Code of Massachusetts Regulations › 220 CMR - DEPARTMENT OF PUBLIC UTILITIES › Title 220 CMR 50.00 - Uniform System Of Accounts For Gas Companies › GAS PLANT INSTRUCTIONS › Section 3 - Components of Construction Cost

Current through Register 1525, July 5, 2024
The cost of construction properly includible in the gas plant
		    accounts shall include, where applicable, the direct and overhead costs as
		    listed and defined hereunder.
(1)
		  "Contract work" includes amounts paid for work performed under contract by
		  other companies, firms, or individuals, costs incident to the award of such
		  contracts, and the inspection of such work.
(2) "Labor" includes the pay and expenses of
		  employees of the utility engaged in construction work, and related workmen's
		  compensation insurance, payroll taxes and similar items of expense.
It does not include the pay and expenses of employees which
		    are distributed to construction through clearing accounts nor the pay and
		    expenses included in other items hereunder.
(3) "Materials and supplies" includes the
		  purchase price at the point of free delivery plus customs duties, excise taxes,
		  the cost of inspection, loading and transportation, the related stores
		  expenses, and the cost of fabricated materials from the utility's shop. In
		  determining the cost of materials and supplies used for construction, proper
		  allowance shall be made for unused materials and supplies, for materials
		  recovered from temporary structures used in performing the work involved, and
		  for discounts allowed and realized in the purchase of materials and supplies.
NOTE. - The cost of individual items of equipment of small
		    value (for example, $50 or less) or of short life, including small portable
		    tools and implements, shall not be charged to gas 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.
(4)
		  "Transportation" includes the cost of transporting employees, materials and
		  supplies, tools, purchased equipment, and other work equipment (when not under
		  own power) to and from points of construction. It includes amounts paid to
		  others as well as the cost of operating the utility's own transportation
		  equipment. (See item 5 following.)
(5) "Special machine service" includes the
		  cost of labor (optional), materials and supplies, depreciation, and other
		  expenses incurred in the maintenance, operation and use of special machines,
		  such as power shovels, pile drivers, derricks, ditchers, scrapers, material
		  unloaders, and other labor saving machines; also expenditures for rental,
		  maintenance and operation of machines of others. It does not include the cost
		  of small tools and other individual items of small value or short life which
		  are included in the cost of materials and supplies. (See item 3, above.) When a
		  particular construction job requires the use for an extended period of time of
		  special machines, transportation or other equipment, the net book cost thereof,
		  less the appraised or salvage value at time of release from the job, shall be
		  included in the cost of construction.
(6) "Shop service" includes the proportion of
		  the expense of the utility's shop department assignable to construction work
		  except that the cost of fabricated materials from the utility's shop shall be
		  included in "Materials and supplies."
(7) "Protection" includes the cost of
		  protecting the utility's property from fire or other casualties and the cost of
		  preventing damages to others, or to the property of others, including payments
		  for discovery or extinguishment of fires, cost of apprehending and prosecuting
		  incendiaries, witness fees in relation thereto, amounts paid to municipalities
		  and others for fire protection, and other analogous items of expenditures in
		  connection with construction work.
(8) "Injuries and damages" includes
		  expenditures or losses in connection with construction work on account of
		  injuries to persons and damages to the property of others; also the cost of
		  investigation of and defense against actions for such injuries and damages.
		  Insurance recovered or recoverable on account of compensation paid for injuries
		  to persons incident to construction shall be credited to the account or
		  accounts to which such compensation is charged. Insurance recovered or
		  recoverable on account of property damages incident to construction shall be
		  credited to the account or accounts charged with the cost of the
		  damages.
(9) "Privileges and
		  permits" includes payments for and expenses incurred in securing privileges,
		  permits or rights in connection with construction work, such as for the use of
		  private or public property, streets, or highways.
(10) "Rents" includes amounts paid for the
		  use of construction quarters and office space occupied by construction forces
		  and amounts properly includible in construction costs for such facilities
		  jointly used.
(11) "Engineering and
		  supervision" may include a reasonable portion of the pay and expenses of
		  engineers, surveyors, draftsmen, inspectors, superintendents and their
		  assistants applicable to construction work.
(12) "General administration capitalized" may
		  include a reasonable portion of the pay and expenses of the general officers
		  and administrative and general expenses applicable to construction
		  work.
(13) "Engineering services"
		  includes amounts paid to other companies, firms or individuals engaged by the
		  utility to plan, design, prepare estimates, supervise, inspect, or give general
		  advice and assistance in connection with construction work.
(14) "Insurance" includes premiums paid or
		  amounts provided or reserved as self-insurance for the protection against loss
		  and damages in connection with construction, by fire or other casualty,
		  injuries to or death of persons other than employees, damages to property of
		  others, defalcation of employees and agents, and the nonperformance of
		  contractual obligations of others. It does not include workmen's compensation
		  or similar insurance on employees included as "labor" in item 2,
		  above.
(15) "Law expenditures"
		  includes the general law expenditures incurred in connection with construction
		  and the court and legal costs directly related thereto, other than law expenses
		  included in protection, item 7, and in injuries and damages, item 8.
(16) "Taxes" includes taxes on physical
		  property (including land) during the period of construction and other taxes
		  properly includible in construction costs before the facilities become
		  available for service.
(17)
		  "Interest during construction" 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. No interest charges shall be included in
		  these accounts upon expenditures for construction projects which have been
		  abandoned.
NOTE. - When a part only of a plant or project is placed in
		    operation or is completed and ready for service but the construction work as a
		    whole is incomplete, that part of the cost of the property placed in operation,
		    or ready for service, shall be treated as "Gas Plant in Service" and interest
		    thereon as a charge to construction shall cease. Interest on that part of the
		    cost of the plant which is incomplete may be continued as a charge to
		    construction until such time as it is placed in operation or is ready for
		    service, except as limited in this Item 17.
(18) "Earnings and expenses during
		  construction." The earnings and expenses during construction shall constitute a
		  component of construction costs.
(a) The
		  earnings shall include revenues received or earned for power produced by
		  generating plants during the construction period and sold or used by the
		  utility. Where such power is sold to an independent purchaser before
		  intermingling with the power generated by other plants, the credit shall
		  consist of the selling price of the energy. Where the power generated by a
		  plant under construction is delivered to the utility's gas system for
		  distribution and sale, or is delivered to an associated company, or is
		  delivered to and used by the utility for purposes other than distribution and
		  sale (for manufacturing or industrial use, for example), the credit shall be
		  the fair value of the energy so delivered. The revenues shall also include
		  rentals for lands, buildings, etc., and miscellaneous receipts not properly
		  includible in other accounts.
(b)
		  The expenses shall consist of the cost of operating the power plant, and other
		  costs incident to the production and delivery of the power for which
		  construction is credited under paragraph (a), above, including the cost of
		  repairs and other expenses of operating and maintaining lands, buildings, and
		  other property, and other miscellaneous and like expenses not properly
		  includible in other accounts.