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 17.3.340.7 - DEFINITIONS

Current through Register Vol. 35, No. 13, July 16, 2024
When used in NMPSC Rule 340 [17.3.340 NMAC] unless otherwise
				  specified the following definitions will apply:
A. "Accounts" means the accounts described or
				recognized by the New Mexico Public Service Commission [New Mexico Public
				Regulation Commission].
B.
				"Depreciation Accounting" means a system of accounting which aims to distribute
				the cost or other basic value of tangible capital assets less salvage (if any)
				over the estimated useful life of the unit (which may be a group of assets) in
				a systematic and rational manner. It is a process of allocation not of
				valuation.
C. "Amortization" means
				the gradual extinguishment of an amount in an account by distributing such
				amount over a fixed period of time, over the life of the asset or liability to
				which it applies, or over the period during which it is anticipated the benefit
				will be realized.
D. "Commission"
				means the New Mexico Public Service Commission [New Mexico Public Regulation
				Commission].
E. "Cost of Removal"
				means the cost of demolishing, dismantling, removing, tearing down, or
				abandoning physical assets including the cost of transportation and handling
				incidental thereto.
F. "Accumulated
				Provision for Depreciation" means the summation of the annual provision for
				depreciation accruals recorded by the utility under a predetermined plan of
				accounting including charges for retirements and net salvage to recover the
				cost of the asset between the time it is first devoted to public use and
				retired from service.
G. "Annual
				Provision for Depreciation Accrual" means the annual amount charged to expense
				and/or clearing accounts.
H. "Group
				Plan" means the plan under which depreciation charges are accrued upon the
				basis of the original cost of the asset included in each depreciable plant
				account using the average service life thereof properly weighed, and upon
				retirement of any depreciable asset its original cost less net salvage is
				charged to the depreciation reserve whether or not the particular asset has
				attained or exceeded the average service life.
I. "Net Salvage" means salvage of property
				retired less the cost of removal.
J. "Original Cost" means the cost of property
				at the time it was first devoted to public service.
K. "Property Retired" means assets which have
				been removed, sold, abandoned, destroyed, or which for any cause have been
				withdrawn from service and the books of account.
L. "Salvage" means the amount received from
				assets retired less any expenses incurred in connection with the sale or in
				preparing the assets for sale; or if retained the amount at which the material
				recoverable is chargeable to materials and supplies or other appropriate
				accounts.
M. "Service Life" means
				the period between the date an asset is first devoted to public use and the
				date of its retirement from service.
N. "Straight-line Method" as applied to
				depreciation accounting means the plan under which the original cost adjusted
				for net salvage of the asset is charged to operating expenses and/or to
				clearing accounts and credited to the depreciation reserve through equal annual
				charges as nearly as may be during its service life.
O. "Utilities" means Classes A, B, C, and D
				as defined by the following table of annual operating revenues:
Class A
Class B
Class C
Class D
Electric and Gas
Exceeding $2,500,000
$1,000,000 to
							 $2,500,000
$150,000 to $1,000,000
$25,000 to $50,000.
Water (annual revenues for 3 consecutive
							 year periods)
Exceeding $500,000
Exceeding
							 $500,000
$50,000 to $500,000
Less than $50,000.
Sewer (average annual revenues for 3
							 consecutive year periods)
$750,000 or more
$150,000 but less than
							 $750,000
Less than $150,000
Annual operating revenues are those revenues recorded in the
				  accounts of the utility resulting from all sales of commodities or services or
				  from other uses of utility properties. For combination utilities departmental
				  operating revenues shall be used for classification purposes. "Department" as
				  used in NMPSC Rule 340 [17.3.340 NMAC] shall mean a responsibility center
				  within a combination utility where revenues and costs are accumulated by
				  commodity or service rendered.
P. "Detailed Study" means a determination of
				depreciation accruals, depreciation rates, and depreciation reserve
				requirements.
Q. "Annual Review"
				means a cursory examination to insure that no major changes have taken place
				which would call for a new detailed study.
R. "Survivor Curve" means a curve that shows
				the number of units or cost of a given group which is surviving in service at
				given ages.
S. "Probable Life
				Curve" means a curve that shows the probable average life of the survivors at
				any age from zero to maximum life.
T. "Frequency Curve" means a curve that shows
				in what manner retirements are distributed over the period from zero age to
				maximum life.
U. "Units of
				Production Method" means the process whereby an equal portion of an asset's
				depreciable cost is allocated to operating expense or clearing accounts based
				on each unit of production from the asset.