New Mexico Administrative Code › Title 17 - PUBLIC UTILITIES AND UTILITY SERVICES › Chapter 3 - UTILITIES FINANCIAL ACCOUNTING AND REPORTING-GENERAL PROVISIONS › Part 340 - AUTHORIZATION OF DEPRECIATION PRACTICES TO BE OBSERVED BY PUBLIC UTILITIES › Section 17.3.340.10 - REQUIREMENTS FOR RECORDS, STUDIES, REVIEWS, AND REPORTS

Current through Register Vol. 35, No. 13, July 16, 2024
A. General: All Class A, B, C, and D
				electric, gas and water utilities and Class A, B and C sewer utilities in New
				Mexico shall maintain adequate accounts and records related to depreciation
				practices. Annual depreciation accruals by account shall be reported for each
				account. A separate reserve for each plant account shall be maintained. The
				cost of depreciable plant adjusted for net salvage will thus be distributed
				over the estimated useful life of such plant in a systematic manner. The
				accounting entries must be made in a manner consistent with applicable Uniform
				Systems of Accounts.
B.
				Depreciation Rates: Each public utility company has the primary responsibility
				for determining the depreciation rates that may be used for each account. Any
				public utility may make application to the Commission and present justification
				for a depreciation method to be approved by the Commission for the accounts as
				contained in the utility's application as evidenced by order of the Commission.
				If no such application is made, a straight-line method or unit of production
				method shall be used. Class A and Class B utilities will determine service
				lives in accordance with NMPSC Rule 340.10 through 340.15 [17.3.340.11
				NMAC].
C. Periodic Studies and
				Annual Reviews:
(1) Class A and Class B
				utilities shall annually make an internal review of all depreciation rates and
				other pertinent depreciation factors by accounts to determine whether the
				current depreciation rates are appropriate for the ensuing accounting year. As
				a result of each utility's annual review and subject to Commission approval,
				depreciation rates may be adjusted to reflect known factors which may affect
				depreciation rates.
(2) Subject to
				the Commission requiring or a utility requesting a different analysis period,
				each Class A and Class B utility shall, not less often than every five (5)
				years, conduct a detailed study of all accounts as to the property of service
				lives, survivor curves, recorded net salvage, and other pertinent factors
				affecting depreciation.
(3) Class C
				and Class D water, gas and electric utilities and Class C sewer utilities shall
				maintain depreciation records for each plant account but may determine average
				service lives either in accordance with NMPSC Rules 340.10 through 340.15
				[17.3.340.11 NMAC] or by estimates based upon knowledge of local conditions,
				company policy with regard to retirement, other factors influencing service
				life, and the experience of other New Mexico utilities. When in the judgment of
				the Commission and after hearings, Class C and Class D water, gas and electric
				utilities and Class C sewer utilities may be required to use actuarial or
				simulated plant record methods for specified depreciation accounts.
(4) Class C and Class D gas, water and
				electric utilities and Class C sewer utilities shall annually review all
				depreciation rates by accounts. When required after hearings, studies shall be
				made so that within a five-year period or such other period as the Commission
				shall require all accounts shall have been analyzed. As a result of the annual
				review depreciation rates may be adjusted to reflect known factors which may
				tend to lengthen or shorten average service lives.
(5) Nothing in NMPSC Rule 340 [17.3.340 NMAC]
				shall prohibit the use of subaccounts for plant in separate geographic areas or
				where an account is large to separate and distinguish between certain classes
				of property. Where such subaccounts have been established, they shall be
				carried separately on the books of the utility and may be treated as separate
				accounts for depreciation purposes.
(6) The Commission may, after hearing,
				require Class A utilities to maintain certain subdivision of primary accounts
				for depreciation purposes.