Illinois Administrative Code › Title 83 - PUBLIC UTILITIES › Part 605 - UNIFORM SYSTEM OF ACCOUNTS FOR WATER UTILITIES › Subpart B - ADDITIONS TO AND DELETIONS FROM NARUC UNIFORM SYSTEM OF ACCOUNTS › Section 605.120 - Accounting Instruction 19

Current through Register Vol. 48, No. 28, July 12, 2024
a) The Note in
				Item 3 of Accounting Instruction 19, Utility Plant - Components of Construction
				Cost, is revised to state:
"Note: The cost of individual items of equipment of small value or
				  of short life, including small portable tools and implements, shall not be charged
				  to utility plant accounts unless the correctness of the accounting therefor is
				  verified by current inventories. The cost shall be charged to the appropriate
				  operating expense or clearing accounts, according to the use of such items, or, if
				  such items are consumed directly in construction work, the cost shall be included as
				  part of the cost of the construction unit.
b) In Accounting Instruction 19, "Utility Plant -
				Components of Construction Cost", Item 17 is deleted (except for the note) and
				replaced with the following:
"Allowance for funds used during construction" ('AFUDC') includes
				  the net cost for the period of construction of borrowed funds used for construction
				  purposes and a reasonable rate on other funds when so used, not to exceed allowances
				  computed in accordance with the formula prescribed in paragraph (a). No AFUDC
				  charges shall be included in these accounts upon expenditures for construction
				  projects that have been abandoned.
1) The
				formula and elements for the computation of AFUDC shall be:
A(i) = s(S/W) + d(D/(D + P + C)) (1 - S/W)
A(e) = [1 - S/W] [p(P/(D + P + C)) + c (C/(D + P + C))]
A(1)
=
Gross allowance for borrowed funds used during
							 construction rate
A(e)
=
Allowance for other funds used during construction
							 rate
S
=
Average short term debt
s
=
Short-term debt interest rate
D
=
Short-term debt interest rate
d
=
Long-term debt interest rate
P
=
Preferred stock
p
=
Preferred stock cost rate
C
=
Common equity
p
=
Common equity cost rate
W
=
Average balance in construction work in progress
2) The
				rates shall be determined annually except that the rates may be adjusted for current
				year security issues which affect the weighted average of long-term debt and/or
				preferred stock or when the return on equity awarded a current rate case exceeds the
				computational return on equity. The balances for long-term debt, preferred stock,
				and common equity shall be the actual book balances as of the end of the prior year.
				The cost rates for long-term debt and preferred stock shall be the weighted average
				cost. The cost rate for common equity shall be the rate granted common equity in the
				last rate proceeding before the Commission. If such cost rate is not available, the
				average rate actually earned during the preceding three years shall be used. The
				short-term debt balances and related cost and the average balance for construction
				work in progress shall be estimated for the current year with appropriate
				adjustments as actual data become available."