New York Codes, Rules and Regulations › Title 16 - DEPARTMENT OF PUBLIC SERVICE › Chapter VI - TELEPHONE AND TELEGRAPH CORPORATIONS › Subchapter E - Uniform Systems Of Accounts › Article 1 - Telephone Corporations › Part 663 - Instructions-telecommunications Plant Accounts › Section 663.3 - Cost of construction

Current through Register Vol. 46, No. 28, July 10, 2024
(a)
					 Telecommunications plant represents an economic resource which will be used to
					 provide future services, the cost of which will be allocated in a rational and
					 systematic manner to the future periods in which it provides benefits. In
					 accounting for construction costs, the utility shall charge to the
					 telecommunications plant accounts, where applicable, all direct and indirect
					 costs.
(b) Direct and indirect
					 costs shall include, but not be limited to:
(1) Labor includes the wages and expenses of
					 employees directly engaged in or in direct charge of construction work. It
					 includes expenses directly related to an employee's wages, such as workers'
					 compensation insurance, payroll taxes, benefits and other similar items of
					 expense.
(2) Engineering includes
					 the portion of the wages and expenses of engineers, draftsmen, inspectors, and
					 their direct supervision applicable to construction work. It includes expenses
					 directly related to an employee's wages, such as workers' compensation
					 insurance, payroll taxes, benefits and other similar items of
					 expense.
(3) Material and supplies
					 includes the purchase price of material used at the point of free delivery plus
					 the costs of inspection, loading and transportation, and an equitable portion
					 of provisioning expense. In determining the cost of material used, proper
					 allowance shall be made for unused material, for material recovered from
					 temporary structures used in performing the work involved, and for discounts
					 allowed and realized in the purchase of material. This item does not include
					 construction material that is stolen or rendered unusable due to vandalism.
					 Such material should be charged to the applicable plant specific operations
					 expense accounts.
(4)
					 Transportation includes the cost of transporting employees, material and
					 supplies, tools and other work equipment to and from the physical construction
					 location. It includes amounts paid therefor to other companies or individuals
					 and the cost of using the company's own motor vehicles or other transportation
					 equipment.
(5) Contract work
					 includes amounts paid for work performed under contract or other agreement by
					 other companies, firms or individuals; engineering and supervision applicable
					 to such work; cost incident to the award of contracts; and the inspection of
					 such work. The cost of construction work performed by affiliated companies and
					 other details relating thereto shall be available from the work in progress and
					 supporting records.
(6) Protection
					 includes the cost of protecting the company's property from fire or other
					 casualties and the cost of preventing damages to others or the property of
					 others.
(7) Privileges, Permits,
					 and Rights of way includes such costs incurred in obtaining these privileges,
					 permits, or rights of way in connection with construction work, such as for use
					 of private property, streets or highways. The cost of such privileges and
					 permits shall be included in the cost of the work for which the privileges or
					 permits are obtained, except for costs includable in account 2111, Land, and
					 account 2690, Intangibles.
(8)
					 Taxes includes taxes properly includable in construction costs before the
					 facilities are completed for service, which taxes are assessed separately from
					 taxes on operating property or under conditions that permit separate
					 identification of the amount chargeable to construction.
(9) Special machine service includes the cost
					 of labor expended, materials and supplies consumed and other expenses incurred
					 in the maintenance, operation and use of special and other labor saving
					 machines (other than transportation equipment) such as trenching equipment,
					 cable plows and pole setting trucks. Also included are expenditures for rental,
					 maintenance and operation of such machines owned by others. When a construction
					 job requires the purchase of special machines, the cost thereof, less the
					 appraised or salvage value at the time of release from the job, shall be
					 included in the cost of construction.
(10) Allowance for funds used during
					 construction includes the cost of debt and equity funds used in the
					 construction of telecommunications property and shall be applied to
					 telecommunications property in accounts 2003 and 2004 unless otherwise directed
					 by the commission. Allowance for funds used during construction shall be
					 charged to the accounts appropriate for the cost of the property acquired or
					 constructed as follows:
(i) Reasonable amounts
					 of interest during the construction period (before the property is received or
					 is completed ready for telecommunications service) on general funds expended
					 for any acquisition or construction of telecommunications plant shall be
					 computed on amounts in accounts 2003, Telecommunications Plant Under
					 Construction--Short Term and 2004, Telecommunications Plant Under
					 Construction--Long Term and shall be charged thereto. Such amounts shall be
					 credited to account 7340, Allowance For Funds Used During
					 Construction.
(ii) When funds,
					 derived from the sales of bonds, notes and other interest-bearing debt, are
					 specifically acquired and separately held for use in the construction of
					 telecommunications plant, the total interest, discount or premium, and expense
					 on such debt, less interest earned on such funds, applicable to the accounting
					 period shall be included in the cost of telecommunications plant and credited
					 to account 7340, Allowance For Funds Used During Construction; provided,
					 however, that no interest charge for a period longer than six months prior to
					 the commencement of construction work shall be made unless specifically
					 authorized by the commission.
(iii)
					 During the period of suspension of a construction project, no allowance for
					 funds used during construction for a period longer than six months from the
					 date of its suspension shall be included in these accounts unless specifically
					 authorized by the commission. No allowance for funds used during construction
					 charge shall be included in these accounts on expenditures for construction
					 projects which have been abandoned.
(11) Insurance includes premiums paid
					 specifically for protection against loss and damage in connection with the
					 construction of telecommunications plant due to fire or other casualty, injury
					 to or death of employees or others, damages to property of others, defalcations
					 of employees and agents and the nonperformance of contractual obligations of
					 others.
(12) Construction services
					 include the cost of telephone, electricity, power, construction quarters,
					 office space and equipment directly related to the construction
					 project.
(13) Indirect construction
					 costs shall include indirect costs such as general engineering, supervision and
					 support. Such costs, in addition to direct supervision, shall include indirect
					 plant operations and engineering supervision up to, but not including,
					 supervision by executive officers whose pay and expenses are chargeable to
					 account 6711, Executive. The records supporting the entries for indirect
					 construction costs shall be kept so as to show the nature of the expenditures,
					 the individual jobs and accounts charged, and the bases of the distribution.
					 The amounts charged to each plant account for indirect costs shall be readily
					 determinable. The instructions contained herein shall not be interpreted as
					 permitting the addition to plant of amounts to cover indirect costs based on
					 arbitrary allocations.
(14) The
					 cost of construction shall not include any amounts classifiable as Corporate
					 Operations Expense.