding the impairment;

2. The amount of the impairment and

how fair value was determined;

3. The caption in the income

statement or the statement of activities

in which the impairment loss is

aggregated if that loss has not been

presented as a separate caption or

reported parenthetically on the face of

the statement; and

4. If applicable, the business

segment(s) affected.

Assets To Be Disposed

Statement No. 121 also applies to all

long-lived assets and certain identifiable

intangibles for which management,

having the authority to approve the

action, has committed to a plan of

disposal except those assets covered by

APB No. 30, Reporting the Results of

Operations—Reporting the Effects of

Disposal of a Segment of a Business, and

Extraordinary, Unusual and

Infrequently Occurring Events and

Transactions. An asset to be disposed of

is carried at the lower of its carrying

amount (acquisition cost less

accumulated depreciation) or its fair

value less cost to sell.

The fair value of the asset to be

disposed of is computed in the same

manner as that for an asset to be held

or used by the entity. Selling costs

include the incremental direct cost to

transact the sale—broker commissions,

legal fees, title transfer, and other

closing costs that must be incurred

before legal title can be transferred.

Costs such as insurance, security

service, and utilities are generally

excluded unless these costs are part of

a contractual agreement that obligates

the entity to incur such costs in the

future. If the asset’s fair value is based

upon current market price or the current

selling price for a similar asset, the fair

value is considered a current amount

and is not discounted. If, however, the

fair value is based upon discounted

expected future cash flows and if the

sale is to occur beyond one year, the

cost to sell must also be discounted.

Assets covered by this statement are not

depreciated (amortized) while being

held for disposal.

Subsequent revisions in estimates of

fair value less cost to sell are reported

as adjustments to the carrying amount of

the asset to be disposed of as long as the

carrying amount of the asset does not

exceed the original carrying amount.

The following financial statement

disclosures are required in the period in

which the impairment is recognized:

1. A description of the assets to be

disposed of including the facts and

circumstances leading to the expected

disposal, the expected disposal date,

and the carrying amount of those assets;

2. If applicable, the business

segment(s) in which the assets to be

disposed of are held;

3. The amount, if any, of the

impairment loss resulting from the

adoption of this statement;

4. The gain or loss, if any, resulting

from subsequent revisions in the

estimates of fair value less cost to sell;

5. The caption in the income

statement or statement of activities in
42322 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

which the gains or losses are aggregated

if those gains or losses have not been

presented as a separate caption or

reported parenthetically on the face of

the statement; and

6. The results of operations for assets

to be disposed of to the extent that those

results are included in the entity’s

results of operations for the period and

can be identified.

Accounting Requirements

All borrowers must adopt the

accounting prescribed by Statement No.

121.

Effective Date and Implementation

Statement No. 121 is effective for

financial statements for fiscal years

beginning after December 15, 1995.

Impairment losses resulting from the

application of this statement to assets

that are held or used by the entity must

be reported in the period in which the

recognition criteria are first applied and

met. Impairment losses attributable to

assets to be disposed of must be

reported as the cumulative effect of a

change in accounting principle as

prescribed in Accounting Principles

Board Opinion No. 20, Accounting

Changes.

Accounting Journal Entries—

Implementation Date

If a borrower has impaired assets that

are held or used at the implementation

date, the following entry should be

recorded:

Dr. 426.5, Other Deductions

Cr. 300 Series of Accounts, Plant Accounts

To record the adoption of Statement No. 121

for the impairment of assets that are held

or used.

If a borrower has impaired assets to be

disposed of at the implementation date,

the following entry should be recorded:

Dr. 435.1, Cumulative Effect on Prior Years

of a Change in Accounting Principle

Cr. 300 Series—Plant Accounts

To record the adoption of Statement No. 121

for assets that are to be disposed.

Accounting Journal Entries—

Subsequent to Implementation Date

If an asset that is either held, used or

to be disposed of becomes impaired, the

following entry should be recorded:

Dr. 426.5, Other Deductions

Cr. 300 Series—Plant Accounts

To record the impairment of a plant asset.

If a borrower makes a subsequent

revision in the estimate of the fair value

less the cost to sell of an asset to be

disposed of, the following entry should

be recorded:

Dr. 300 Series—Plant Accounts

Cr. 421, Miscellaneous Nonoperating Income

To revise the fair value of an asset to be

disposed.

138 Automatic Meter Reading

Systems—Turtles

Automatic meter reading systems

were developed from technology called

power line carrier communication

systems. One such system, developed by

Hunt Technologies, Inc., is called by its

brand name, the Turtle system. In

addition to its function as an automated

reading device, the Turtle can provide

outage detection, power failure counts,

and other potential applications. The

current Turtle system does not have the

capability for applications such as

collection of load survey or interval

data. A Turtle system consists of:

1. A meter reader mounted

(retrofitted) inside the meter;

2. A receiver located in each

substation; and

3. Monitoring and programming

equipment (software and personal

computer) usually located in the

headquarters building.

The system transmits continuous

information one way from the meter to

a receiver located in the substation. The

receiver constantly monitors every

Turtle meter served by the substation.

The substation receiver can be sized to

monitor up to 3,000 Turtle meter

readers at the same time. The data is

then transmitted to the headquarters

monitoring equipment via telephone

line or an equivalent communication

system.

The technical literature and other

information provided by the

manufacturer indicates that this system

can only be used for remote meter

reading, outage detection, power failure

counts, and phase identification. At this

time, there is no indication that the

system supports other functions such as

home security. Therefore, the

accounting prescribed for the Turtle

meter reading devices and support

equipment relates only to electric utility

operations.

Accounting Requirements

The function of the equipment is the

primary factor in determining the

account in which the equipment shall

be recorded. The components of the

Turtle automatic meter reading system

shall be recorded in Account 370,

Meters. The cost of the meter reader

encoding device and retrofitting the

meter with the meter reader unit shall

be capitalized to the cost of the existing

meter. Any associated operating

expenses shall be charged to Account

586, Meter Expenses, with maintenance

expenses charged to Account 597,

Maintenance of Meters.

Separate continuing property records

shall be established for the meters,

either fitted or retrofitted with the

device; the receiver; the personal

computer; and the system software. The

meters, receivers, and personal

computer shall be depreciated over the

manufacturer’s estimated useful service

life. The system software shall be

depreciated over the estimated useful

service life of the program not to exceed

5 years.

139 Global Positioning Systems

The Global Positioning System (GPS)

is a worldwide radio-navigation system

formed from a network of 24 satellites

and their ground stations. Utilities are

using this advanced technology

geographic data collection system to

update and modernize their system

maps. GPS uses a system of satellites

orbiting the earth to establish plant

locations with pinpoint accuracy. By

triangulating from three satellites and

using radio signals to measure distances

and locate items, system-wide maps can

be created of the utility’s service area. A

field inventory is then taken of the

utility’s plant and plotted onto the map.

The GPS consists of base station

equipment, remote station equipment,

the GPS program, and mapping

conversion software.

All equipment associated with GPS is

dedicated to the mapping effort. The

base station is installed at a fixed

location and ties satellite measurements

into a solid local reference. The remote

station is a portable receiver that is

taken into the field to determine

locations and is moved from site to site.

The GPS program is the application

software that operates the station

equipment and is used by layout

technicians to gather information of

existing and new facilities in the field.

The conversion software is used for

converting the GPS and inventory

information gathered in the field into a

form usable by the mapping program.

Accounting Requirements

The function and location of the

equipment are the primary factors in

determining the account in which the

equipment shall be recorded. The

components of the GPS shall be

accounted for as follows:

1. Remote and Base Station

Equipment. The cost of the equipment,

both remote and fixed, shall be

capitalized in a subaccount of Account

391, Office Furniture and Equipment.

2. GPS Program and Conversion

Software for Mapping. The cost of GPS

program and conversion software shall

be capitalized in a subaccount of
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42323

Account 391, Office Furniture and

Equipment.

3. GPS/GIS Field Inventory of System.

The cost of performing a GPS/GIS

survey and field inventory of the

existing system, by either a consultant

or the utility’s own forces, shall be

charged to Account 588, Miscellaneous

Distribution Expenses.

140 Radio-Based Automatic Meter

Reading Systems

Radio-based automatic meter reading

technology allows meters equipped with

a low-power radio device called an ERT

(Encoder, Receiver, Transmitter) to be

read from a remote location. The ERT

device can either be retrofitted to an

existing meter or purchased installed in

a new meter. The ERT device ‘‘encodes’’

energy consumption and transmits this

information to a radio transceiver

equipped handheld computer. The data

collected and stored in the handheld

computer is then uploaded to a billing

computer using specialized software for

that purpose.

Accounting Requirements

The function of the equipment is the

primary factor in determining the

account in which the equipment shall

be recorded. The components of the

radio-based automatic meter reading

system shall be recorded in Account

370, Meters. The cost of the meter

reader encoding device and retrofitting

the meter with the meter reader unit

shall be capitalized to the cost of the

existing meter. Any associated operating

expenses shall be charged to Account

586, Meter Expenses, with maintenance

expenses charged to Account 597,

Maintenance of Meters.

Separate continuing property records

shall be established for the meters,

either fitted or retrofitted with the

device; the handheld computer; and the

upload software. The meters and

handheld computer shall be depreciated

over the manufacturer’s estimated

useful service life. The upload software

shall be depreciated over the estimated

useful service life of the program not to

exceed 5 years.

* * * * *

23. In Section 1767.41, Interpretations

Nos. 601, 602, 603, 604, 606, 608, 618,

627, and 628 are revised to read as

follows:

* * * * *

601 Employee Benefits

The costs of employees’ fringe

benefits (hospitalization, retirement,

holiday, sick and vacation pay, etc.)

shall be accumulated in an appropriate

clearing account and allocated monthly

on the basis of payroll. Vacation costs

shall be accrued monthly by appropriate

credits to an accrual account. These

monthly accruals shall be allocated on

the basis of direct payroll costs to

construction, retirement, and the

applicable operations, maintenance, and

administrative expense accounts.

Sick leave costs are not normally

accrued unless the employee is entitled

to be paid for accumulated sick leave at

the termination of employment. Salary

payments and the associated employee

pensions and benefits and social

security and other payroll taxes for an

employee who is actually sick shall be

charged to the same account or accounts

to which his or her salary is normally

charged.

602 Compensated Absences

Statement of Financial Accounting

Standards No. 43, Accounting for

Compensated Absences (Statement No.

43), requires employers to accrue a

liability as an employee earns the right

to be paid for future absences. Four

criteria were established for this accrual:

1. The employer’s obligation for

payment for future absences is

attributable to employees’ services

already performed.

2. The obligation relates to employee

rights which vest or accumulate. Vested

rights are considered those for which

the employer is obligated to make

payment even if the employee

terminates. Rights which accumulate are

those earned but unused rights to

compensated absences which may be

carried forward to one or more periods,

subsequent to the period in which they

are earned.

3. Payment of the compensation is

probable.

4. The amount can be reasonably

estimated.

A company’s liability shall be

estimated based upon payments it

expects to make as a result of

employees’ work already performed. If a

reasonable estimate cannot be made, the

company shall disclose that fact in the

financial statements.

Statement No. 43 does not apply to

severance or termination pay,

postretirement benefits, deferred

compensation, stock or stock options,

group insurance, or other long-term

fringe benefits.

The entries required to account for the

accrual of compensated absences are as

follows:

Dr. 435.1, Cumulative Effect on Prior Years

of a Change in Accounting Principle

Cr. 242.3, Accrued Employees’ Vacation and

Holidays

To record the liability for benefits earned in

prior years.

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Cr. 242.3, Accrued Employees Vacation and

Holidays

To record the liability for benefits earned in

the current period.

603 Employee Retirement and Group

Insurance

Some borrowers have group insurance

or retirement plans or both for their

employees. As a general rule the cost of

these programs is borne partially by the

cooperative and partially by its

employees. The cooperative may pay

the full cost in advance and recover the

employee’s share through payroll

deductions. The accounting for these

transactions is as follows:

1. The cooperative’s advanced

payment of premiums on insurance and

retirement agreements shall be charged

to Account 165, Prepayments, for the

employers portion, and Account 143,

Other Accounts Receivable, for the

employee’s portion.

2. The cost of the employer’s portion

of a retirement and group insurance

program shall be charged to

construction and retirement activities

and the applicable operations,

maintenance, and administrative

expense accounts based upon a specific

identification with employees’ labor

costs charged therein or, in the absence

of specific employee identification,

based upon direct labor dollars or direct

labor hours depending upon which

allocation technique provides the most

equitable distribution of costs.

604 Deferred Compensation

Many utilities participate in the

NRECA Deferred Compensation

Program. Based upon the provisions of

the program, the following accounting

entries shall be made:

Dr. 186.XX, Miscellaneous Deferred Debits—

Deferred Compensation

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To increase the deferred compensation

provision by the amount of the annual

deposit to NRECA’s Deferred

Compensation Fund.

Dr. 128, Other Special Funds—Deferred

Compensation

Cr. 131.1, Cash—General

To record the annual deposit to NRECA’s

Deferred Compensation Fund.

Dr. Construction Work in Progress,

Retirement Work in Progress, or the

Various Operations, Maintenance, and

Administrative Expense Accounts, as

appropriate.

Cr. 186.XX, Miscellaneous Deferred Debits—

Deferred Compensation

To record monthly accrual of deferred

compensation.
42324 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

Note: If an employee joins the deferred

compensation program during the year, use

entry #1 to record the additional deposit to

the NRECA Deferred Compensation Fund

and increase the monthly accrual in entry #2

to reflect this deposit.

NRECA provides borrowers that

participate in the deferred

compensation program with an annual

account statement disclosing the

activity for each Homestead Fund

investment including the number of

shares owned, interest income, dividend

income, capital gains/losses, and the

value of the shares owned at statement

date. Funds may be invested in the

Short-term Bond Fund, the Value Fund,

the Short-term Government Securities

Fund, and the Daily Income Fund.

Depending upon the Homestead Fund

selected, invested funds may earn

interest and dividend income and may

experience unrealized holding gains or

losses. Based upon the information

provided on the annual statement, the

following journal entries shall be

recorded to recognize the increase or

decrease in the fund assets:

Dr. 128, Other Special Funds—Deferred

Compensation

Cr. 419, Interest and Dividend Income

Cr. 421, Miscellaneous Nonoperating Income

To record an increase in the fund value as

of December 31, 19xx, resulting from

interest and dividend income and from

unrecognized holding gains on trading

securities.

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To record an increase in the liability to the

employee resulting from an increase in the

investment account.

Dr. 426.5, Other Deductions

Cr. 128, Other Special Funds—Deferred

Compensation

To record a decrease in fund value as of

December 31, 19xx, resulting from

unrecognized holding losses on trading

securities.

Dr. 228.3, Accumulated Provision for

Pensions and Benefits

Cr. Various Operations, Maintenance, and

Administrative Expense Accounts

To record a decrease in the liability to the

employee resulting from a decrease in the

investment account.

Payments made to participating

employees because of retirement or

separation for other reasons shall be

recorded using the following entries:

Dr. 131.1, Cash—General

Cr. 128, Other Special Funds—Deferred

Compensation

To record the receipt of funds from NRECA.

and

Dr. 228.3, Accumulated Provision for

Pensions and Benefits

Cr. 131.1, Cash—General

To record payment to employee for deferred

compensation.

If the borrower has elected to bear the

market risk of the funds which

guarantee that the amount of money an

employee receives will not be less than

the amount of salary deferred, the

following entry shall be recorded if total

payment(s) from NRECA are less than

the amount of salary deferred:

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Cr. 131.1, Cash—General

To record payment to employee for deferred

compensation. Payment was made because

amount returned did not equal salary

deferred.

Appropriate disclosure of the terms of

the program shall be made in the notes

to the financial statements.

* * * * *

606 Pension Costs

With the issuance of Statement of

Financial Accounting Standards No. 87,

Employers’ Accounting for Pensions

(Statement No. 87), there have been

significant changes in the accounting

and reporting requirements relating to

pension costs. This section will

highlight the accounting and reporting

requirements for the major types of

pension plans. It should be noted,

however, that the definitions and

accounting procedures outlined in this

section relate to financial accounting

and they may differ from those used for

tax accounting.

Defined Benefit Pension Plans

A defined benefit pension plan is a

plan that defines an amount of pension

benefit to be provided, usually as a

function of one or more factors such as

age, years of service, or compensation.

In a defined benefit plan, the employer

promises to provide, in addition to

current wages, retirement income

payments in future years after the

employee retires or terminates service.

Generally, the amount of benefit to be

paid depends upon a number of future

events that are incorporated into the

plan’s benefit formula, after including

how long the employee and any

survivors live, how many years of

service the employee renders, and the

employee’s compensation in the years

immediately before retirement or

termination.

Under a defined benefit plan, the

determination of pension costs, assets,

liabilities, and the disclosures in the

financial statements require many

calculations and assumptions to be

made. This section provides a general

overview of the accounting and

reporting requirements associated with

a defined benefit pension plan. Consult

Statement No. 87 for guidance in

making the necessary calculations and

assumption.

The accounting and reporting

requirements related to a defined benefit

pension plan are as follows:

1. The following components shall be

included in the periodic recognition of

net pension cost by an employer

sponsoring a defined benefit pension

plan:

a. The service cost component

recognized in a period shall be

determined as the actuarial present

value of benefits attributed by the

pension plan formula to employee

service during that period. The

measurement of the service cost

component requires use of an

attribution method and assumptions.

b. The interest cost component

recognized in a period shall be

determined as the increase in the

projected benefit obligation due to the

passage of time. Measuring the projected

benefit obligation as a present value

requires accrual of an interest cost at

rates equal to the assumed discount

rates.

c. For a funded plan, the actual return

on plan assets, if any, shall be

determined based upon the fair value of

plan assets at the beginning and the end

of the period, adjusted for contributions

and benefit payments.

d. Plan amendments (including

initiation of a plan) often include

provisions that grant increased benefits

based upon services rendered in prior

period. Because plan amendments are

granted with the expectation that the

employer will realize economic benefits

in future period, Statement No. 87 does

not require the cost of providing such

retroactive benefits (prior service cost)

to be included in net periodic pension

cost entirely in the year of the

amendment but provides for recognition

during the future service periods of

those employees active at the date of the

amendment who are expected to receive

benefits under the plan.

The cost of retroactive benefits

(including benefits that are granted to

retirees) is the increase in the projected

benefit obligation at the date of the

amendment. Except as noted below,

prior service cost shall be amortized by

assigning an equal amount to each

future period of service of each

employee active at the date of the

amendments who is expected to receive

benefits under the plan. If all or almost

all of the plan’s participants are

inactive, the cost of retroactive plan

amendments affecting benefits of

inactive participants shall be amortized

based upon the remaining life
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42325

expectancy of those participants rather

than the remaining service period.

To reduce the complexity and detail

of the computations required, consistent

use of an alternative amortization

approach that more rapidly reduces the

unrecognized cost of retroactive

amendments is acceptable. For example,

a straight-line amortization of the cost

over the average remaining service

period of employees expected to receive

benefits under the plan is acceptable.

The alternative method used shall be

disclosed.

In some situations, a history of regular

plan amendments and other evidence

may indicate that the period during

which the employee expects to realize

economic benefits from an amendment

granting retroactive benefits is shorter

than the entire remaining service period

of the active employees. Identification

of such situations requires an

assessment of the individual

circumstances and the substance of the

particular plan situation. In those

circumstances, the amortization of prior

service cost shall be accelerated to

reflect the more rapid expiration of the

employer’s economic benefits and to

recognize the cost in the periods

benefited.

A plan amendment can reduce rather

than increase the projected benefit

obligation. Such a reduction shall be

used to reduce an existing unrecognized

prior service cost, and the excess, if any,

shall be amortized on the same basis as

the cost of benefit increases.

e. Gains and losses are changes in the

amount of either the projected benefit

obligation or plan assets resulting from

experience different from that assumed

and changes in assumptions. Gains and

losses include amounts that have been

realized. Because gains and losses may

reflect refinements in estimates as well

as real changes in economic values, and

because some gains in one period may

be offset by losses in another or vice

versa, the recognition of gains and

losses as components of net pension

cost of the period in which they arise is

not required.

The expected return on plan assets

shall be determined based upon the

expected long-term rate of return on

plan assets and the market-related value

of plan assets. The market-related value

of plan assets shall be either fair value

or a calculated value that recognizes

changes in fair value in a systematic and

rational manner over not more than 5

years. Different ways of calculating

market-related value may be used for

different classes of assets but the

manner of determining market-related

value shall be applied consistently from

year to year for each asset class.

Asset gains and losses are the

differences between the actual return on

assets during a period and the expected

return on assets for that period. Assets

gains and losses include both changes

reflected in the market-related value of

assets and changes not yet reflected in

the market-related value (that is, the

difference between the fair value of

assets and the market-related value).

Asset gains and losses not yet reflected

in market-related values are not

required to be amortized.

As a minimum, amortization of an

unrecognized gain or loss (excluding

asset gains and losses not yet reflected

in market-related value) shall be

included as a component of net pension

cost for a year if, as of the beginning of

the year, that unrecognized net gain or

loss exceeds 10 percent of the greater of

the projected benefit obligation or the

market-related value of plan assets. If

amortization is required, the minimum

amortization shall be that excess

divided by the average remaining

service period of active employees

expected to receive benefits under the

plan. If all or almost all of a plan’s

participants are inactive, the average

remaining life expectancy of the

inactive participants shall be used

instead of average remaining service

life.

Any systematic method of

amortization of gains and losses may be

used in lieu of the minimum specified

in the previous paragraph provided that

the minimum is used in any period in

which the minimum is greater (i.e.,

reduces the net balance by more), the

method is applied consistently, the

method is applied similarly to both

gains and losses, and the method is

disclosed.

The gain or loss component of net

periodic pension cost shall consist of

the difference between the actual return

on plan assets and the expected return

on plan assets and amortization of the

unrecognized net gain or loss from

previous periods.

2. A liability (unfunded accrued

pension cost) shall be recognized if the

net periodic pension cost recognized

pursuant to Statement No. 87 exceeds

amounts the employer has contributed

to the plan. An asset (prepaid pension

cost) shall be recognized if the net

periodic pension cost is less than the

amounts the employer has contributed

to the plan.

If the accumulated benefit obligation

exceeds the fair value of plan assets, the

employer shall recognize a liability

(including unfunded accrued pension

cost) that is at least equal to the

unfunded accumulated benefit

obligation. Recognition of an additional

minimum liability is required if an

unfunded accumulated benefit

obligation exists and an asset has been

recognized as a prepaid pension cost,

the liability already recognized as

unfunded accrued pension cost is less

than the unfunded accumulated benefit

obligation, or no accrued or prepaid

pension cost has been recognized.

If an additional minimum liability is

recognized, an equal amount shall be

recognized as an intangible asset,

provided that the asset does not exceed

the amount of unrecognized prior

service cost. If an additional liability

required to be recognized exceeds

unrecognized prior service cost, the

excess (which represents a net loss not

yet recognized as a net periodic pension

cost) shall be reported as a separate

component (reduction) of equity.

When a new determination of the

amount of additional liability is made to

prepare a balance sheet, the related

intangible asset and separate component

of equity shall be eliminated or

adjusted, as necessary.

3. An employer sponsoring a defined

benefit pension plan shall disclose the

following information:

a. A description of the plan including

employee groups covered, type of

benefit formula, funding policy, types of

assets held and significant nonbenefit

liabilities, if any, and the nature and

effect of significant matters affecting

comparability of information for all

period presented.

b. The amount of net periodic pension

cost for the period showing separately

the service cost component, the interest

cost component, the actual return on

assets for the period, and the net total

of other components.

c. A schedule reconciling the funded

status of the plan with amounts reported

in the employer’s balance sheet,

showing separately, the fair value of

plan assets, the projected benefit

obligation identifying the accumulated

benefit obligation and the vested benefit

obligation, the amount of unrecognized

prior service cost, the amount of

unrecognized net gain or loss including

asset gains and losses not yet reflected

in market-related value), the amount of

any remaining unrecognized net

obligation or net asset existing at the

date of initial application of Statement

No. 87, the amount of any additional

liability recognized, and the amount of

net pension asset or liability recognized

in the balance sheet (which is the net

result of combining the previous six

items).

d. The weighted-average assumed

discount rate and rate of compensation

increase (if applicable) used to measure

the projected benefit obligation and the
42326 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

weighted-average expected long-term

rate of return on plan assets.

e. If applicable, the amount and type

of securities of the employer and related

parties included in plan assets, and the

approximate amount of annual benefits

of employees and retirees covered by

annuity contracts issued by the

employer and related parties. Also, if

applicable, the alternative amortization

periods used.

f. An employer that sponsors two or

more separate defined benefit pension

plans shall determine net periodic

pension cost, liabilities, and assets by

separately applying the provisions of

Statement No. 87 to each plan. In

particular, unless an employer clearly

has a right to use the assets of one plan

to pay benefits of another, a liability

required to be recognized for one plan

shall not be reduced or eliminated

because another plan has assets in

excess of its accumulated benefit

obligation or because the employer has

prepaid pension cost related to another

plan.

The required disclosures may be

aggregated for all of an employer’s

single-employer defined benefit plans,

or plans may be disaggregated into

groups so as to provide the most useful

information. Plans with assets in excess

of the accumulated benefit obligation,

however, shall not be aggregated with

plans that have accumulated benefit

obligations that exceed plan assets.

Annuity Contracts

An annuity contract is a contract in

which an insurance company

unconditionally undertakes a legal

obligation to provide specified benefits

to specific individuals in return for a

fixed consideration or premium. An

annuity contract is irrevocable and

involves the transfer of significant risk

from the employer to the insurance

company. Some annuity contracts

(participating annuity contracts) provide

that the purchaser (either the plan or the

employer) may participate in the

experience of the insurance company.

Under these contracts, the insurance

company ordinarily pays dividends to

the purchaser. If the substance of a

participating contract is such that the

employer remains subject to all or most

of the risks and rewards associated with

the benefit obligation covered and the

assets transferred to the insurance

company, that contract is not an annuity

contract for purposes of Statement No.

87.

To the extent that benefits currently

earned are covered by annuity contracts,

the cost of these benefits shall be the

cost of purchasing the contracts, except

as noted below. That is, if all benefits

attributed by the plan’s benefits formula

to service in the current period are

covered by nonparticipating annuity

contracts, the cost of the contracts

determines the service cost component

of net pension cost for that period.

Benefits provided by the pension

benefit formula beyond benefits

provided by annuity contracts (for

example, benefits related to future

compensation levels) shall be accounted

for according to the provisions

applicable to plans not involving

insurance contracts.

Benefits covered by annuity contracts

shall be excluded from the projected

benefit obligation and the accumulated

benefit obligation. Except as noted

below, annuity contracts shall be

excluded from plan assets.

Some annuity contracts provide that

the purchaser (either the plan or the

employer) may participate in the

experience of the insurance company.

Under these contracts, the insurance

company ordinarily pays dividends to

the purchaser, the effect of which is to

reduce the cost of the plan. The

purchase price of a participating

annuity contract ordinarily is higher

than the price of an equivalent contract

without participation rights. The cost of

the participation right shall be

recognized, at the date of purchase, as

an asset. In subsequent periods, the

participation right shall be measured at

its fair value if the contract is such that

the fair value is reasonably estimable.

Otherwise, the participation right shall

be measured at its amortized cost (not

in excess of its net realizable value), and

the cost shall be amortized

systematically over the expected

dividend period under the contract.

Other Contracts with Insurance

Companies

Insurance contracts that are, in

substance, equivalent to the purchase of

annuities shall be accounted for as such.

Other contracts with insurance

companies shall be accounted for as

investments and measured at fair value.

For some contracts, the best available

evidence of fair value may be contract

value. If a contract has a determinable

cash surrender value or conversion

value, that is presumed to be its fair

value.

Defined Contribution Plans

A defined contribution pension plan

is a plan that provides pension benefits

in return for services rendered, provides

an individual account for each

participant, and has terms that specify

how contributions to the individual’s

accounts are to be determined rather

than the amount of pension benefits the

individual is to receive. Under a defined

contribution plan, the pension benefits

a participant will receive depend only

upon the amount contributed to the

participant’s account, the returns earned

on investments of those contributions,

and forfeitures of other participants’

benefits that may be allocated to the

participant’s account.

To the extent that a plan’s defined

contributions to an individual’s account

are to be made for periods in which that

individual renders services, the net

pension cost for a period shall be the

contribution called for in that period. If

a plan calls for contributions for periods

after an individual retires or terminates,

the estimated cost shall be accrued

during the employee’s service period.

An employer that sponsors one or

more defined contribution plans shall

disclose the following separately from

its defined benefit plan disclosures:

1. A description of the plan(s)

including employee groups covered, the

basis for determining contributions, and

the nature and effect of significant

matters affecting comparability of

information for all periods presented.

2. The amount of cost recognized

during the period.

A pension plan having characteristics

of both a defined benefit plan and a

defined contribution plan requires

careful analysis. If the substance of the

plan is to provide a defined benefit, as

may be the case with some ‘‘target

benefit’’ plans, the accounting and

disclosure requirements shall be

determined in accordance with the

provisions applicable to a defined

benefit plan.

Multiemployer Plans

A multiemployer plan is a pension

plan to which two or more unrelated

employers contribute, usually pursuant

to one or more collective-bargaining

agreements. A characteristic of

multiemployer plans is that assets

contributed by one participating

employer may be used to provide

benefits to employees of other

participating employers since assets

contributed by an employer are not

segregated in a separate account or

restricted to provide benefits only to

employees of that employer.

An employer participating in a

multiemployer plan shall recognize as

net pension cost, the required

contribution for the period and shall

recognize as a liability, any

contributions due and unpaid. The

required contribution includes both

current costs and prior service costs. If

an employer elects to fund prior service

cost in full at the inception of the plan,

the total payment becomes the
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42327

employer’s required contribution, and

accordingly, its pension cost for the

period.

The following provisions are

applicable to RUS borrowers

participating in a multiemployer

pension plan:

1. An electric utility participating in

a multiemployer plan may defer current

period pension expenses if the

provisions of Statement of Financial

Accounting Standards No. 71

(Statement No. 71), Accounting for the

Effects of Certain Types of Regulation,

are applied.

Under the provisions of Statement No.

71, pension costs may be deferred

provided such costs are recovered

through future rates.

2. An electric utility instituting an

amendment to the NRECA Retirement

and Security plan enters into a

contractual agreement to pay the costs

incurred (prior service pension costs)

for the amendment. In such cases, the

agreement is noncancelable and payable

regardless of continued participation in

the plan.

Since the utility is unconditionally

committed to making these payments

and such payments are not contingent

upon the utility’s continued

participation in the plan, the

recognition of that liability is

appropriate. The costs associated with

this liability shall be expensed, in their

entirety, when the liability is

recognized.

The accounting journal entries

required to record the transactions

associated with a multiemployer

pension plan are as follows:

Sample 1—Current Pension Expense

The journal entry required to record the

normal costs associated with the NRECA

Retirement and Security Program is as

follows:

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 131.1, Cash—General

To record the payment of pension costs to

NRECA.

Note: This entry shall not be recorded

during the moratorium.

Sample 2—Prior Service Pension Expense

The journal entries required to record the

prior service costs associated with the

NRECA Retirement and Security Program are

as follows:

1. If the RUS borrower elects to pay the

prior service pension costs in full, and there

is no deferral of costs under the provision of

Statement No. 71, the following entry shall

be recorded:

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 131.1, Cash—General

To record the payment of prior service

pension costs to NRECA.

2. If the RUS borrower elects to finance

prior service pension costs over a period of

years and there is no deferral of costs under

the provisions of Statement No. 71, the

following entries shall be recorded:

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 224, Other Long-Term Debt

To record the liability to NRECA for prior

service pension costs.

Dr. 224, Other Long-Term Debt

Dr. 427, Interest on Long-Term Debt

Cr. 131.1, Cash—General

To record the annual payment to NRECA for

prior service pension costs.

3. If the RUS borrower elects to finance

prior service pension costs over a period of

years and such costs are being deferred and

amortized in accordance with the provisions

of Statement No. 71, the following entries

shall be recorded:

Dr. 182.3, Other Regulatory Assets

Cr. 224, Other Long-Term Debt

To record the liability to NRECA for prior

service pension costs.

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 182.3, Other Regulatory Assets

To record the amortization of deferred prior

service pension costs.

Dr. 224, Other Long-Term Debt

Dr. 427, Interest on Long-Term Debt

Cr. 131.1, Cash—General

To record the annual payment to NRECA for

prior service pension costs.

4. If the RUS borrower elects to pay the

prior service pension costs in full and such

costs are being deferred and amortized in

accordance with the provisions of Statement

No. 71, the following entries shall be

recorded:

Dr. 182.3, Other Regulatory Assets

Cr. 131.1, Cash—General

To record the payment to NRECA for prior

service pension costs.

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 182.3, Other Regulatory Assets

To record the amortization of deferred prior

service pension costs.

It should be noted that although the

above entries relate specifically to the

NRECA Retirement and Security

Program, they are applicable to all

multiemployer pension plans.

An employer that participates in one

or more multiemployer plans shall

disclose the following separately from

disclosures for a single-employer plan:

1. A description of the multiemployer

plan(s) including the employee groups

covered, the type of benefits provided

(defined benefit or defined

contribution), and the nature and effect

of significant matters affecting

comparability of information for all

periods presented.

2. The amount of cost recognized

during the period.

Multiple-Employer Plans

A multiple-employer plan is, in

substance, aggregations of singleemployer plans combined to pool their

assets for investment purposes to reduce

the cost of plan administration. Under a

multiple-employer plan, assets are

segregated and specifically identified to

an employer. In addition, such plans

may have features that allow

participating employers to have

different benefit formulas. Such plans

shall be considered single-employer

plans for financial accounting purposes

and each employer’s accounting shall be

based upon its respective interest in the

plan.

* * * * *

608 Training Costs, Attendance at

Meetings, Etc.

Utilities engage in many types of

training programs. Seminars are

conducted for directors, managers,

office managers, attorneys, engineers,

and others. Bookkeepers and office

managers attend accountants’ meetings.

Safety engineers attend safety schools

and subsequently conduct regular safety

meetings at the cooperative. Costs

incurred for the various types of training

activities shall be accounted for as

follows:

1. Managers’ and directors’ expenses

to attend the NRECA national and state

conventions shall be charged to Account

930.2, Miscellaneous General Expenses.

2. Management or engineering

seminar fees, salary time attending such

seminars including the associated

pensions and benefits expense and

payroll taxes, and the related per diem

and expenses shall be charged to the

functional expense accounts. Salaries

paid to employees shall also be charged

to the appropriate functional expense

account. Fees and expenses for

directors’ attendance shall be charged to

Account 930.2, Miscellaneous General

Expenses.

3. When the office manager,

bookkeeper, or work order clerk attends

a state or regional accounting meeting,

their salary time and the associated

employee pensions and benefits and

social security and other payroll taxes

shall be charged to the account to which

the employees’ time is ordinarily

charged.

4. Employees’ salary time employee

and the associated pensions and
42328 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

benefits and social security and other

payroll taxes spent attending regular

safety meetings conducted by the

cooperative shall be charged to the

account to which the employees’ time is

ordinarily charged.

5. A safety engineer’s salary time and

the associated employee pensions and

benefits and social security and other

payroll taxes spent attending a

statewide safety school shall be charged

to Account 925, Injuries and Damages.

6. The salary time and the associated

employee pensions and benefits and

social security and other payroll taxes

spent by a manager or line foreman

conducting weekly safely meetings shall

be charged to the appropriate functional

expense accounts including Account

590, Maintenance, Supervision and

Engineering, and Account 920,

Administrative and General Services.

* * * * *

618 Theft Losses not Covered by

Insurance

Utilities may suffer losses as a result

of thefts of cash, materials and supplies,

equipment, or electric plant-in-service

that is not covered by insurance. The

charges for nominal uninsured losses

shall be recorded in the following

accounts:

1. Cash—Account 924, Property

Insurance, shall be charged.

2. Plant materials and operating

supplies—Account 163, Stores Expense

Undistributed, shall be charged.

3. Equipment—Account 163, Stores

Expense Undistributed, shall be charged

for stores equipment; and Account 184,

Transportation Expense—Clearing, for

transportation and garage equipment.

The appropriate miscellaneous

operations or administrative expense

account (Account 506, 524, 539, 549,

566, 588, 905, 910, 916, or 930.2, as

appropriate) shall be charged for all

other equipment.

4. Electric Plant-in-Service—A

retirement work order shall be prepared

for electric plant constituting a unit of

property. The loss due to retirement

shall be charged to Account 108.6,

Accumulated Provision for Depreciation

of Distribution Plant. If the plant does

not constitute a retirement unit, the loss

shall be charged to the appropriate

maintenance expense account.

* * * * *

627 Postretirement Benefits

Statement of Financial Accounting

Standards No. 106, Employers’

Accounting for Postretirement Benefits

Other than Pensions (Statement No.

106), requires reporting entities to

accrue the expected cost of

postretirement benefits during the years

the employee provides service to the

entity. For purposes of applying the

provisions of Statement No. 106,

members of the board of directors are

considered to be employees of the

cooperative. Prior to the issuance of

Statement No. 106, most reporting

entities accounted for postretirement

benefit costs on a ‘‘pay-as-you-go’’ basis;

that is, costs were recognized when

paid, not when the employee provided

service to the entity in exchange for the

benefits.

As defined in Statement No. 106, a

postretirement benefit plan is a deferred

compensation arrangement in which an

employer promises to exchange future

benefits for an employee’s current

services. Postretirement benefit plans

may be funded or unfunded.

Postretirement benefits include, but are

not limited to, health care, life

insurance, tuition assistance, day care,

legal services, and housing subsidies

provided outside of a pension plan.

This statement applies to both written

plans and to plans whose existence is

implied from a practice of paying

postretirement benefits. An employer’s

practice of providing postretirement

benefits to selected employees under

individual contracts with specified

terms determined on an employee-byemployee basis does not, however,

constitute a postretirement benefit plan

under the provisions of this statement.

Postretirement benefit plans generally

fall into three categories: singleemployer defined benefit plans, multiemployer plans, and multiple-employer

plans.

The accounting requirements set forth

in this interpretation focus on singleand multiple-employer plans. The

accounting requirements set forth in

Statement No. 106 for multiemployer

plans or defined contribution plans

shall be adopted for borrowers electing

those types of plans.

Under the provisions of Statement No.

106, there are two components of the

postretirement benefit cost: the current

period cost and the transition

obligation. The transition obligation is a

one-time accrual of the costs resulting

from services already provided.

Statement No. 106 allows the transition

obligation to be deferred and amortized

on a straight-line basis over the average

remaining service period of the active

employees. If the average remaining

service life of the employees is less than

20 years, a 20-year amortization period

may be used.

Accounting Requirements

All RUS borrowers must adopt the

accrual accounting provisions and

reporting requirements set forth in

Statement No. 106. The transition

obligation and accrual of the current

period cost must be based upon an

actuarial study. This study must be

updated to allow the borrower to

comply with the measurement date

requirements of Statement No. 106;

however, the study must, at a minimum,

be updated every five years. RUS will

not allow electric borrowers to account

for postretirement benefits on a ‘‘pay-asyou-go’’ basis.

The deferral and amortization of the

transition obligation does not require

RUS approval provided that it complies

with the provisions of Statement No.

106. If, however, a borrower elects to

expense the transition obligation in the

current period and subsequently defer

this expense in accordance with

Statement of Financial Accounting

Standards No. 71, Accounting for the

Effects of Certain Types of Regulation,

the deferral must be approved by RUS.

In those states in which the commission

will not allow the recovery of the

transition obligation through future

rates, the transition obligation must be

expensed, in its entirety, in the year in

which Statement No. 106 is adopted. A

portion of the transition obligation may

be charged to construction and

retirement activities provided such

charges are properly supported.

Effective Date and Implementation

For plans outside the United States

and for defined benefit plans of

employers that (a) are nonpublic

enterprises and (b) sponsor defined

benefit postretirement plans with no

more than 500 plan participants in the

aggregate, Statement No. 106 is effective

for fiscal years beginning after December

15, 1994. For all other plans, Statement

No. 106 is effective for fiscal years

beginning after December 15, 1992.

RUS borrowers must comply with the

implementation dates set forth in

Statement No. 106. At the time of the

adoption of Statement No. 106, rates

must be in place sufficient to recover

the current period expense and any

amortization of the transition obligation.

A copy of a board resolution or

commission order, as appropriate,

indicating that the transition obligation

and current period expense have been

included in the borrower’s rates must be

submitted to RUS.

Accounting Journal Entries—Transition

Obligation

The journal entries required to record

the transition obligation are as follows:

1. If the borrower elects to expense

the transition obligation in the current
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42329

period and there is no deferral of costs,

the following entry shall be recorded:

Dr. 435.1, Cumulative Effect on Prior Years

of a Change in Accounting Principle

or

Dr. 926, Employee Pensions and Benefits

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To record the current period recognition of

the transition obligation for postretirement

benefits. Note: A portion of the transition

obligation may be charged to construction

and retirement activities provided such

charges are properly supported.

2. If the borrower elects to defer and

amortize the transition obligation in

accordance with the provisions of

Statement No. 71, the following entry

shall be recorded:

Dr. 182.3, Other Regulatory Assets

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To record the deferral of the transition

obligation under the provisions of

Statement No. 71.

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 182.3, Other Regulatory Assets

To record the amortization of postretirement

benefits expenses as they are recovered

through rates in accordance with Statement

No. 71.

3. The deferral and amortization of

the transition obligation under the

provisions of Statement No. 106 is

considered to be an off balance sheet

item. If, therefore, the borrower elects to

defer and amortize the transition

obligation on a straight-line basis over

the average remaining service period of

the active employees or 20 years in

accordance with Statement No. 106, no

entry is required. Instead, the transition

obligation is recognized as a component

of postretirement benefit cost as it is

amortized. It should be noted, however,

that the amount of the unamortized

transition obligation must be disclosed

in the notes to the financial statements.

Accounting Journal Entries—Current

Period Expense

The current period postretirement

expense should be recorded by the

following entry:

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To record current period postretirement

benefit expense.

Dr. 228.3X, Accumulated Provision for

Pensions and Benefits—Funded

Cr. 131.1, Cash—General

To record cash payments on a ‘‘pay-as-yougo’’ basis for postretirement benefits.

Accounting Journal Entry—Funding

If a borrower elects to voluntarily

fund its postretirement benefits

obligation in an external, irrevocable

trust, the following entry shall be

recorded:

Dr. 228.3X, Accumulated Provision for

Pensions and Benefits—Funded

Cr. 131.1, Cash—General

To record the funding of postretirement

benefits expense into an external,

irrevocable trust.

If a borrower elects to voluntarily

fund its postretirement benefits

obligation in an investment vehicle

other than an external, irrevocable trust,

the following entry shall be recorded:

Dr. 128, Other Special Funds

Cr. 131.1, Cash—General

To record the funding of postretirement

benefits expense into an investment

vehicle other than an external, irrevocable

trust.

628 Postemployment Benefits

Statement of Financial Accounting

Standards No. 112, Employers’

Accounting for Postemployment

Benefits (Statement No. 112) establishes

the standards of financial accounting

and reporting for employers who

provide benefits to former or inactive

employees after employment but before

retirement. Inactive employees are those

who are not currently rendering service

to the employer but who have not been

terminated, including employees who

are on disability leave, regardless of

whether they are expected to return to

active service. For purposes of applying

the provisions of Statement No. 112,

former members of the board of

directors are considered to be

employees of the cooperative.

Postemployment benefits include

benefits provided to former or inactive

employees, their beneficiaries, and

covered dependents. They include, but

are not limited to, salary continuation,

supplemental benefits (including

workmen’s compensation), health care,

job training and counseling, and life

insurance coverage. Benefits may be

provided in cash or in kind and may be

paid upon cessation of active

employment or over a specified period

of time.

The cost of providing

postemployment benefits is considered

to be a part of the compensation

provided to an employee in exchange

for current service and should,

therefore, be accrued as the employee

earns the right to be paid for future

postemployment benefits. Applying the

criteria set forth in Statement of

Financial Accounting Standards No. 43,

Accounting for Compensated Absences,

a postemployment benefit obligation is

accrued when all of the following

conditions are met:

1. The employer’s obligation for

payment for future absences is

attributable to employees’ services

already performed;

2. The obligation relates to employee

rights that vest or accumulate. Vested

rights are considered those rights for

which the employer is obligated to make

payment even if the employee

terminates. Rights that accumulate are

those earned, but unused rights to

compensated absences that may be

carried forward to one or more periods

subsequent to the period in which they

are earned;

3. Payment of the compensation is

probable; and

4. The amount can be reasonably

estimated.

If all of these conditions are not met,

the employer must account for its

postemployment benefit obligation in

accordance with Statement of Financial

Accounting Standards No. 5,

Accounting for Contingencies

(Statement No. 5) when it becomes

probable that a liability has been

incurred and the amount of that liability

can be reasonably estimated.

If an obligation for postemployment

benefits is not accrued in accordance

with the provisions of Statement No. 5

or Statement No. 43 only because the

amount cannot be reasonably estimated,

the financial statements should disclose

that fact.

Accounting Requirements

All RUS borrowers must adopt the

accrual accounting provisions and

reporting requirements set forth in

Statement No. 112 as of the statement’s

implementation date. A portion of the

cumulative effect may be charged to

construction and retirement activities

provided such charges are properly

supported. If a borrower elects to defer

the cumulative effect of implementing

Statement No. 112 in accordance with

the provisions of Statement of Financial

Accounting Standards No. 71,

Accounting for the Effects of Certain

Types of Regulation, the deferral must

be approved by RUS.

Effective Date and Implementation

Statement No. 112 is effective for

fiscal years beginning after December

15, 1993. Previously issued financial

statements should not be restated.

RUS borrowers must comply with the

implementation date set forth in

Statement No. 112. At the time of the

adoption of Statement No. 112, rates
42330 Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

must be in place sufficient to recover

the current period expense.

Accounting Journal Entries

The journal entries required to

account for postemployment benefits

are as follows:

Dr. 435.1, Cumulative Effect on Prior Years

of a Change in Accounting Principle

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To record the cumulative effect of

implementing Statement No. 112.

Note: A portion of the cumulative effect

may be charged to construction and

retirement activities provided such charges

are properly supported. Account 435.1 is

closed to Account 219.2, Nonoperating

Margins.

If the borrower elects to defer and

amortize the cumulative effect in

accordance with the provisions of

Statement No. 71, the following entry

shall be recorded:

Dr. 182.3, Other Regulatory Assets

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To record the deferral of the cumulative

effect of implementing Statement No. 112

in accordance with the provisions of

Statement No. 71.

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 182.3, Other Regulatory Assets

To record the amortization of the cumulative

effect of implementing Statement No. 112

as it is recovered through rates in

accordance with Statement No. 71.

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Dr. 107, Construction Work in Progress

Dr. 108.8, Retirement Work in Progress

Cr. 228.3, Accumulated Provision for

Pensions and Benefits

To record current period postemployment

benefit expense.

Note: If postemployment benefits are

accrued under the criteria set forth in

Statement No. 43, this journal entry is made

on a monthly basis. If, however, the accrual

is based upon the provisions of Statement

No. 5, this is a one-time entry unless the

liability is reevaluated and subsequently

adjusted.

* * * * *

23. In § 1767.41, Interpretation Nos.

630 and 631 are added in numerical

order to read as follows:

* * * * *

630 Split Dollar Life Insurance

The National Rural Electric

Cooperative Association Split Dollar

Life Insurance provides life insurance

benefits to cooperative employees. The

benefits provided under this policy

consist of two components, the face

value of the insurance policy and the

accumulated cash surrender value.

While the employee is the owner of the

policy, the employee must sign a

collateral assignment giving the

cooperative absolute right to the cash

surrender value of the policy. Under the

terms of this collateral assignment, the

employee must reimburse the

cooperative for the premiums paid upon

the employee’s termination of

employment or attainment of the age of

62 if the employee wishes to maintain

the insurance coverage. If death occurs

prior to either of these events, the

premiums paid to date by the

cooperative are deducted from the death

benefits payable to the policy

beneficiary.

Accounting Requirements

Financial Accounting Standards

Board Technical Bulletin 85–4,

Accounting for Purchase of Life

Insurance (Bulletin 85–4), states that the

amount that could be realized under an

insurance contract as of the date of the

financial statements should be reported

as an asset. The change in the cash

surrender or contract value of that asset

during the period should be reported as

an adjustment to the premiums paid in

determining the expense or income to

be recognized for the period. The

cooperative shall, therefore, record the

cash surrender value of the policy as an

asset because of its absolute right to

receive that value based upon the

employee’s collateral assignment. Any

receivable that may occur as a result of

the employee reimbursement for the

premiums paid is contingent upon the

employee electing to maintain the

insurance coverage after termination of

employment or reaching the age of 62

and is not recorded as an asset on the

cooperative’s records.

Accounting Journal Entries

The journal entries required to

account for the NRECA Split Dollar Life

Insurance Program are as follows:

Dr. 124, Other Investments

Cr. Various Operations, Maintenance, and

Administrative Expense Accounts

To record an increase in the cash surrender

value of the insurance contract.

or

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Cr. 124, Other Investments

To record a decrease in the cash surrender

value of the insurance contract.

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 131.1, Cash—General

To record the premium cost of the insurance

contract.

631 Special Early Retirement Plan

The Special Early Retirement Plan

(SERP) being offered through the

National Rural Electric Cooperative

Association (NRECA) constitutes an

amendment to its Retirement and

Security (R&S) program. The SERP is

often chosen as a vehicle through which

the cooperative may reduce the size of

its workforce or replace more highly

paid employees with lower paid entry

level employees. If an employee covered

by an NRECA retirement plan chose to

retire before his/her normal retirement

date, that employee would receive an

actuarially reduced benefit. However,

when a cooperative elects to offer a

SERP, no such reduction is required.

The cooperative selects the criteria

under which an employee will be

eligible to participate such as age, years

of service, or a combination of age and

benefit service requirements. As with

other amendments to the R&S program,

NRECA calculates the cost of the plan

based upon the criteria selected by the

cooperative and allows the cooperative

to pay the cost immediately or on an

installment basis.

Under this plan, the employee

receives full retirement benefits in the

form of either an immediate lump-sum

settlement or annuity payments. It is not

unusual for the cooperative to add an

incentive to encourage participation

such as medical or life insurance, either

in whole or in part, until age 65. The

actuarial analysis provided by NRECA

includes the cost of the SERP and the

estimated reduction and/or increase in

costs associated with Statement of

Financial Accounting Standards No.

106, Employer’s Accounting for

Postretirement Benefits Other Than

Pensions (Statement No. 106).

Statement of Financial Accounting

Standards No. 87, Employer’s

Accounting for Pensions (Statement No.

87)

In accordance with the provisions of

Statement No. 87, the costs associated

with an amendment to a multiemployer

plan are recognized when they become

due and payable. Since NRECA

calculates the amount due and payable

at the time of the amendment, the entire

amount due, whether paid immediately

or financed through NRECA or any

other institution, must be recognized as

an expense at that time. This cost may,

however, be deferred in accordance

with the provisions of Statement of

Financial Accounting Standards No. 71,

Accounting for the Effects of Certain

Types of Regulation (Statement No. 71).
Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations 42331

Accounting Journal Entries

The journal entry required to record

the additional pension costs associated

with the SERP is as follows:

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 131.1, Cash—General

or

Cr. 224, Other Long-Term Debt

To record the prior service pension costs

incurred as a result of adopting the SERP.

If the borrower elects to defer and

amortize the cost in accordance with

Statement No. 71, the following entries

shall be recorded:

Dr. 182.3, Other Regulatory Assets

Cr. 131.1, Cash—General

or

Cr. 224, Other Long-Term Debt

To record, under the provisions of Statement

No. 71, the deferral of the prior service

pension costs incurred as a result of

adopting the SERP.

Dr. Various Operations, Maintenance, and

Administrative Expense Accounts

Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress

Cr. 182.3, Other Regulatory Assets

To record the amortization of deferred prior

service pension costs as they are recovered

through rates in accordance with Statement

No. 71.

Statement No. 106

In the event that net reductions in

postretirement benefits result from this

plan amendment, the reductions are

recognized as follows:

1. The amount of the reduction shall

first reduce any existing unrecognized

prior service cost;

2. Any remaining reductions shall

next reduce any unrecognized transition

obligation; and

3. Any remaining reduction shall be

recognized in a manner consistent with

the accounting for prior service

postretirement benefit costs.

In accordance with Statement No.

106, prior service postretirement benefit

costs are recognized in equal amounts in

each remaining year of service for active

plan participants. Because it is an offbalance sheet item, only a memorandum

entry is required to reduce the amount

of unrecognized prior service cost.

At adoption, Statement No. 106

permitted the recognition of the

transition obligation in one of two ways.

The transition obligation was

recognized over the longer of the

average remaining service period of

current plan participants or 20 years, or

it may have been recognized

immediately. If the delayed recognition

option was chosen under Statement No.

106, this, too, was an off-balance sheet

item that requires only a memorandum

entry to reduce the amount of

unrecognized transition obligation.

However, if the immediate recognition

option was chosen, the cooperative

either recorded the expense in that year

or, with RUS approval, deferred the

expense under the provisions of

Statement No. 71. If the expense were

recorded, in total, in the year of

adoption, no unrecognized transition

obligation remains to reduce. If,

however, the transition obligation was

deferred in accordance with Statement

No. 71, the journal entry required to

effect the reduction in Statement No.

106 expense is as follows:

Dr. 228.3, Accumulated Provision for

Pensions and Benefits

Cr. 182.3, Other Regulatory Assets

To record a reduction in the deferred

Statement No. 106 transition obligation

resulting from the adoption of the SERP.

Note: The dollar value of this entry must

not exceed the deferral shown on the balance

sheet.

If, after the two previous reductions

have been made, any net credit remains,

it shall be recognized in a manner

consistent with prior service costs; that

is, as an off balance sheet item that is

amortized over the remaining service

lives (to full eligibility) of the active

plan participants. The annual

amortization reduces amounts normally

charged to the various operations,

maintenance, and administrative

expense accounts and Account 228.3 as

postretirement benefit expenses.

Dated: July 28, 1997.

Jill Long Thompson,

Under Secretary, Rural Development.

[FR Doc. 97–20240 Filed 8–5–97; 8:45 am]

BILLING CODE 3410–15–P