Code of Maine Rules › 65 - DEPARTMENT OF PUBLIC UTILITIES COMMISSION › 407 - PUBLIC UTILITIES COMMISSION › Chapter 720 - COMPLIANCE WITH THE GAAP REQUIREMENTS OF SFAS NO. 106 › Section 407-720-2 - Definitions

Current through 2024-29, July 17, 2024
A. Deferral period. Accounting intervals
				during which expenditures awaiting final disposition are capitalized on a
				company's books of account, rather than being charged to expense as would
				normally be required.
B. External
				funding. The term "external trust fund" or "external funding" means a fund
				created by a utility which is under the direction of a trustee independent of
				the utility. The management of cash or other assets placed in such a trust are
				outside the control of the utility.
C. FASB. The Financial Accounting Standards
				Board (FASB) is the private sector organization designated to establish
				standards for financial accounting and reporting. FASB is officially recognized
				as the authoritative standard setting body by the Securities and Exchange
				Commission (Accounting Series Release No. 150).
D. GAAP. Accounting standards are formally
				embodied in a hierarchical set of rules and procedures known as Generally
				Accepted Accounting Principles (GAAP).
E. Internal Funding. A method of providing
				for the payment of a liability through the creation of a reserve account on the
				books of a company. The company may or may not, at its discretion, segregate
				cash or other specific assets to meet the established liability, but control of
				those assets remains within the purview of the utility.
F. Least-Cost Option. Regarding the choice
				between external and internal funding, the least-cost option is that option
				that is more likely to achieve the lowest present value revenue requirements
				given a reasonable range of possible futures. Risk and other appropriate
				factors must be considered in determining what is the least-cost
				option.
G. Other Post-Employment
				Benefits (OPEBs). Benefits other than pensions provided to retired employees
				and their dependents. These may include, but are not limited to, benefits such
				as health care, life insurance and housing allowances. OPEBs are sometimes also
				referred to as Postretirement Benefits Other than Pensions (PBOPs).
H. Pay-as-you-go approach. A method of
				accounting whereby entries are made to the books of account only when the cash
				account is affected.
I. SFAS 106.
				SFAS 106, Employer's Accounting for Postretirement Benefits Other Than Pensions
				is a pronouncement of the Financial Accounting Standards Board that establishes
				accounting rules and procedures to be used in recognizing the effects of the
				costs of OPEBs for financial reporting purposes. This pronouncement requires an
				"accrual" approach whereby the present value of the OPEB obligation is
				estimated through the use of actuarial techniques, with the income statement
				reflecting both annual accruals and changes in the balance sheet accounts from
				year to year.
J. Regulatory Asset.
				An asset established on a company's books, pursuant to a directive from a
				regulatory body having jurisdiction over the company, resulting from the
				capitalization of an expenditure that would be expensed under standard
				accounting procedures.
K. Transition
				Obligation. The transition obligation is the actuarial present value of the
				OPEB costs attributable to employee service rendered up to the date of adoption
				of SFAS 106 (that is, prior service costs representing the OPEBs already earned
				by existing and retired employees). The transition obligation is also known as
				the Accumulated Postretirement Benefit Obligation (APBO).