7 cfr 1767

federal register

Wednesday
August 6, 1997

Part II

Department of
Agriculture
Rural Utilities Service
7 CFR Part 1767
Accounting Requirements for RUS
Electric Borrowers; Final Rule

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Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Part 1767
RIN 0572–AB36

Accounting Requirements for RUS
Electric Borrowers
Rural Utilities Service, USDA.
ACTION: Final rule.
AGENCY:

SUMMARY: This final rule amends the
Rural Utilities Service’s regulations on
accounting policies and procedures for
RUS electric borrowers. This final rule
amends the regulations pertaining to
departures from the prescribed RUS
Uniform System of Accounts (USoA), by
allowing RUS borrowers to implement
certain revenue and expense deferral
plans without obtaining prior RUS
approval. It also institutes activity-based
costing (functional accounting)
requirements for employee pensions
and benefits, payroll taxes, and
insurance and establishes a new
accounting interpretation that addresses
the accounting requirements set forth in
Statement of Financial Accounting
Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of,
within the framework of the RUS USoA.
This final rule also establishes uniform
accounting procedures for the National
Rural Electric Cooperative Association’s
(NRECA) Split-Dollar life insurance
program, the NRECA Special Early
Retirement program, and the automatic
meter reading system developed by
Hunt Technologies, Inc., global
positioning systems, and radio-based
remote meter reading systems. This final
rule also amends Accounting
Interpretation No. 104 to record plant
contributed by an RUS electric
cooperative as an intangible asset.
EFFECTIVE DATE: September 5, 1997.
FOR FURTHER INFORMATION CONTACT: Ms.
Roberta D. Purcell, Director, Program
Accounting Services Division, Rural
Utilities Service, Stop 1523, Room 2221,
South Building, U.S. Department of
Agriculture, 1400 Independence
Avenue, SW., Washington, DC 20250–
1523, telephone number (202) 720–
9450.
SUPPLEMENTARY INFORMATION:

Executive Order 12866
This final rule has been determined to
be not significant for the purposes of
Executive Order 12866 and therefore
has not been reviewed by the Office of
Management and Budget (OMB).

Regulatory Flexibility Act Certification
The Administrator of RUS has
determined that a rule relating to the
RUS electric loan program is not a rule
as defined in the Regulatory Flexibility
Act (5 U.S.C. 601 et seq.), and, therefore,
the Regulatory Flexibility Act does not
apply to this final rule.
Information Collection and
Recordkeeping Requirements
The reporting and recordkeeping
requirements contained in this final rule
were approved by OMB pursuant to the
Paperwork Reduction Act of 1995 (44
U.S.C. Chapter 35, as amended) under
control number 0572–0002.
Send questions or comments
regarding this burden or any aspect of
this information collection, including
suggestions for reducing the burden to
F. Lamont Heppe, Jr., Director, Program
Support and Regulatory Analysis, Rural
Utilities Service, U.S. Department of
Agriculture, 1400 Independence Ave.,
SW., STOP 1522, Room 4034,
Washington, DC 20250–1522.
National Environment Policy Act
Certification
The Administrator, RUS, has
determined that this final rule will not
significantly affect the quality of the
human environment as defined by the
National Environmental Policy Act of
1969 (42 U.S.C. 4321 et seq.). Therefore,
this action does not require an
environmental impact statement or
assessment.
Catalog of Federal Domestic Assistance
The program described by this final
rule is listed in the Catalog of Federal
Domestic Assistance Program under
number 10.850—Rural Electrification
Loans and Loan Guarantees. This
catalog is available on a subscription
basis from the Superintendent of
Documents, the United States
Government Printing Office,
Washington, DC 20402–9325.
Executive Order 12372
This final rule is excluded from the
scope of Executive Order 12372,
Intergovernmental Consultation. A
notice of final rule entitled Department
Programs and Activities Excluded from
Executive Order 12372 (50 FR 47034)
exempts RUS electric loans and loan
guarantees to governmental and
nongovernmental entities from coverage
under this order.
National Performance Review
This regulatory action is being taken
as part of the National Performance
Review program to eliminate

unnecessary regulations and improve
those that remain in force.
Civil Justice Reform
This final rule has been reviewed
under Executive Order 12988, Civil
Justice Reform. RUS has determined
that this final rule meets the applicable
standards provided in Sec. 3, of the
Executive Order.
Background
In order to facilitate the effective and
economical operation of a business
enterprise, adequate and reliable
financial records must be maintained.
Accounting records must provide a
clear, accurate picture of current
economic conditions from which
management can make informed
decisions in charting the company’s
future. The rate-regulated environment
in which an electric utility operates
causes an even greater need for financial
information that is accurate, complete,
and comparable with that of other
electric utilities.
RUS, as a Federal lender and
mortgagee, and in furthering the
objectives of the Rural Electrification
Act (RE Act) (7 U.S.C. 901 et seq.) has
a legitimate programmatic interest and a
substantial financial interest in
requiring adequate records to be
maintained. In order to provide RUS
with financial information that can be
analyzed and compared with the
operations of other borrowers in the
RUS program, all RUS borrowers must
maintain financial records that utilize
uniform accounts and uniform
accounting policies and procedures. The
standard RUS security instrument,
therefore, requires borrowers to
maintain their books, records, and
accounts in accordance with methods
and principles of accounting prescribed
by RUS in the RUS USoA for its electric
borrowers.
To ensure that borrowers consistently
account for their financial operations
and keep pace with the ever-changing
environment in which they operate, as
well as apply the provisions of recent
pronouncements of the Financial
Accounting Standards Boards, the USoA
must be revised and updated as changes
in the industry and generally accepted
accounting principles occur. RUS is,
therefore, revising Section 1767.13,
Departures from the Prescribed RUS
Uniform System of Accounts, to identify
certain revenue and expense deferral
plans that may be implemented without
the prior written approval of RUS.
When RUS adopted the requirements set
forth in Section 1767.13 in 1993, RUS
borrowers were implementing a variety
of revenue and expense deferral plans,

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
many without RUS knowledge or
approval. Since the adoption of these
requirements, RUS has been able to
better determine the types of deferral
plans being routinely adopted by its
borrowers and the impact of these plans
on loan security. History has shown that
RUS has routinely approved the deferral
of certain revenues and expenses and
the accelerated amortization of
previously deferred costs that have a
minimal impact on loan security,
provided that the information necessary
for RUS to evaluate the action was
submitted. In an effort to reduce
paperwork requirements for both RUS
and its borrowers, RUS is eliminating
the requirement to obtain prior RUS
approval to implement certain specific
types of deferrals and accelerated
amortizations of previously deferred
expenses that have been routinely
approved for all borrowers in the past.
With the issuance, by the Federal
Energy Regulatory Commission (FERC),
of Orders 888 and 889 on April 24, 1996
(61 FR 21540–21736; 21737–21854 (May
10, 1996) on open access, it is essential
that rural electric cooperatives
effectively and efficiently cost their
products and services if they are to
compete in an open market. Before
products and services may be effectively
priced in an open market, management
must have reliable financial information
concerning the actual cost of the
products and services it provides. Costs,
therefore, must be accumulated on a
functional basis. Salaries, materials, and
many other expenses incurred in utility
operations are already accounted for on
a functional basis. Employee pensions
and benefits, payroll taxes, and
insurance costs, however, are not,
except to the extent that they are
charged to construction and retirement
activities. RUS is, therefore, revising its
USoA to require borrowers to allocate
employee pensions and benefits
expense, as well as payroll taxes and
insurance costs currently recorded in
Accounts 408, Taxes Other than Income
Taxes; 924, Property Insurance; 925,
Injuries and Damages; and 926,
Employee Pensions and Benefits; to the
appropriate functional operations,
maintenance, and administrative
expense accounts. Additionally, RUS is
amending the operations, maintenance,
and administrative expense accounts to
which labor charges are accrued to
reflect this activity-based costing
methodology. Accordingly, RUS is also
amending the accounting interpretations
that address insurance and pensions
and benefits expense to reflect this cost
allocation procedure.
This rule also revises Section 1767.41
by establishing a new accounting

interpretation that addresses the
provisions of the recently issued
pronouncement of the Financial
Accounting Standards Board, Statement
of Financial Accounting Standards No.
121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived
Assets to be Disposed of. RUS instructs
its borrowers, with qualifying assets, as
to the proper accounts to be used within
the framework of the RUS USoA. Copies
of Statements of Financial Accounting
Standards may be obtained from the
Order Department of the Financial
Accounting Standards Board, 401
Merritt 7, P.O. Box 5116, Norwalk,
Connecticut 06856–5116.
RUS is also adopting new accounting
interpretations that establish the
accounting policies and procedures for
the NRECA Split-Dollar life insurance
program and the NRECA Special Early
Retirement (SERP) program. The SplitDollar life insurance program and the
Special Early Retirement program are
benefits packages established by NRECA
for borrowers to offer to their
employees. The benefits provided under
the Split-Dollar life insurance program
consist of two components, the face
value of the insurance policy which is
payable to the employee’s heirs and the
accumulated cash surrender value.
While the employee is the owner of the
policy, the employee must sign a
collateral assignment that gives the
employer, the RUS borrower, an
absolute right to the cash surrender
value of the policy. Under the terms of
this collateral assignment, the employee
must reimburse the cooperative for the
premiums paid upon the employee’s
termination of employment or
attainment of the age of 62, if the
employee wishes to maintain the
insurance coverage. If death occurs prior
to either of these events, the premiums
paid to date by the borrower are
deducted from the death benefits
payable to the policy beneficiary. The
accounting interpretation details the
accounting journal entries necessary to
record the cash surrender value of the
policy and the expenses incurred by the
borrower in providing the policy.
The SERP is a vehicle through which
the cooperative may reduce the size of
its workforce or replace more highly
paid employees with lower paid entrylevel employees. If an employee covered
by an NRECA retirement plan chooses
to retire before the employee’s normal
retirement date, that employee would
receive an actuarially reduced benefit.
However, when a cooperative elects to
offer a SERP, no such reduction is
required. The accounting interpretation
details the accounting for the benefits
package, itself, as well as the reduction

42285

in postretirement benefit costs that may
result from an employee accepting the
SERP.
This rule also establishes an
accounting interpretation for the
automatic meter reading system
developed by Hunt Technologies, Inc.
The system transmits continuous
information one way from the meter to
a receiver located in the substation. The
receiver constantly monitors each meter
served by the substation. The data is
then transmitted to the headquarters
monitoring equipment via telephone
line or an equivalent communication
system. The accounting records the
various components of the system in the
primary plant accounts based upon their
functions.
This rule establishes an accounting
interpretation for Global Positioning
Systems (GPS). The GPS is a worldwide
radio-navigation system formed from a
network of 24 satellites and their ground
stations that utilities are using to update
and modernize their system maps. GPS
uses a system of satellites orbiting the
earth to establish plant locations with
pinpoint accuracy. By triangulating
from three satellites and using radio
signals to measure distances and locate
items, system-wide maps can be created
of the utility’s service area. The
accounting records the various
components of the system in the
primary plant accounts based upon their
functions.
This rule also adopts an accounting
interpretation for radio-based automatic
meter reading systems. Radio-based
automatic meter reading technology
allows meters equipped with a lowpower radio device called an ERT
(Encoder, Receiver, Transmitter) to be
read from a remote location. The ERT
device ‘‘encodes’’ energy consumption
and transmits this information to a radio
transceiver equipped handheld
computer. The data collected and stored
in the handheld computer is then
uploaded to a billing computer using
specialized software for that purpose.
The accounting records the various
components of the system in the
primary plant accounts based upon their
functions.
This rule revises Interpretation No.
104, Terminal Facilities, to comply with
guidance provided by FERC for public
utilities on the accounting for plant
contributed by one electric cooperative
to another. Previously, contributed plant
was recorded as a deferred charge in
Account 186, Miscellaneous Deferred
Debits. FERC issuances, however, direct
public utilities to record contributed
plant as an intangible asset in Account
303, Miscellaneous Intangible Plant.
Upon review, RUS has determined that

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the classification of contributed plant as
an intangible asset is more appropriate
and is, therefore, revising its accounting
interpretations for RUS borrowers found
in Interpretation No. 104.
Comments
A proposed rule entitled Accounting
Requirements for RUS Electric
Borrowers, published April 29, 1997, at
62 FR 23298, invited interested parties
to submit comments on or before May
29, 1997. Twenty-seven comments were
received which included submissions
from NRECA, RUS electric borrowers,
certified public accounting firms, and a
statewide organization. The comments
submitted by NRECA were based upon
a joint review of the proposed rule by
the Generation and Transmission
Managers’ Accounting and Depreciation
Subcommittee and the Distribution
Systems Accounting and Tax
Committee. The following paragraphs
address the various topics that were
discussed by the commenters.
Implementation Date
Comment. The majority of
commenters requested that RUS
recognize that implementing the
functional accounting requirements set
forth in the proposed rule would require
borrowers to make significant computer
programming and accounting changes
and, as a consequence, requested that
implementation be delayed until no
earlier than January 1, 1998. One
borrower recommended a transition
period of from 1 to 3 years for
implementation, during which time
either the current accounting
methodologies or the functional
approach could be utilized provided
that adequate disclose of the method
utilized was made. One commenter
recommended an implementation date
of January 1, 1999, with earlier
implementation encouraged and one
commenter requested 3 years to allow
borrowers to implement the required
accounting systems without unduly
interfering with their other required
workloads. No commenters expressed a
need to delay the other proposed
revisions to the USoA.
Response. RUS is sympathetic to the
commenters’ concerns and believes, as
do the majority of commenters, that a
January 1, 1998, implementation date is
appropriate and achievable. The vast
majority of RUS borrowers’ accounting
systems are based upon computerized
accounting models designed by a few
data processing centers. Because of the
importance, to their clients, of adopting
a functional approach to accounting for
expenses, these centers have already
begun reformatting their accounting

systems and software. Several are
previewing the new systems within the
next 30 to 60 days.
It is also important to note that the
managerial benefits to be derived from
a functional accounting system should
not be delayed. The sooner these
systems are providing RUS borrowers’
management with the cost data critical
to operating in a deregulated industry,
the greater benefits that are to be
derived.
It is for these reasons that RUS will
grant an automatic departure from the
functional accounting requirements of
this final rule for any borrower electing
to delay implementation until January 1,
1998.
Comment. Many of the commenters
requested relief from restating prior
periods’ financial statements in the RUS
Form 7, Financial and Statistical Report;
the RUS Form 12, Operating Report—
Financial; and the audited financial
statements prepared and submitted in
accordance with 7 CFR part 1773, Policy
on Audits of RUS Borrowers (part 1773).
Response. The security instruments
utilized by RUS require borrowers to
prepare and furnish to RUS, at least
once during each 12-month period, a
full and complete report of its financial
condition, operations, and cash flows,
in form and substance satisfactory to
RUS, audited and certified by an
independent CPA satisfactory to RUS,
and accompanied by a report of such
audit, in form and substance satisfactory
to RUS. RUS has implemented these
requirements through regulations
published in part 1773. In Section 8 of
part 1773, borrowers are required to
prepare comparative financial
statements for the 12-month period as of
their audit date and for the immediately
preceding 12-month period. It is this
comparative financial information that
permits RUS to analyze a borrower’s
financial progress and monitor any
changes, either positive or negative, in
operations from one year to the next. We
believe the importance of this
information to RUS in analyzing a
borrower’s continuing loan security
status significantly outweighs the cost to
the borrowers of providing this
information.
After adoption of the functional
accounting requirements, borrowers will
be able to determine the percentage of
general and administrative costs
allocated to the various functional
operations, maintenance, and
administrative expense accounts. These
same percentages could be applied to
the prior year’s financial statements to
prepare comparative data. Since there is
no net effect on a borrower’s operating
or net margins for the year, we believe

the impact will be immaterial to the
financial statements taken as a whole,
thereby allowing CPAs to provide the
audit opinions necessary to allow
borrowers to comply with the
requirements set forth in part 1773 and,
ultimately, their security instrument
provisions. To alleviate any further
reporting burden, however, RUS will
not require restatement of prior years’
financial statements in the RUS Forms
7 and 12.
Functional Accounting
Comment. A majority of the
commenters disagreed with RUS’’
proposal to allocate labor related
expenses such as employee pensions
and benefits, payroll taxes, and
employee insurance on the basis of
direct labor hours. Rather, commenters
recommended that those costs
specifically identifiable with a
particular employee be charged to the
same accounts charged with that
employee’s labor and that those costs
not specifically identifiable be allocated
on the basis of direct labor dollars or
hours, depending upon which
allocation technique provides the most
equitable distribution.
Response. RUS agrees with the
recommendation and has revised the
final rule accordingly.
Comment. Two commenters argued
that property taxes and property
insurance are more typically grouped
with other types of fixed costs such as
depreciation and interest and that either
all of these ‘‘fixed costs’’ should be
allocated or none.
Response. Property taxes and property
insurance are costs that are readily
identifiable with the various
components of generation, transmission,
and distribution plant thereby making
their allocation a rational and
elementary step toward a true functional
accounting of costs. While we agree that
depreciation expense should be readily
identifiable with the various plant
components, RUS has not required such
specific identification in the past and to
do so currently would dramatically
change the depreciation accounting
methodology for the majority of RUS
borrowers. Depreciation expense is
currently recorded by overall function;
for example, steam production plant,
nuclear production plant, hydraulic
production plant, other production
plant, transmission plant, distribution
plant, and general plant and RUS has
determined that the cost of requiring
any further allocation by primary plant
account would, for the majority of RUS
borrowers, outweigh the benefits to be
derived. For those borrowers that have
this capability, however, RUS would, on

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an individual borrower basis, consider
requests for approval of a further
allocation of depreciation expense.
With regard to interest expense, this
allocation process would not only be
cumbersome but would, more
importantly, render invalid RUS’
financial test requirements as set forth
in its security instruments. For these
reasons, RUS will not adopt an
allocation procedure for depreciation or
interest expense in this final rule.
Comment. One commenter
recommended that property insurance
premiums be charged directly to the
operations expense accounts associated
with insured substations and lines
rather than to the miscellaneous
transmission and distribution
operations expense account. The
commenter believes that this further
allocation of these costs would be
beneficial in establishing rates and in
developing cost of service studies in the
future.
Response. RUS agrees with this
recommendation; however, believes that
additional informational benefits could
be derived by extending the allocation
process beyond substations and lines.
We have, therefore, revised the final
rule to require the allocation of property
insurance premiums and reserve
accruals to the individual generation,
transmission, and distribution operating
expense accounts associated with the
plant items insured. Property insurance
premiums or reserve accruals associated
with general plant items will continue
to be charged to the miscellaneous
administrative expense accounts as no
further allocation is available under the
current USoA.
Comment. Two commenters
recommended that additional general
and administrative costs be allocated to
operations and maintenance activities;
specifically, Accounts 920,
Administrative and General Salaries;
921, Office Supplies and Expenses; 923,
Outside Services Employed;, 930,
General Advertising Expense; 931,
Rents; and 935, Maintenance of General
Plant.
Response. The descriptions of the
aforementioned accounts, as currently
set forth in the USoA, allow general and
administrative costs that are assignable
to specific functions to be so charged.
Only those costs attributable to the
general administration of the borrowers’
activities must remain unallocated in
these accounts. While some may argue
that all general and administrative costs
could be allocated on an indirect basis
to the specific functional accounts, the
USoA is structured so as to maintain the
integrity of the administrative and
general costs incurred in the overall

operations of the cooperative. For these
reasons, no revisions were made to the
final rule.
Comment. One commenter
recommended that the administrative
and accounting fees related to 401(k)
plans be allocated to the functional
operations and maintenance accounts.
Response. As previously indicated,
the current USoA allows for the
assignment of general and
administrative costs when a direct
functional relationship exists.
Therefore, if a borrower can specifically
assign accounting and administrative
fees associated with 401(k) plans to the
applicable operations, maintenance, and
administrative accounts, no further
revision to the USoA is required. Costs
that cannot be specifically assigned are
more accurately reflected as costs
applicable to the general administration
of the borrowers’ operations and should
remain in the general and
administrative account categories.
Comment. One commenter
recommended that Account 405,
Amortization of Other Electric Plant, be
subaccounted similarly to Account 403,
Depreciation Expense, to facilitate cost
identification between the plant
categories and facilities.
Response. While RUS encourages the
use of subaccounts to provide borrower
management with the level of detail
necessary to make informed business
decisions, we are reluctant to require
specific subaccounts that may not be
reflective of an individual borrower’s
intangible or other electric plant
facilities. For this reason, no revision
was made in the final rule.
Comment. Two commenters
recommended the use of subaccounts to
facilitate specific cost identification.
Response. While RUS encourages the
use of subaccounts to provide borrower
management with the level of detail
needed to make informed business
decisions, we are reluctant to require
specific subaccounts that may not apply
or be easily adaptable to an individual
borrower’s accounting system. For this
reason, no revision was made in the
final rule.
Comment. Two commenters noted
that payments made under workmen’s
compensation laws were excluded from
allocation to the maintenance accounts.
Response. RUS agrees with the
recommendation and has revised the
final rule to allocate all costs of injuries
and damages to the various operations,
maintenance, and administrative
expense accounts.

42287

Section 1767.13, Departures From the
Prescribed RUS USoA
Comment. In its proposed rule, RUS
advocated eliminating the requirement
for RUS borrowers to obtain prior RUS
approval to implement certain, specific
types of deferrals. Included among the
deferrals proposed to be exempted was
the deferral of any current period
expense provided that a borrower would
have met its financial tests (Times
Interest Earned Ratio (TIER) or Debt
Service Charge (DSC) ratio) for the year
had the deferral not been made. Two
commenters pointed out that several
generation and transmission borrowers
have or are negotiating new indentures
that invoke a Margins for Interest
requirement rather that the standard
TIER requirement. In addition, in the
new form of mortgage and loan contract
applicable to RUS distribution
borrowers, borrowers not only have a
TIER and DSC requirement but an
Operating TIER and DSC requirement.
The commenters recommended
language that would focus on the
financial covenants or financial tests
applicable to each borrower during the
year the deferral is made.
Response. RUS agrees with the
recommendation and has revised the
final rule accordingly.
To further clarify this exemption, it
was RUS’ intent to apply this provision
to the cumulative total of all individual
deferrals made pursuant to this
exemption during the reporting year.
That is, not only must each deferral
made during the year meet this
requirement but the cumulative total of
all deferrals made pursuant to this
exemption during the reporting year
must meet this requirement.
Comment. Two commenters
recommended that RUS exempt from its
approval process, all revenue deferral
plans provided that the borrower
continued to meet RUS financial
covenants after consideration of the
revenue deferral. In addition, one of
these commenters recommended
exempting revenue deferrals that would
be fully amortized within 12 months.
Response. RUS’ purpose in
exempting, from RUS approval
requirements, certain, specific revenue
and expense deferral plans was to
minimize the paperwork requirements
for both RUS and its borrowers. The
deferral plans selected for exemption
were ordinary in the course of business
and provided little risk to RUS’ loan
security interests. Requests for
approvals of revenue deferral plans
other than those associated with the
NRECA moratorium on pension plan
payments are minimal. Due to the

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infrequency of the requests and
typically, the special nature of the
requests, RUS has determined that all
other revenue deferral plans should
continue to be approved by RUS.
Comment. One commenter
recommended a revision to the language
exempting, from RUS approval
requirements, revenue deferrals
coincident with a moratorium imposed
by NRECA on its Retirement and
Security Program. The proposed
language exempted the deferral of
revenues coincident with a moratorium
imposed by the NRECA on its
Retirement and Security Program,
provided, however, that the deferral is
for the sole purpose of offsetting future
pension cost increases. The commenter
requested that ‘‘increases’’ be deleted
from the provision.
Response. RUS has no objection to
this recommendation and has revised
the final rule accordingly.
Comment. Two commenters
recommended that RUS clarify that
those deferrals exempted from the RUS
approval process must still comply with
the provisions of Statement of Financial
Accounting Standards No. 71,
Accounting for the Effects of Certain
Types of Regulation, and that the
entities implementing such deferrals
must continue to meet the requirements
for doing so.
Response. RUS agrees with this
recommendation and has revised the
final rule accordingly.
Comment. One commenter
recommended that the expense deferral
plans exempted from RUS approval
requirements be cross-referenced to the
appropriate accounting interpretations.
Response. RUS agrees with the
recommendation and has revised the
final rule accordingly.
Section 1767.41, Accounting Methods
and Procedures Required of All RUS
Borrowers
Comment. One commenter expressed
its concerns that RUS should not
interpret generally accepted accounting
principles (GAAP) through its
accounting interpretations but should
merely require its borrowers to follow
GAAP. The commenter expressed
concern that any interpretation that
does not mirror a standard issued by the
Financial Accounting Standards Board
provides the opportunity for a conflict
to exist.
Response. Each accounting
interpretation addressing a FASB
standard includes a synopsis of the
requirements of the standard. While we
understand the commenter’s concern
that this synopsis could alter the intent
of the FASB standard, we expose, for

public comment, all interpretations to
ensure that no apparent conflicts exist.
The purpose of the interpretations is to
alert borrowers to recent issuances that
may impact upon their operations and
to provide guidance on recording the
applicable transactions within the
framework of the USoA. Our purpose is
not to alter the FASB standard unless it
is necessary to do so to accommodate
the cooperative organizational structure
of our borrowers. To ensure that our
intent was clear, we proposed
introductory language to Section
1767.41 detailing our purpose and
allowing borrowers to request a specific
interpretation if they feel a conflict
exists. For this reason, we have made no
revision to the final rule.
Comment. One commenter
recommended that the introductory
language to Section 1767.41 be
amended. The commenter focused on
the language concerning requests for
interpretations when a borrower feels
that the accounting prescribed in the
USoA conflicts with GAAP. The
proposed language requires a borrower
to request this interpretation in writing.
The commenter is concerned that
requiring only written requests may
stifle questions posed to RUS and
recommended language that focuses on
resolution of issues.
Response. It is and has always been
RUS’ intention to encourage borrower
questions, not to stifle them and we are
receptive to any action that will
enhance interaction between RUS and
its borrowers. Therefore, we are revising
the final rule to incorporate the
commenter’s recommended language.
We would, however, caution borrowers
that, due to the regulatory nature of the
USoA, specific interpretations thereof or
departures therefrom must be requested,
in writing, in accordance with Sections
1767.13 and 1767.14. Written
interpretations of this USoA ensure
consistency in the application of
accounting methodologies among RUS
borrowers, thereby enhancing financial
analysis and ultimately, loan security.
Interpretation No. 137, Impairment of
Long-Lived Assets
Comment. While agreeing with our
accounting interpretation, one
commenter recommended that we
expand our guidance to address the
potential impairment of a distribution
cooperative’s investment in a generation
and transmission (G&T) cooperative.
The commenter expressed concern that
with the changes occurring in the
electric utility industry, additional
guidance should be formulated to
indicate what accounting should be

applied if an investment in a G&T
becomes impaired.
Response. The interrelationship
between a G&T and its distribution
members is a complex one and
encompasses many far-ranging issues in
addition to the distribution
cooperatives’ investments in their G&Ts.
While we share the commenter’s
concern, due to this complex
interrelationship and the electric utility
industry’s constantly changing
environment, we believe any guidance
issued at this time may prove
imprudent. It is our intention, therefore,
to monitor the deregulation process
closely, review all of the accounting
consequences, and issue guidance in
future rulemakings as more of the issues
are resolved.
Interpretation No. 104, Terminal
Facilities
Comment. One commenter stated that
it is probable that power supply
contracts resulting in the construction of
terminal facilities will not be renewed.
This commenter recommended that the
amortization period be associated with
contract life if it is shorter than the
average service life of the plant
constructed.
Response. RUS agrees with the
recommendation and has revised the
final rule accordingly.
Interpretations No. 138, Automatic
Meter Reading Systems—Turtles, and
140, Radio-Based Automatic Meter
Reading Systems
Comment. Several commenters
requested reconsideration of
Interpretations 138, Automatic Meter
Reading Systems—Turtles, and 140,
Radio-Based Automatic Meter Reading
Systems. The commenters addressed a
number of concerns including the
functional classification of equipment,
depreciation period of equipment, and
the need for a generic interpretation to
address all types of automatic meter
reading devices. The commenters
believe that the primary purpose of both
the Turtle and Radio-Based Automatic
Meter Reading Systems are to facilitate
the meter reading function and should
be recorded in Account 370, Meters.
They expressed concern, however, that
the depreciation rate applicable to
metering equipment was not reflective
of the average service lives of these
devices and the associated computer
software.
Response. RUS agrees with the
commenters that the underlying
function of these systems is meter
reading and that these types of devices
and the associated software have vastly
different service lives than the other

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
equipment recorded in Account 370.
RUS has, therefore, revised
Interpretations 138 and 140 to require
that all equipment be classified in a
separate subaccount of Account 370,
Meters. RUS has further revised its
interpretation to require depreciation of
the meter reading devices over the
manufacturer’s suggested service life
and, in accordance with Interpretation
No. 401, Computer Software Costs,
depreciation of the associated software
over its estimated useful service life not
to exceed 5 years.
In response to the commenters’
request that we provide a generic
accounting interpretation to address all
types of automatic meter reading
devices, RUS is hesitant to provide
generic interpretations that may be
inappropriately applied to differing
types of equipment. As technologies
constantly improve, many of the
systems and equipment that are in use
in today’s environment may be replaced
by significantly different devices that
provide a range of functions currently
unanticipated by the industry. To avoid
the application of accounting
instructions to systems or devices to
which they do not apply, RUS has
decided to continue its practice of
addressing specific, new technologies as
they arise.
Interpretation No. 610, Financial
Forecasts
Comment. One commenter expressed
the view that labor and related expenses
pertaining to the completion of a
financial forecast should be capitalized.
Response. While comments on
Interpretation No. 610 were outside the
scope of this proposal, the preparation
of financial forecasts are necessary in
the normal and usual operations of any
business enterprise and are considered
common business practice. Financial
forecasts are managerial tools used to
direct the course of an enterprise and to
evaluate its performance. Costs incurred
in the normal course of business are
expensed in the period in which they
are incurred.
Interpretation No. 627, Postretirement
Benefits
Comment. One commenter suggested
that the accounting journal entries for
the transition obligation associated with
postretirement benefits be amended to
require the various operations,
maintenance, and administrative
expense accounts to be charged rather
than Account 926, Employee Pensions
and Benefits.
Response. The adoption of Statement
of Financial Accounting Standards No.
106, Employers’ Accounting for

Postretirement Benefits Other Than
Pension (Statement No. 106), was
effective for most RUS borrowers
beginning with fiscal years after
December 15, 1994. The journal entry
reference by the commenter addresses
the current period expensing of the
transition obligation, which, due to the
passage of time, is no longer an
appropriate option for borrowers.
Borrowers that failed to adopt Statement
No. 106 within the required timeframe
have erred in the preparation of their
financial statements and must account
for such error as a prior period
adjustment. For this reason, no revision
was made to the final rule.
Interpretation No. 630, Split Dollar Life
Insurance
Comment. Two commenters
recommended that Interpretation No.
630, Split Dollar Life Insurance, be
revised to apply to all split dollar life
insurance programs, regardless of the
service provider.
Response. While there are a number
of split dollar life insurance programs
available in the marketplace, the
majority of RUS borrowers participate in
the program offered by NRECA. The
accounting guidance provided in
Interpretation No. 630 is based upon
information provided by NRECA on
their program and is, therefore, specific
to their plan. If, however, a borrower is
currently participating in a program
offered by another provider that
parallels the NRECA program, the
borrower should use the accounting
provided in this interpretation. If the
borrower’s current program differs from
that provided by NRECA, the borrower
should request specific accounting
guidance for that program. For this
reason, no revision was made in the
final rule.
Comment. One commenter
recommended that Interpretation No.
630, Split Dollar Life Insurance, be
expanded to provide a standard expense
reference. This commenter
recommended the use of Account 926,
Employee Pensions and Benefits, or
Account 165, Prepayaments.
Response. RUS agrees that an expense
account reference should be added to
this interpretation. However, in keeping
with the functional approach to
accounting established in this rule, RUS
will revise the final rule to require that
various operations, maintenance, and
administrative expense accounts be
charged for the expenses associated
with split dollar life insurance.

42289

Interpretation No. 631, Special Early
Retirement Plan
Comment. One commenter
recommended that Interpretation No.
631, Special Early Retirement Plan
(SERP), be revised to apply to all plans,
regardless of the provider of the service.
Response. While there are a number
of SERP programs available, the vast
majority of RUS borrowers participate in
the program offered by NRECA. The
accounting guidance provided in
Interpretation No. 631 is based upon
information provided by NRECA on
their program and is, therefore, specific
to their plan. If, however, a borrower is
currently participating in a program
offered by another provider that mirrors
the NRECA program, the borrower
should use the accounting provided in
this interpretation. If the borrower’s
current program differs from that
provided by NRECA, the borrower
should request specific accounting
guidance for that program. For this
reason, no revision was made in the
final rule.
List of Subjects in 7 CFR Part 1767
Electric power, Loan programs—
energy, Reporting and recordkeeping
requirements, Rural areas, Uniform
System of Accounts.
For the reasons set forth in the
preamble, RUS hereby amends 7 CFR
chapter XVII as follows:
PART 1767—ACCOUNTING
REQUIREMENTS FOR RUS ELECTRIC
BORROWERS
1. The authority citation for part 1767
is revised to read as follows:
Authority: 7 U.S.C. 901 et seq., 1921 et
seq., 6941 et seq.

2. Section 1767.13 is amended by
revising paragraphs (a) and (d) to read
as follows:
§ 1767.13 Departures from the prescribed
RUS Uniform System of Accounts.

(a) No departures are to be made to
the prescribed RUS USoA without the
prior written approval of RUS. RUS
grants a departure to any borrower
electing to delay implementation of the
functional (activity-based) accounting
requirements of this part through
December 31, 1997. Requests for
departures from the RUS USoA shall be
addressed, in writing, to the Director,
Program Accounting Services Division
(PASD).
*
*
*
*
*
(d) RUS borrowers will not implement
the provisions of Statement of Financial
Accounting Standards (SFAS) No. 71,
Accounting for the Effects of Certain

42290

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

Types of Regulation, SFAS No. 90,
Regulated Enterprises—Accounting for
Abandonments and Disallowances of
Plant Costs, SFAS No. 92, Regulated
Enterprises—Accounting for Phase-in
Plans, without the prior written
approval of RUS except as provided for
in paragraphs (d)(1) through (d)(5) of
this section. Requests for approval shall
be addressed, in writing, to the Director,
PASD. The specific deferrals set forth in
paragraphs (d)(1) through (d)(5) of this
section may be implemented without
the prior written approval of RUS
provided that the deferrals comply with
Statement No. 71 and that the RUS
borrowers implementing such deferrals
continue to meet the requirements set
forth in Statement No. 71 for doing so:
(1) The deferral and amortization of
prior service pension costs (See
§ 1767.41, Interpretation No. 606,
Pension Costs), remapping expenses
(See § 1767.41, Interpretation No. 613,
Mapping Costs), and preliminary survey
and investigation charges (See
§ 1767.17, Interpretation No. 111,
Engineering Contracts for System
Planning);
(2) The deferral of any current period
expense or expenses, on a cumulative
basis for the fiscal year, only if a
borrower would have met each of its
financial tests or coverage ratios that it
has covenanted with RUS to meet for
that fiscal year, had the deferral not
been made;
(3) The deferral of any cost that will
be fully amortized within the next 12
succeeding months;
(4) The accelerated amortization of
any previously deferred expense; and
(5) The deferral of revenues
coincident with a moratorium imposed
by the National Rural Electric
Cooperative Association on its
Retirement and Security Program,
provided, however, that the deferral is
for the sole purpose of offsetting future
pension costs.
*
*
*
*
*
3. Section 1767.17 is amended by
revising paragraphs (a) and (b) to read
as follows:
§ 1767.17

Operating expense instructions.

(a) Supervision and engineering. The
supervision and engineering includible
in the operating expense accounts shall
consist of the salary, employee pensions
and benefits, social security and other
payroll taxes, injuries and damages, and
other expenses of superintendents,
engineers, clerks, other employees, and
consultants engaged in supervising and
directing the operation and maintenance
of each utility function. Whenever
allocations are necessary in order to
arrive at the amount to be included in

any account, the method and basis of
allocation shall be reflected by
underlying records.
(1) Labor items:
(i) Special tests to determine
efficiency of equipment operation;
(ii) Preparing or reviewing budgets,
estimates, and drawings relating to
operation or maintenance for
departmental approval;
(iii) Preparing instructions for
operations and maintenance activities;
(iv) Reviewing and analyzing
operating results;
(v) Establishing organizational setup
of departments and executing changes
therein;
(vi) Formulating and reviewing
routines of departments and executing
changes therein;
(vii) General training and instruction
of employees by supervisors whose pay
is chargeable hereto. Specific
instructions and training in a particular
type of work is chargeable to the
appropriate functional account (See
paragraph (c) (19) of this section); and
(viii) Secretarial work for supervisory
personnel, but not general clerical and
stenographic work chargeable to other
accounts.
(2) Expense items:
(i) Employee pensions and benefits;
(ii) Social security and other payroll
taxes;
(iii) Injuries and damages;
(iv) Consultants’ fees and expenses;
and
(v) Meals, traveling, and incidental
expenses.
(b) Maintenance. (1) The cost of
maintenance chargeable to the various
operating expense and clearing accounts
includes labor, employee pensions and
benefits, social security and other
payroll taxes, injuries and damages,
materials, overheads, and other
expenses incurred in maintenance work.
A list of work operations applicable
generally to utility plant is included in
this paragraph (b). Other work
operations applicable to specific classes
of plant are listed in functional
maintenance expense accounts.
(2) Materials recovered in connection
with the maintenance of property shall
be credited to the same account to
which the maintenance cost was
charged.
(3) If the book cost of any property is
carried in Account 102, Electric Plant
Purchased or Sold, the cost of
maintaining such property shall be
charged to the accounts for maintenance
of property of the same class and use,
the book cost of which is carried in
other electric plant in service accounts.
Maintenance of property leased from
others shall be treated as provided in
paragraph (c) of this section.

(4) Items:
(i) Direct field supervision of
maintenance;
(ii) Inspecting, testing, and reporting
on condition of plant specifically to
determine the need for repairs,
replacements, rearrangements, and
changes and inspecting and testing the
adequacy of repairs which have been
made;
(iii) Work performed specifically for
the purpose of preventing failure,
restoring serviceability or maintaining
life of plant;
(iv) Rearranging and changing the
location of plant not retired;
(v) Repairing for reuse materials
recovered from plant;
(vi) Testing for, locating, and clearing
trouble;
(vii) Net cost of installing,
maintaining, and removing temporary
facilities to prevent interruptions in
service; and
(viii) Replacing or adding minor items
of plant which do not constitute a
retirement unit.
*
*
*
*
*
4. Section 1767.21 is amended by
revising Account 408 to read as follows:
§ 1767.21

*

*

Operating income.

*

*

*

408 Taxes Other Than Income Taxes
A. This account shall include the
amounts of ad valorem, gross revenue,
or gross receipts taxes, state
unemployment insurance, franchise
taxes, Federal excise taxes, social
security taxes, and all other taxes
assessed by Federal, state, county,
municipal, or other local governmental
authorities, except income taxes.
B. These accounts shall be charged in
each accounting period with the
amounts of taxes which are applicable
thereto, with concurrent credits to
Account 236, Taxes Accrued, or
Account 165, Prepayments, as
appropriate. When it is not possible to
determine the exact amounts of taxes,
the amounts shall be estimated and
adjustments made in current accruals as
the actual tax levies become known.
C. The charges to these accounts shall
be made or supported so as to show the
amount of each tax and the basis upon
which each charge is made. In the case
of a utility rendering more than one
utility service, taxes of the kind
includible in these accounts shall be
assigned directly to the utility
department the operation of which gave
rise to the tax, in so far as practicable.
Where the tax is not attributable to a
specific utility department, it shall be
distributed among the utility
departments or nonutility operations on

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
an equitable basis after appropriate
study to determine such basis.
Note A: Special assessments for street and
similar improvements shall be included in
the appropriate utility plant or nonutility
property account.
Note B: Taxes specifically applicable to
construction and retirement activities shall
be included in the cost of construction or the
retirement.
Note C: Gasoline and other sales taxes shall
be charged as far as practicable to the same
account as the materials on which the tax is
levied.
Note D: Social security and other forms of
payroll taxes shall be charged to nonutility
operations, the specific functional
operations, maintenance, and administrative
expense accounts, and to construction and
retirement activities on a basis related to
payroll either directly or by transfers from
this account.
Note E: Property taxes applicable to the
various utility functions shall be charged to
the specific functional operations and
administrative expense accounts either
directly or by transfers from this account.
Note F: Interest on tax refunds or
deficiencies shall not be included in these
accounts but in Account 419, Interest and
Dividend Income, or Account 431, Other
Interest Expense, as appropriate.

D. Account 408 shall be subaccounted
as follows:
408.1 Taxes—Property
408.2 Taxes—U.S. Social Security—
Unemployment
408.3 Taxes—U.S. Social Security—F.I.C.A.
408.4 Taxes—State Social Security—
Unemployment
408.5 Taxes—State Sales—Consumers
408.6 Taxes—Gross Revenue or Gross
Receipts Tax
408.7 Taxes—Other

*

*
*
*
*
5. Section 1767.27 is amended by
revising Accounts 500, 501, 502, 505,
506, 510, 511, 512, 513, 514, 517, 519,
520, 523, 524, 528, 529, 530, 531, 532,
535, 537, 538, 539, 541, 542, 543, 544,
545, 546, 548, 549, 551, 552, 553, 554,
556, 560, 561, 562, 563, 564, 566, 568,
569, 570, 571, 572, 573, 580, 581, 582,
583, 584, 585, 586, 587, 588, 590, 591,
592, 593, 594, 595, 596, 597, and 598 to
read as follows:
§ 1767.27
expense.

*

*

Operation and maintenance

*

*

*

500 Operation Supervision and
Engineering
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and expenses
incurred in the general supervision and
direction of the operation of steam
power generating stations. Direct
supervision of specific activities, such
as fuel handling, boiler-room

operations, and generator operations
shall be charged to the appropriate
account. (See § 1767.17(a).)
501

Fuel

A. This account shall include the cost
of fuel used in the production of steam
for the generation of electricity,
including expenses in unloading fuel
from the shipping media and handling
thereof up to the point where the fuel
enters the first boiler plant bunker,
hopper, bucket, tank, or holder of the
boiler-house structure. Records shall be
maintained to show the quantity, B.t.u.
content and cost of each type of fuel
used.
B. The cost of fuel shall be charged
initially to Account 151, Fuel Stock, and
cleared to this account on the basis of
the fuel used. Fuel handling expenses
may be charged to this account as
incurred or charged initially to Account
152, Fuel Stock Expenses Undistributed.
In the latter event, they shall be cleared
to this account on the basis of the fuel
used. Respective amounts of fuel stock
and fuel stock expenses shall be readily
available.
Items
Labor:
1. Supervising, purchasing, and
handling of fuel.
2. All routine fuel analyses.
3. Unloading from shipping facility
and placing in storage.
4. Moving of fuel in storage and
transferring fuel from one station to
another.
5. Handling from storage or shipping
facility to first bunker, hopper, bucket,
tank, or holder of boiler-house structure.
6. Operation of mechanical
equipment, such as locomotives, trucks,
cars, boats, barges, and cranes.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees

42291

when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Operating, maintenance, and
depreciation expenses and ad valorem
taxes on utility-owned transportation
equipment used to transport fuel from
the point of acquisition to the unloading
point.
2. Lease or rental costs of
transportation equipment used to
transport fuel from the point of
acquisition to the unloading point.

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Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

3. Cost of fuel including freight,
switching, demurrage, and other
transportation charges.
4. Excise taxes, insurance, purchasing
commissions, and similar items.
5. Stores expenses to extent
applicable to fuel.
6. Transportation and other expenses
in moving fuel in storage.
7. Tools, lubricants, and other
supplies.
8. Operating supplies for mechanical
equipment.
9. Residual disposal expenses less any
proceeds from sale of residuals.
Note: Abnormal fuel handling expenses
occasioned by emergency conditions shall be
charged to expense as incurred.

502 Steam Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, materials
used, and expenses incurred in
production of steam for electric
generation. This includes all expenses
of handling and preparing fuel
beginning at the point where the fuel
enters the first boiler plant bunker,
hopper, tank, or holder of the boilerhouse structure.
Items
Labor:
1. Supervising steam production.
2. Operating fuel conveying, storage,
weighing, and processing equipment
within boiler plant.
3. Operating boiler and boiler
auxiliary equipment.
4. Operating boiler feed water
purification and treatment equipment.
5. Operating ash-collecting and
disposal equipment located inside the
plant.
6. Operating boiler plant electrical
equipment.
7. Keeping boiler plant log and
records and preparing reports on boiler
plant operations.
8. Testing boiler water.
9. Testing, checking, and adjusting
meters, gauges, and other instruments
and equipment in boiler plant.
10. Cleaning boiler plant equipment
when not incidental to maintenance
work.
11. Repacking glands and replacing
gauge glasses where the work involved
is of a minor nature and is performed by
regular operating crews. Where the work
is of a major character, such as that
performed on high-pressure boilers, the
item should be considered as
maintenance.
Taxes:
1. Federal and state unemployment.

2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.

11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Chemicals and boiler inspection
fees.
2. Lubricants.
3. Boiler feed water purchased and
pumping supplies.
*
*
*
*
*
505 Electric Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, and materials
used, and expenses incurred in
operating prime movers, generators, and
their auxiliary apparatus, switch gear,
and other electric equipment to the
points where electricity leaves for
conversion for transmission or
distribution.
Items
Labor:
1. Supervising electric production.
2. Operating turbines, engines,
generators, and exciters.
3. Operating condensers, circulating
water systems, and other auxiliary
apparatus.
4. Operating generator cooling system.
5. Operating lubrication and oil
control system, including oil
purification.
6. Operating switchboards, switch
gear and electric control, and protective
equipment.
7. Keeping electric plant log and
records and preparing reports on
electric plant operations.
8. Testing, checking, and adjusting
meters, gauges, and other instruments,
relays, controls, and other equipment in
the electric plant.
9. Cleaning electric plant equipment
when not incidental to maintenance
work.
10. Repacking glands and replacing
gauge glasses.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Taxes.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)

13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Lubricants and control system oils.
2. Generator cooling gases.
3. Circulating water purification
supplies.
4. Cooling water purchased.
5. Motor and generator brushes.
506 Miscellaneous Steam Power
Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and materials
used and expenses incurred which are
not specifically provided for or not
readily assignable to other steam
generation operation expense accounts.
Items
Labor:
1. General clerical and stenographic
work.
2. Guarding and patrolling plant and
yard.
3. Building service.
4. Care of grounds including snow
removal, and grass cutting.
5. Miscellaneous labor.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:

42293

1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
Materials and Expenses:
1. General operating supplies, such as
tools, gaskets, packing waste, gauge
glasses, hose, indicating lamps, record
and report forms.
2. First-aid supplies and safety
equipment.
3. Employees’ service facilities
expenses.
4. Building service supplies.
5. Communication service.
6. Miscellaneous office supplies and
expenses, printing, and stationery.
7. Transportation expenses.
8. Meals, traveling, and incidental
expenses.
9. Research, development, and
demonstration expenses.
*
*
*
*
*
510 Maintenance Supervision and
Engineering
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and expenses
incurred in the general supervision and
direction of maintenance of steam
generation facilities. Direct field
supervision of specific jobs shall be
charged to the appropriate maintenance
account. (See § 1767.17(a).)
511 Maintenance of Structures
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and materials
used and expenses incurred in the

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Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

maintenance of steam structures, the
book cost of which is includible in
Account 311, Structures and
Improvements. (See § 1767.17(b).)
512 Maintenance of Boiler Plant
A. This account shall include the cost
of labor, employee pensions and
benefits, social security and other
payroll taxes, injuries and damages, and
materials used and expenses incurred in
the maintenance of steam plant, the
book cost of which is includible in
Account 312, Boiler Plant Equipment.
(See § 1767.17(b).)
B. For the purpose of making charges
hereto and to Account 513, Maintenance
of Electric Plant, the point at which
steam plant is distinguished from
electric plant is defined as follows:
1. Inlet flange of throttle valve on
prime mover.
2. Flange of all steam extraction lines
on prime mover.
3. Hotwell pump outlet on condensate
lines.
4. Inlet flange of all turbine-room
auxiliaries.
5. Connection to line side of motor
starter for all boiler-plant equipment.
513 Maintenance of Electric Plant
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and materials
used and expenses incurred in the
maintenance of electric plant, the book
cost of which is includible in Account
313, Engines and Engine-Driven
Generators; Account 314,
Turbogenerator Units; and Account 315,
Accessory Electric Equipment. (See
§ 1767.17(b) and Paragraph B of
Account 512.)
514 Maintenance of Miscellaneous
Steam Plant
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and materials
used and expenses incurred in
maintenance of miscellaneous steam
generation plant, the book cost of which
is includible in Account 316,
Miscellaneous Power Plant Equipment.
(See § 1767.17(b).)
*
*
*
*
*
517 Operation Supervision and
Engineering
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and expenses
incurred in the general supervision and
direction of the operation of nuclear
power generating stations. Direct

supervision of specific activities, such
as fuel handling, reactor operations, and
generator operations shall be charged to
the appropriate account. (See
§ 1767.17(a).)
*
*
*
*
*
519 Coolants and Water
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, and materials
used and expenses incurred for heat
transfer materials and water used for
steam and cooling purposes.
Items
Labor:
1. Operation of water supply facilities.
2. Handling of coolants and heat
transfer materials.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Taxes.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.

4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Chemicals.
2. Additions to or refining of fluids
used in reactor systems.
3. Lubricants.
4. Pumping supplies and expenses.
5. Miscellaneous supplies and
expenses.
6. Purchased water.
Note: Do not include in this account water
for general station use or the initial charge for
coolants, heat transfer, or moderator fluids,
chemicals, or other supplies capitalized.

520 Steam Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, and materials
used and expenses incurred in
production of steam through nuclear
processes, and similar expenses for
operation of any auxiliary superheat
facilities.
Items
Labor:
1. Supervising steam production.
2. Fuel handling including removal,
insertion, disassembly, and preparation
for cooling operations and shipment.
3. Testing instruments and gauges.
4. Health, safety, monitoring, and
decontamination activities.

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
5. Waste disposal.
6. Operating steam boilers and
auxiliary steam, superheat facilities.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.

9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Chemical supplies.
2. Charts and logs.
3. Health, safety, monitoring, and
decontamination supplies.
4. Boiler inspection fees.
5. Lubricants.
*
*
*
*
*
523

Electric Expenses

This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, materials
used, and expenses incurred in
operating turbogenerators, steam
turbines and their auxiliary apparatus,
switch gear, and other electric
equipment to the points where
electricity leaves for conversion for
transmission or distribution.
Items
Labor:
1. Supervising electric production.
2. Operating turbines, engines,
generators, and exciters.
3. Operating condensers, circulating
water systems, and other auxiliary
apparatus.
4. Operating generator cooling system.
5. Operating lubrication and oil
control system, including oil
purification.
6. Operating switchboards, switch
gear, and electric control and protective
equipment.
7. Keeping plant log and records and
preparing reports on electric plant
operations.
8. Testing, checking and adjusting
meters, gauges, and other instruments,
relays, controls, and other equipment in
the electric plant.
9. Cleaning electric plant equipment
when not incidental to maintenance.
10. Repacking glands and replacing
gauge glasses.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.

42295

Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.

42296

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Lubricants and control system oils.
2. Generator cooling gases.
3. Log sheets and charts.
4. Motor and generator brushes.
524 Miscellaneous Nuclear Power
Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred which are not
specifically provided for or are not
readily assignable to other nuclear
generation operation accounts.
Items
Labor:
1. General clerical and stenographic
work.
2. Plant security.
3. Building service.
4. Care of grounds, including snow
removal, and grass cutting
5. Miscellaneous labor.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.

Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
Materials and Expenses:
1. General operating supplies, such as
tools, gaskets, hose, indicating lamps,
records and reports forms.
2. First-aid supplies and safety
equipment.
3. Employees’ service facilities
expenses.
4. Building service supplies.
5. Communication service.
6. Miscellaneous office supplies and
expenses, printing and stationery.
7. Transportation expenses.
8. Meals, traveling, and incidental
expenses.
9. Research, development, and
demonstration expenses.
*
*
*
*
*
528 Maintenance Supervision and
Engineering
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and expenses
incurred in the general supervision and
direction of maintenance of nuclear
generation facilities. Direct field
supervision of specific jobs shall be
charged to the appropriate maintenance
account. (See § 1767.17(a).)
529

Maintenance of Structures

This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in the

maintenance of structures, the book cost
of which is includible in Account 321,
Structures and Improvements. (See
§ 1767.17(b).)
530 Maintenance of Reactor Plant
Equipment
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in the
maintenance of reactor plant, the book
cost of which is includible in Account
322, Reactor Plant Equipment. (See
§ 1767.17(b).)
531 Maintenance of Electric Plant
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in the
maintenance of electric plant, the book
cost of which is includible in Account
323, Turbogenerator Units, and Account
324, Accessory Electric Equipment. (See
§ 1767.17(b).)
532 Maintenance of Miscellaneous
Nuclear Plant
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of miscellaneous nuclear generating
plant, the book cost of which is
includible in Account 325,
Miscellaneous Power Plant Equipment.
(See § 1767.17(b).)
*
*
*
*
*
535 Operation Supervision and
Engineering
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and expenses
incurred in the general supervision and
direction of the operation of hydraulic
power generating stations. Direct
supervision of specific activities, such
as hydraulic operation, and generator
operation shall be charged to the
appropriate account. (See § 1767.17(a).)
*
*
*
*
*
537 Hydraulic Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, materials
used, and expenses incurred in
operating hydraulic works including
reservoirs, dams, and waterways, and in
activities directly relating to the
hydroelectric development outside the

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
generating station. It shall also include
the cost of labor, materials used, and
other expenses incurred in connection
with the operation of (1) fish and
wildlife, and (2) recreation facilities.
Separate subaccounts shall be
maintained for each of the above.
Items
Labor:
1. Supervising hydraulic operation.
2. Removing debris and ice from trash
racks, reservoirs, and waterways.
3. Patrolling reservoirs and
waterways.
4. Operating intakes, spillways,
sluiceways, and outlet works.
5. Operating bubbler, heater, or other
deicing systems.
6. Ice and log jam work.
7. Operating navigation facilities.
8. Operations relating to conservation
of game, fish, and forests.
9. Insect control activities.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.

3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Insect control materials.
2. Lubricants, packing, and other
supplies used in the operation of
hydraulic equipment.
3. Transportation expense.
538

Electric Expenses

This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, materials
used, and expenses incurred in
operating prime movers, generators, and
their auxiliary apparatus, switchgear,
and other electric equipment, to the
point where electricity leaves for
conversion for transmission or
distribution.
Items
Labor:
1. Supervising electric production.
2. Operating prime movers,
generators, and auxiliary equipment.
3. Operating generator cooling system.
4. Operating lubrication and oil
control systems, including oil
purification.
5. Operating switchboards,
switchgear, and electric control and
protection equipment.

42297

6. Keeping plant log and records and
preparing reports on plant operations.
7. Testing, checking and adjusting
meters, gauges, and other instruments,
relays, controls, and other equipment in
the plant.
8. Cleaning plant equipment when not
incidental to maintenance work.
9. Repacking glands.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.

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Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Lubricants and control system oils.
2. Motor and generator brushes.
539 Miscellaneous Hydraulic Power
Generation Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred which are not
specifically provided for or are not
readily assignable to other hydraulic
generation operation expense accounts.
Items
Labor:
1. General clerical and stenographic
work.
2. Guarding and patrolling plant and
yard.
3. Building service.
4. Care of grounds including snow
removal, and grass cutting.
5. Snow removal from roads and
bridges.
6. Miscellaneous labor.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees

when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
Materials and Expenses:
1. General operating supplies, such as
tools, gaskets, packing, waste, hose,
indicating lamps, record and report
forms.
2. First-aid supplies and safety
equipment.
3. Employees’ service facilities
expenses.
4. Building service supplies.
5. Communication service.
6. Office supplies, printing and
stationery.
7. Transportation expenses.
8. Fuel.
9. Meals, traveling, and incidental
expenses.
10. Research, development, and
demonstration expenses.
*
*
*
*
*
541 Maintenance Supervision and
Engineering
This account shall include the cost of
labor, employee pensions and benefits,

social security and other payroll taxes,
injuries and damages, and expenses
incurred in the general supervision and
direction of the maintenance of
hydraulic power generating stations.
Direct field supervision of specific jobs
shall be charged to the appropriate
maintenance account. (See § 1767.17(a).)
542 Maintenance of Structures
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of hydraulic structures, the book cost of
which is includible in Account 331,
Structures and Improvements. (See
§ 1767.17 (b).) However, the cost of
labor, materials used, and expenses
incurred in the maintenance of fish and
wildlife and recreation facilities, the
book cost of which is includible in
Account 331, Structures and
Improvements, shall be charged to
Account 545, Maintenance of
Miscellaneous Hydraulic Plant.
543 Maintenance of Reservoirs, Dams,
and Waterways
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of plant includible in Account 332,
Reservoirs, Dams, and Waterways. (See
§ 1767.17(b).) However, the cost of
labor, materials used, and expenses
incurred in the maintenance of fish and
wildlife and recreation facilities, the
book cost of which is includible in
Account 332, Reservoirs, Dams, and
Waterways, shall be charged to Account
545, Maintenance of Miscellaneous
Hydraulic Plant.
544 Maintenance of Electric Plant
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of plant includible in Account 333,
Water Wheels, Turbines and Generators,
and Account 334, Accessory Electric
Equipment, (See § 1767.17(b).)
545 Maintenance of Miscellaneous
Hydraulic Plant
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of plant, the book cost of which is
includible in Account 335,
Miscellaneous Power Plant Equipment,
and Account 336, Roads Railroads and

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
Bridges. (See § 1767.17(b).) It shall also
include the cost of labor, materials used,
and other expenses incurred in the
maintenance of (1) fish and wildlife,
and (2) recreation facilities. Separate
subaccounts shall be maintained for
each of the above.
*
*
*
*
*
546 Operation Supervision and
Engineering
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and expenses
incurred in the general supervision and
direction of the operation of other
power generating stations. Direct
supervision of specific activities, such
as fuel handling and engine and
generator operation shall be charged to
the appropriate account. (See
§ 1767.17(a).)
*
*
*
*
*
548 Generation Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, materials
used, and expenses incurred in
operating prime movers, generators, and
electric equipment in other power
generating stations, to the point where
electricity leaves for conversion for
transmission or distribution.
Items
Labor:
1. Supervising other power generation
operation.
2. Operating prime movers,
generators, and auxiliary apparatus and
switching and other electric equipment.
3. Keeping plant log and records and
preparing reports on plant operations.
4. Testing, checking, cleaning, oiling,
and adjusting equipment.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).

3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Dynamo, motor, and generator
brushes.
2. Lubricants and control system oils.
3. Water for cooling engines and
generators.

42299

549 Miscellaneous Other Power
Generation Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in the operation
of other power generating stations
which are not specifically provided for
or are not readily assignable to other
generation expense accounts.
Items
Labor:
1. General clerical and stenographic
work.
2. Guarding and patrolling plant and
yard.
3. Building service.
4. Care of grounds, including snow
removal, and grass cutting.
5. Miscellaneous labor.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.

42300

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
Materials and Expenses:
1. Building service supplies.
2. First-aid supplies and safety
equipment.
3. Communication service.
4. Employees’ service facilities
expenses.
5. Office supplies, printing and
stationery.
6. Transportation expense.
7. Meals, traveling, and incidental
expenses.
8. Fuel for heating.
9. Water for fire protection or general
use.
10. Miscellaneous supplies, such as
hand tools, drills, saw blades, and files.
11. Research, development, and
demonstration expenses.
*
*
*
*
*

social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of plant, the book cost of which is
includible in Account 343, Prime
Movers; Account 344, Generators; and
Account 345, Accessory Electric
Equipment. (See § 1767.17(b).)

551 Maintenance Supervision and
Engineering
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and expenses
incurred in the general supervision and
direction of the maintenance of other
power generating stations. Direct field
supervision of specific jobs shall be
charged to the appropriate maintenance
account. (See § 1767.17(a).)

Items
Labor:
1. Allocating loads to plants and
interconnections with others.
2. Directing switching.
3. Arranging and controlling
clearances for construction,
maintenance, test, and emergency
purposes.
4. Controlling system voltages.
5. Recording loadings, and water
conditions.
6. Preparing operating reports and
data for billing and budget purposes.
7. Obtaining reports on the weather
and special events.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:

552 Maintenance of Structures
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of facilities used and expenses incurred
in maintenance of facilities used in
other power generation, the book cost of
which is includible in Account 341,
Structures and Improvements, and
Account 342, Fuel Holders, Producers
and Accessories. (See § 1767.17(b).)
553 Maintenance of Generating and
Electric Equipment
This account shall include the cost of
labor, employee pensions and benefits,

554 Maintenance of Miscellaneous
Other Power Generation Plant
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of other power generation plant, the
book cost of which is includible in
Account 346, Miscellaneous Power
Plant Equipment. (See § 1767.17(b).)
*
*
*
*
*
556 System Control and Load
Dispatching
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, and expenses
incurred in load dispatching activities
for system control. Utilities having an
interconnected electric system or
operating under a central authority
which controls the production and
dispatching of electricity may apportion
these costs to this account and Account
561, Load Dispatching, and Account
581, Load Dispatching.

1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
Expenses:
1. Communication service provided
for system control purposes.
2. System record and report forms.
3. Meals, traveling, and incidental
expenses.
4. Obtaining weather and special
events reports.
*
*
*
*
*
560 Operation Supervision and
Engineering
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and expenses
incurred in the general supervision and
direction of the operation of the
transmission system as a whole. Direct
supervision of specific activities, such
as station operation and line operation
shall be charged to the appropriate
account. (See § 1767.17(a).)
561

Load Dispatching

This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, materials
used, and expenses incurred in load
dispatching operations pertaining to the
transmission of electricity.
Items
Labor:
1. Direct switching.
2. Arranging and controlling
clearances for construction,
maintenance, test, and emergency
purposes.
3. Controlling system voltages.
4. Obtaining reports on the weather
and special events.
5. Preparing operating reports and
data for billing and budget purposes.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees

when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Expenses:
1. Communication service provided
for system control purposes.
2. System record and report forms.
3. Meals, traveling, and incidental
expenses.
4. Obtaining weather and special
events reports.

42301

562 Station Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, materials
used, and expenses incurred in
operating transmission substations and
switching stations. If transmission
station equipment is located in or
adjacent to a generating station, the
expenses applicable to transmission
station operations shall nevertheless be
charged to this account.
Items
Labor:
1. Supervising station operation.
2. Adjusting station equipment where
such adjustment primarily affects
performance, such as regulating the flow
of cooling water, adjusting current in
fields of a machine or changing voltage
of regulators, changing station
transformer taps.
3. Inspecting, testing, and calibrating
station equipment for the purpose of
checking its performance.
4. Keeping station log and records and
preparing records on station operation.
5. Operating switching and other
station equipment.
6. Standing watch, guarding, and
patrolling station and station yard.
7. Sweeping, mopping, and tidying
station.
8. Care of grounds, including snow
removal, and grass cutting.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally

42302

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Building service expenses.
2. Operating supplies, such as
lubricants, commutator brushes, water,
and rubber goods.
3. Station meter and instrument
supplies, such as ink and charts.
4. Station record and report forms.
5. Tool expense.
6. Transportation expenses.
7. Meals, traveling, and incidental
expenses.
563

Overhead Line Expenses

564

Underground Line Expenses

A. These accounts shall include the
cost of labor, employee pensions and
benefits, social security and other

payroll taxes, injuries and damages,
property insurance, property taxes,
materials used, and expenses incurred
in the operation of transmission lines.
B. If the expenses are not substantial
for both overhead and underground
lines, these accounts may be combined.
Items
Labor:
1. Supervising line operation.
2. Inspecting and testing lightning
arresters, circuit breakers, switches, and
grounds.
3. Load tests of circuits.
4. Routine line patrolling.
5. Routine voltage surveys made to
determine the condition or efficiency of
transmission system.
6. Transferring loads, switching and
reconnecting circuits and equipment for
operating purposes. (Switching for
construction or maintenance purposes is
not includible in this account.)
7. Routine inspection and cleaning of
manholes, conduit, network, and
transformer vaults.
8. Electrolysis surveys.
9. Inspecting and adjusting linetesting equipment, such as voltmeters,
ammeters, and wattmeters.
10. Regulation and addition of oil or
gas in high-voltage cable systems.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.

Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Transportation expenses.
2. Meals, traveling, and incidental
expenses.
3. Tool expenses.
4. Operating supplies, such as
instrument charts, and rubber goods.
*
*
*
*
*
566 Miscellaneous Transmission
Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damage, materials used,
and expenses incurred in transmission
map and record work, transmission
office expenses, and other transmission
expenses not provided for elsewhere.
Items
Labor:
1. General records of physical
characteristics of lines and stations,
such as capacities.

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
2. Ground resistance records.
3. Janitor work at transmission office
buildings, including care of grounds,
snow removal, and grass cutting.
4. Joint pole maps and records.
5. Line load and voltage records.
6. Preparing maps and prints.
7. General clerical and stenographic
work.
8. Miscellaneous labor.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.

7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
Materials and Expenses:
1. Communication service.
2. Building service supplies.
3. Map and record supplies.
4. Transmission office supplies and
expenses, printing and stationery.
5. First-aid supplies.
6. Research, development, and
demonstration expenses.
*
*
*
*
*
568 Maintenance Supervision and
Engineering
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and expenses
incurred in the general supervision and
direction of maintenance of the
transmission system. Direct field
supervision of specific jobs shall be
charged to the appropriate maintenance
account. (See § 1767.17(a).)
569

Maintenance of Structures

This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in the
maintenance of structures, the book cost
of which is includible in Account 352,
Structures and Improvements. (See
§ 1767.17(b).)
570 Maintenance of Station
Equipment
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of station equipment, the book cost of
which is includible in Account 353,
Station Equipment. (See § 1767.17(b).)
571

Maintenance of Overhead Lines

This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of transmission plant, the book cost of
which is includible in Accounts 354,
Towers and Fixtures; 355, Poles and
Fixtures; 356, Overhead Conductors and
Devices; and 359, Roads and Trails. (See
§ 1767.17(b).)
Items
1. Work of the following character on
poles, towers, and fixtures:

42303

a. Installing or removing additional
clamps or strain insulators on guys in
place.
b. Moving line or guy pole in
relocation of the same pole or section of
line.
c. Painting poles, towers, crossarms,
or pole extensions.
d. Readjusting and changing position
of guys or braces.
e. Realigning and straightening poles,
crossarms braces, and other pole
fixtures.
f. Reconditioning reclaimed pole
fixtures.
g. Relocating crossarms, racks,
brackets, and other fixtures on poles.
h. Repairing or realigning pins, racks,
or brackets.
i. Repairing pole supported platform.
j. Repairs by others to jointly owned
poles.
k. Shaving, cutting rot, or testing
poles or crossarms in use or salvaged for
reuse.
l. Stubbing poles already in service.
m. Supporting fixtures and
conductors and transferring them to
new poles during pole replacements.
n. Maintenance of pole signs, stencils,
and tags.
2. Work of the following character on
overhead conductors and devices:
a. Overhauling and repairing line
cutouts, line switches, and line
breakers.
b. Cleaning insulators and bushings.
c. Refusing cutouts.
d. Repairing line oil circuit breakers
and associated relays and control
wiring.
e. Repairing grounds.
f. Resagging, retyping, or rearranging
position or spacing of conductors.
g. Standing by phones, going to calls,
cutting faulty lines clear, or similar
activities at times of emergencies.
h. Sampling, testing, changing,
purifying, and replenishing insulating
oil.
i. Repairing line testing equipment.
j. Transferring loads, switching and
reconnecting circuits and equipment for
maintenance purposes.
k. Trimming trees and clearing brush.
l. Chemical treatment of right of way
areas when occurring subsequent to
construction of line.
3. Work of the following character on
roads and trails:
a. Repairing roadways and bridges.
b. Trimming trees and brush to
maintain previous roadway clearance.
c. Snow removal from roads and
trails.
d. Maintenance work on publicly
owned roads and trails when done by
utility at its expense.
Taxes:

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Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital services and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
572 Maintenance of Underground
Lines
This account shall include the cost of
labor, employee pensions and benefits,

social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of transmission plant, the book cost of
which is includible in Accounts 357,
Underground Conduit, and Account
358, Underground Conductors and
Devices. (See § 1767.17(b).)
Items
1. Work of the following character on
underground conduit:
a. Cleaning ducts, manholes, and
sewer connections.
b. Minor alterations of handholes,
manholes, or vaults.
c. Refastening, repairing, or moving
racks, ladders, hangers in manholes, or
vaults.
d. Plugging and shelving or
replugging ducts.
e. Repairs to sewers and drains, walls
and floors, rings and covers.
2. Work of the following character on
underground conductors and devices:
a. Repairing oil circuit breakers,
switches, cutouts, and control wiring.
b. Repairing grounds.
c. Retraining and reconnecting cables
in manholes, including transfer of
cables from one duct to another.
d. Repairing conductors and splices.
e. Repairing or moving junction boxes
and potheads.
f. Refireproofing of cables and
repairing supports.
g. Repairing electrolysis preventive
devices for cables.
h. Repairing cable bonding systems.
i. Sampling, testing, changing,
purifying, and replenishing insulating
oil.
j. Transferring loads, switching and
reconnecting circuits, and equipment
for maintenance purposes.
k. Repairing line testing equipment.
l. Repairs to oil or gas equipment in
high-voltage cable system and
replacement of oil or gas.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).

3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
573 Maintenance of Miscellaneous
Transmission Plant
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of owned or leased plant which is
assignable to transmission operations
and is not provided for elsewhere. (See
§ 1767.17(b).)
*
*
*
*
*
580 Operation Supervision and
Engineering
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and expenses
incurred in the general supervision and
direction of the operation of the

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
distribution system. Direct supervision
of specific activities, such as station
operation, line operation, and meter
department operation shall be charged
to the appropriate account. (See
§ 1767.17(a).)
581 Load Dispatching
This account (the keeping of which is
optional with the utility) shall include
the cost of labor, employee pensions
and benefits, social security and other
payroll taxes, injuries and damages,
property insurance, property taxes,
materials used, and expenses incurred
in load dispatching operations
pertaining to the distribution of
electricity.
Items
Labor:
1. Direct switching.
2. Arranging and controlling
clearances for construction,
maintenance, test, and emergency
purposes.
3. Controlling system voltages.
4. Preparing operating reports.
5. Obtaining reports on the weather
and special events.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Expenses:
1. Communication service provided
for system control purposes.
2. System record and report forms.
3. Meals, traveling, and incidental
expenses.
582 Station Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, materials
used, and expenses incurred in the
operation of distribution substations.
Items
Labor:
1. Supervising station operation.
2. Adjusting station equipment where
such adjustment primarily affects
performance, such as regulating the flow
of cooling water, adjusting current in
fields of a machine, changing voltage of
regulators, or changing station
transformer taps.
3. Keeping station log and records and
preparing reports on station operation.

42305

4. Inspecting, testing, and calibrating
station equipment for the purpose of
checking its performance.
5. Operating switching and other
station equipment.
6. Standing watch, guarding, and
patrolling station and station yard.
7. Sweeping, mopping, and tidying
station.
8. Care of grounds, including snow
removal, and grass cutting.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated

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Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Building service expenses.
2. Operating, supplies, such as
lubricants, commutator brushes, water,
and rubber goods.
3. Station meter and instrument
supplies, such as ink and charts.
4. Station record and report forms.
5. Tool expense.
6. Transportation expense.
7. Meals, traveling, and incidental
expenses.
Note: If the utility owns storage battery
equipment used for supplying electricity to
customers in periods of emergency, the cost
of operating labor and of supplies, such as
acid, gloves, hydrometers, thermometers,
soda, automatic cell fillers, and acid proof
shoes shall be included in this account. If
significant in amount, a separate subdivision
shall be maintained for such expenses.

583

Overhead Line Expenses

584

Underground Line Expenses

These accounts shall include,
respectively, the cost of labor, employee
pensions and benefits, social security
and other payroll taxes, injuries and
damages, property insurance, property
taxes, materials used, and expenses
incurred in the operation of overhead
and underground distribution lines.
Items
Labor:
1. Supervising line operation.
2. Changing line transformer taps.
3. Inspecting and testing lightning
arresters, line circuit breakers, switches,
and grounds.
4. Inspecting and testing line
transformers for the purpose of
determining load, temperature, or
operation performance.
5. Patrolling lines.

6. Load tests and voltage surveys of
feeders, circuits, and line transformers.
7. Removing line transformers and
voltage regulators with or without
replacement.
8. Installing line transformers or
voltage regulators with or without
change in capacity provided that the
cost of first installation of these items is
included in Account 368, Line
Transformers.
9. Voltage surveys, either routine or
upon request of customers, including
voltage tests at customer’s main switch.
10. Transferring loads, switching and
reconnecting circuits and equipment for
operation purpose.
11. Electrolysis surveys.
12. Inspecting and adjusting line
testing equipment.
Taxes:
1. Federal and State unemployment.
2. F.I.C.A,
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance
premiums (credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.

5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Tool expense.
2. Transportation expense.
3. Meals, traveling, and incidental
expenses.
4. Operating supplies, such as
instrument charts, and rubber goods.
585 Street Lighting and Signal System
Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, materials
used, and expenses incurred in: (1) The
operation of street lighting and signal
system plant which is owned or leased
by the utility; and (2) the operation and
maintenance of such plant owned by
customers where such work is done
regularly as a part of the street lighting
and signal system service.
Items
Labor:
1. Supervising street lighting and
signal systems operation.
2. Replacing lamps and incidental
cleaning of glassware and fixtures in
connection therewith.
3. Routine patrolling for lamp
outages, extraneous nuisances, or
encroachments.

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
4. Testing lines and equipment
including voltage and current
measurement.
5. Winding and inspection of time
switch and other controls.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance
premiums (credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.

8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Street lamp renewals.
2. Transportation and tool expense.
3. Meals, traveling, and incidental
expenses.
586

Meter Expenses

This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, materials
used, and expenses incurred in the
operation of customer meters and
associated equipment.
Items
Labor:
1. Supervising meter operation.
2. Clerical work on meter history and
associated equipment record cards, test
cards, and reports.
3. Disconnecting and reconnecting,
removing and reinstalling, sealing and
unsealing meters and other metering
equipment in connection with initiating
or terminating services including the
cost of obtaining meter readings, if
incidental to such operation.
4. Consolidating meter installations
due to elimination of separate meters for
different rates of service.
5. Changing or relocating meters,
instrument transformers, time switches,
and other metering equipment.
6. Resetting time controls, checking
operation of demand meters and other
metering equipment, when done as an
independent operation.
7. Inspecting and adjusting meter
testing equipment.
8. Inspecting and testing meters,
instrument transformers, time switches,
and other metering equipment on
premises or in shops excluding
inspecting and testing incidental to
maintenance.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.

42307

Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.

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12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses
1. Meter seals and miscellaneous
meter supplies.
2. Transportation expenses.
3. Meals, traveling, and incidental
expenses.
4. Tool expenses.
Note: The cost of the first setting and
testing of a meter is chargeable to utility
plant, Account 370, Meters.

587

Customer Installations Expenses

This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, materials
used, and expenses incurred in work on
customer installations in inspecting
premises and in rendering services to
customers of the nature of those
indicated by the list of items hereunder.
Items
Labor
1. Supervising customer installations
work.
2. Inspecting premises, including the
check of wiring for code compliance.
3. Investigating, locating, and clearing
grounds on customers’ wiring.
4. Investigating service complaints,
including load tests of motors and
lighting and power circuits on
customers’ premises; field investigations
of complaints on bills or of voltage.
5. Installing, removing, renewing, and
changing lamps and fuses.
6. Radio, television, and similar
interference work including erection of
new aerials on customers’ premises and
patrolling of lines, testing of lightning
arresters, inspection of pole hardware,
and examination on or off premises of
customers’ appliances, wiring, or
equipment to locate cause of
interference.
7. Installing, connecting, reinstalling,
or removing leased property on
customers’ premises.
8. Testing, adjusting, and repairing
customers’ fixtures and appliances in
the shop or on premises.
9. Cost of changing customers’
equipment due to changes in service
characteristics.
10. Investigation of current diversion
including setting and removal of check
meters and securing special readings
thereon; special calls by employees in
connection with discovery and

settlement of current diversion; changes
in customer wiring; and any other labor
cost identifiable as caused by current
diversion.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.

9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Lamp and fuse renewals.
2. Materials used in servicing
customers’ fixtures, appliances, and
equipment.
3. Power, light, heat, telephone, and
other expenses of the appliance repair
department.
4. Tool expense.
5. Transportation expense, including
pickup and delivery charges.
6. Meals, traveling, and incidental
expenses.
7. Rewards paid for discovery of
current diversion.
Note A: Amounts billed customers for any
work, the cost of which is charged to this
account, shall be credited to this account.
Any excess over costs resulting therefrom,
shall be transferred to Account 451,
Miscellaneous Service Revenues.
Note B: Do not include in this account
expenses incurred in connection with
merchandising, jobbing, and contract work.

588 Miscellaneous Distribution
Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in distribution
system operation not provided for
elsewhere.
Items
Labor:
1. General records of physical
characteristics of lines and substations,
such as capacities.
2. Ground resistance records.
3. Joint pole maps and records.
4. Distribution system voltage and
load records.
5. Preparing maps and prints.
6. Service interruption and trouble
records.
7. General clerical and stenographic
work except that chargeable to Account
586, Meter Expenses.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
Expenses:
1. Operating records covering poles,
transformers, manholes, cables, and
other distribution facilities. Exclude
meter records chargeable to Account
586, Meter Expenses, and station

records chargeable to Account 582,
Station Expenses, and stores records
chargeable to Account 163, Stores
Expense Undistributed.
2. Janitor work at distribution office
buildings including snow removal and
grass cutting.
3. Communication service.
4. Building service expenses.
5. Miscellaneous office supplies and
expenses, printing and stationery, maps
and records, and first-aid supplies.
6. Research, development, and
demonstration expenses.
*
*
*
*
*
590 Maintenance Supervision and
Engineering
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and expenses
incurred in the general supervision and
direction of maintenance of the
distribution system. Direct field
supervision of specific jobs shall be
charged to the appropriate maintenance
account. (See § 1767.17(a).)
591

Maintenance of Structures

This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of structures, the book cost of which is
includible in Account 361, Structures
and Improvements. (See § 1767.17(b).)
592 Maintenance of Station Equipment
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of plant, the book cost of which is
includible in Account 362, Station
Equipment, and Account 363, Storage
Battery Equipment. (See § 1767.17(b).)
593 Maintenance of Overhead Lines
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in the
maintenance of overhead distribution
line facilities, the book cost of which is
includible in Account 364, Poles,
Towers and Fixtures; Account 365,
Overhead Conductors and Devices; and
Account 369, Services. (See
§ 1767.17(b).)
Items
1. Work of the following character on
poles, towers, and fixtures:

42309

a. Installing additional clamps or
removing clamps or strain insulators on
guys in place.
b. Moving line or guy pole in
relocation of pole or section of line.
c. Painting poles, towers, crossarms,
or pole extensions.
d. Readjusting and changing position
of guys or braces.
e. Realigning and straightening poles,
crossarms, braces, pins, racks, brackets,
and other pole fixtures.
f. Reconditioning reclaimed pole
fixtures.
g. Relocating crossarms, racks,
brackets, and other fixtures on poles.
h. Repairing pole supported platform.
i. Repairs by others to jointly owned
poles.
j. Shaving, cutting rot, or treating
poles or crossarms in use or salvaged for
reuse.
k. Stubbing poles already in service.
l. Supporting conductors,
transformers, and other fixtures and
transferring them to new poles during
pole replacements.
m. Maintaining pole signs, stencils,
and tags.
2. Work of the following character on
overhead conductors and devices:
a. Overhauling and repairing line
cutouts, line switches, line breakers,
and capacitor installations.
b. Cleaning insulators and bushings.
c. Refusing line cutouts.
d. Repairing line oil circuit breakers
and associated relays and control
wiring.
e. Repairing grounds.
f. Resagging, retying, or rearranging
position or spacing of conductors.
g. Standing by phones, going to calls,
cutting faulty lines clear, or similar
activities at times of emergency.
h. Sampling, testing, changing,
purifying, and replenishing insulating
oil.
i. Transferring loads, switching, and
reconnecting circuits and equipment for
maintenance purposes.
j. Repairing line testing equipment.
k. Trimming trees and clearing brush.
l. Chemical treatment of right-of-way
area when occurring subsequent to
construction of line.
3. Work of the following character on
overhead services:
a. Moving position of service either on
pole or on customers’ premises.
b. Pulling slack in service wire.
c. Retying service wire.
d. Refastening or tightening service
bracket.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and

42310

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
594 Maintenance of Underground
Lines
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in the

maintenance of underground
distribution line facilities, the book cost
of which is includible in Account 366,
Underground Conduit; Account 367,
Underground Conductors and Devices;
and Account 369, Services. (See
§ 1767.17(b).)
Items
1. Work of the following character on
underground conduit:
a. Cleaning ducts, manholes, and
sewer connections.
b. Moving or changing position of
conduit or pipe.
c. Minor alterations of handholes,
manholes, or vaults.
d. Refastening, repairing, or moving
racks, ladders, or hangers in manholes
or vaults.
e. Plugging and shelving ducts.
f. Repairs to sewers, drains, walls, and
floors, rings, and covers.
2. Work of the following character on
underground conductors and devices:
a. Repairing circuit breakers,
switches, cutouts, network protectors,
and associated relays and control
wiring.
b. Repairing grounds.
c. Retraining and reconnecting cables
in manholes including transfer of cables
from one duct to another.
d. Repairing conductors and splices.
e. Repairing or moving junction boxes
and potheads.
f. Refireproofing cables and repairing
supports.
g. Repairing electrolysis preventive
devices for cables.
h. Repairing cable bonding systems.
i. Sampling, testing, changing,
purifying, and replenishing insulating
oil.
j. Transferring loads, switching and
reconnecting circuits and equipment for
maintenance purposes.
k. Repairing line testing equipment.
l. Repairing oil or gas equipment in
high voltage cable systems and
replacement of oil or gas.
3. Work of the following character on
underground services:
a. Cleaning ducts.
b. Repairing any underground service
plant.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,

applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
595 Maintenance of Line Transformers
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of distribution line transformers, the
book cost of which is includible in
Account 368, Line Transformers. (See
§ 1767.17(b).)
596 Maintenance of Street Lighting
and Signal Systems
This account shall include the cost of
labor, employee pensions and benefits,

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of plant, the book cost of which is
includible in Account 373, Street
Lighting and Signal Systems. (See
§ 1767.17(b).)
597

Maintenance of Meters

This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in the
maintenance of meters and meter testing
equipment, the book cost of which is
includible in Account 370, Meters, and
Account 395, Laboratory Equipment,
respectively. (See § 1767.17(b).)
598 Maintenance of Miscellaneous
Distribution Plant
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in maintenance
of plant, the book cost of which is
includible in Accounts 371,
Installations on Customers’ Premises,
and Account 372, Leased Property on
Customers’ Premises, and any other
plant the maintenance of which is
assignable to the distribution function
and is not provided for elsewhere. (See
§ 1767.17(b).)
Items
1. Work of similar nature to that listed
in other distribution maintenance
accounts.
2. Maintenance of office furniture and
equipment used by distribution system
department.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.

4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
6. Section 1767.28 is amended by
revising Accounts 901, 902, 903, and
905 to read as follows:
2. Changing and collecting meter
charts used for billing purposes.
3. Inspecting time clocks and
checking seals when performed by
meter readers and the work represents a
minor activity incidental to regular
meter reading routine.
4. Reading meters, including demand
meters, and obtaining load information
for billing purposes. Exclude and charge
to Account 586, Meter Expenses, or to
Account 903, Customer Records and
Collection Expenses, as applicable, the
cost of obtaining meter readings, first
and final, if incidental to the operation
of removing or resetting, sealing or
locking, and disconnecting or
reconnecting meters.
5. Computing consumption from
meter reader’s book or from reports by
mail when done by employees engaged
in reading meters.
6. Collecting from prepayment meters
when incidental to meter reading.

42311

7. Maintaining record of customers’
keys.
8. Computing estimated or average
consumption when performed by
employees engaged in reading meters.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)

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Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

8. Cost of safety, accident prevention,
and similar educational activities.
Materials and Expenses:
1. Badges, lamps, and uniforms.
2. Demand charts, meter books and
binders and forms for recording
readings, but not the cost of preparation.
3. Postage and supplies used in
obtaining meter readings by mail.
4. Transportation, meals, and
incidental expenses.
903 Customer Records and Collection
Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in work on
customer applications, contracts, orders,
credit investigations, billing and
accounting, collections and complaints.
Items
Labor:
1. Receiving, preparing, recording,
and handling routine orders for service,
disconnections, transfers or meter tests
initiated by the customer, excluding the
cost of carrying out such orders, which
is chargeable to the account appropriate
for the work called for by such orders.
2. Investigations of customers’ credit
and keeping of records pertaining
thereto, including records of
uncollectible accounts written off.
3. Receiving, refunding, or applying
customer deposits and maintaining
customer deposit, line extension, and
other miscellaneous records.
4. Checking consumption shown by
meter readers’ reports where incidental
to preparation of billing date.
5. Preparing address plates and
addressing bills and delinquent notices.
6. Preparing billing data.
7. Operating billing and bookkeeping
machines.
8. Verifying billing records with
contracts or rate schedules.
9. Preparing bills for delivery and
mailing or delivering bills.
10. Collecting revenues, including
collection from prepayment meters,
unless incidental to meter-reading
operations.
11. Balancing collections, preparing
collections for deposit, and preparing
cash reports.
12. Posting collections and other
credits or charges to customer accounts
and extending unpaid balances.
13. Balancing customer accounts and
controls.
14. Preparing, mailing, or delivering
delinquent notices and preparing
reports of delinquent accounts.
15. Final meter reading of delinquent
accounts when done by collectors
incidental to regular activities.

16. Disconnecting and reconnecting
service because of nonpayment bills.
17. Receiving, recording, and
handling of inquiries, complaints, and
requests for investigations from
customers, including preparation of
necessary orders, but excluding the cost
of carrying out such orders, which is
chargeable to the account appropriate
for the work called for by such orders.
18. Statistical and tabulating work on
customer accounts and revenues, but
not including special analyses for sales
department, rate department, or other
general purposes, unless incidental to
regular customer accounting routines.
19. Preparing and periodically
rewriting meter reading sheets.
20. Determining consumption and
computing estimated or average
consumption when performed by
employees other than those engaged in
reading meters.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.

2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
Materials and Expenses:
1. Address plates and supplies.
2. Cash overages and shortages.
3. Commissions or fees to others for
collecting.
4. Payments to credit organizations for
investigations and reports.
5. Postage.
6. Transportation expenses, including
transportation of customer bills and
meter books under centralized billing
procedures.
7. Transportation, meals expenses,
and incidental expenses.
8. Bank charges, exchange, and other
fees for cashing and depositing
customers’ checks.
9. Forms for recording orders for
services, or removals.
10. Rent of mechanical equipment.
Note. The cost of work on meter history
and meter location records in chargeable to
Account 586, Meter Expenses.

*

*

*

*

*

905 Miscellaneous Customer Accounts
Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, materials
used, and expenses incurred not
provided for in other accounts.
Items
Labor:
1. General clerical and stenographic
work.
2. Miscellaneous labor.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein,

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)

13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Communication service.
2. Miscellaneous office supplies and
expenses and stationery and printing
other than those specifically provided
for in Account 902 and Account 903.
7. Section 1767.29 is amended by
revising Accounts 907, 908, 909, and
910 to read as follows:
§ 1767.29 Customer service and
informational expenses.

*

*

*

*

907

Supervision

*

This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and expenses
incurred in the general direction and
supervision of customer service
activities, the object of which is to
encourage safe, efficient, and
economical use of the utility’s service.
Direct supervision of a specific activity
within customer service and
informational expense classification
shall be charged to the account wherein
the costs of such activity are included.
(See § 1767.17(a).)
908

Customer Assistance Expenses

This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in providing
instructions or assistance to customers,
the object of which is to encourage safe,
efficient, and economical use of the
utility’s service.
Items
Labor:
1. Direct supervision of department.
2. Processing customer inquiries
relating to the proper use of electric
equipment, the replacement of such
equipment, and information related to
such equipment.
3. Advice directed to customers as to
how they may achieve the most efficient
and safest use of electric equipment.
4. Demonstrations, exhibits, lectures,
and other programs designed to instruct
customers in the safe, economical, or
efficient use of electric service, and/or
oriented toward conservation of energy.
5. Engineering and technical advice to
customers, the object of which is to
promote safe, efficient, and economical
use of the utility’s service.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.

42313

Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
Materials and Expenses:
1. Supplies and expenses pertaining
to demonstrations, exhibits, lectures,
and other programs.
2. Loss in value on equipment and
appliances used for customer assistance
programs.

42314

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

3. Office supplies and expenses.
4. Transportation, meals, and
incidental expenses.
Note: Do not include in this account
expenses that are provided for elsewhere,
such as Accounts 416, Costs and Expenses of
Merchandising, Jobbing, and Contract Work;
587, Customer Installations Expenses; and
912, Demonstrating and Selling Expenses.

909 Informational and Instructional
Advertising Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in activities
which primarily convey information as
to what the utility urges or suggests
customers should do in utilizing electric
service to protect health and safety, to
encourage environmental protection, to
utilize their electric equipment safely
and economically, or to conserve
electric energy.
Items
Labor:
1. Direct supervision of information
activities.
2. Preparing informational materials
for newspapers, periodicals, and
billboards and preparing and
conducting informational motion
pictures, radio and television programs.
3. Preparing informational booklets
and bulletins used in direct mailings.
4. Preparing informational window
and other displays.
5. Employing agencies, selecting
media, and conducting negotiations in
connection with the placement and
subject matter of information programs.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.

5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
Materials and Expenses:
1. Use of newspapers, periodicals,
billboards, and radio for informational
purposes.
2. Postage on direct mailings to
customers exclusive of postage related
to billings.
3. Printing of informational booklets,
dodgers, and bulletins.
4. Supplies and expenses in preparing
informational materials by the utility.
5. Office supplies and expenses.
Note A: Exclude from this account and
charge to Account 930.2, Miscellaneous
General Expenses, the cost of publication of
stockholder reports, dividend notices, bond
redemption notices, financial statements, and
other notices of a general corporate character.
Also exclude all expenses of a promotional,
institutional, goodwill, or political nature,
which are includible in such accounts as 913,
Advertising Expenses; 930.1, General
Advertising Expenses; and 426.4,
Expenditures for Certain Civic, Political and
Related Activities.
Note B: Entries relating to informational
advertising included in this account shall
contain or refer to supporting documents
which identify the specific advertising
message. If references are used, copies of the

advertising message shall be readily
available.

910 Miscellaneous Customer Service
and Informational Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, materials
used, and expenses incurred in
connection with customer service and
informational activities which are not
includible in other customer
information expense accounts.
Items
Labor:
1. General clerical and stenographic
work not assigned to specific customer
service and informational programs.
2. Miscellaneous labor.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Communication service.
2. Printing, postage, and office
supplies expenses.
8. Section 1767.30 is amended by
revising Accounts 911, 912, 913, and
916 to read as follows:
§ 1767.30

*

*

Sales expenses

*

*

*

911 Supervision
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, and expenses
incurred in the general direction and
supervision of sales activities, except
merchandising. Direct supervision of a
specific activity, such as demonstrating,
selling, or advertising shall be charged
to the account wherein the costs of such
activity are included. (See § 1767.17(a).)
912 Demonstrating and Selling
Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in promotional,
demonstrating, and selling activities,
except by merchandising, the object of
which is to promote or retain the use of
utility services by present and
prospective customers.

Items
Labor:
1. Demonstrating uses of utility
services.
2. Conducting cooking schools,
preparing recipes, and related home
service activities.
3. Exhibitions, displays, lectures, and
other programs designed to promote use
of utility services.
4. Experimental and development
work in connection with new and
improved appliances and equipment,
prior to general public acceptance.
5. Solicitation of new customers or of
additional business from old customers,
including commissions paid employees.
6. Engineering and technical advice to
present or prospective customers in
connection with promoting or retaining
the use of utility services.
7. Special customer canvasses when
their primary purpose is the retention of
business or the promotion of new
business.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts

42315

credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
Materials and Expenses:
1. Supplies and expenses pertaining
to demonstration, experimental, and
development activities.
2. Booth and temporary space rental.
3. Loss in value on equipment and
appliances used for demonstration
purposes.
4. Transportation, meals, and
incidental expenses.
913 Advertising Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in advertising
designed to promote or retain the use of
utility service, except advertising the
sale of merchandise by the utility.
Items
Labor:
1. Direct supervision of department.
2. Preparing advertising material for
newspapers, periodicals, and billboards,
and preparing and conducting motion
pictures, radio, and television programs.
3. Preparing booklets and bulletins
used in direct mail advertising.
4. Preparing window and other
displays.
5. Clerical and stenographic work.
6. Investigating advertising agencies
and media and conducting negotiations
in connection with the placement and
subject matter of sales advertising.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee

42316

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
Materials and Expenses:
1. Advertising in newspapers,
periodicals, billboards, and radio for
sales promotion purposes, but not
including institutional or goodwill
advertising includible in Account 930.1,
General Advertising Expenses.
2. Materials and services given as
prizes or otherwise in connection with
civic lighting contests, canning, or
cooking contests, and bazaars in order to

publicize and promote the use of utility
services.
3. Fees and expenses of advertising
agencies and commercial artists.
4. Novelties for general distribution.
5. Postage on direct mail advertising.
6. Premiums distributed generally,
such as recipe books when not offered
as inducement to purchase appliances.
7. Printing booklets, dodgers, and
bulletins.
8. Supplies and expenses in preparing
advertising material.
9. Office supplies and expenses.
Note A: The cost of advertisements which
set forth the value or advantages of utility
service without reference to specific
appliances, or, if reference is made to
appliances, invites the reader to purchase
appliances from his dealer or refer to
appliances not carried for sale by the utility,
shall be considered sales promotion
advertising and charged to this account.
However, advertisements which are limited
to specific makes of appliances sold by the
utility and price and terms, thereof, without
referring to the value or advantages of utility
service, shall be considered as merchandise
advertising and the cost shall be charged to
Costs and Expenses of Merchandising,
Jobbing and Contract Work, Account 416.
Note B: Advertisements which
substantially mention or refer to the value or
advantages of utility service, together with
specific reference to makes of appliance sold
by the utility and the price, and terms,
thereof, and designed for the joint purpose of
increasing the use of utility service and the
sales of appliances, shall be considered as a
combination advertisement and the costs
shall be distributed between this account and
Account 416 on the basis of space, time, or
other proportional factors.
Note C: Exclude from this account and
charge to Account 930.2, Miscellaneous
General Expenses, the cost of publication of
stockholder reports, dividend notices, bond
redemption notices, financial statements, and
other notices of a general corporate character.
Also exclude all institutional or goodwill
advertising. (See Account 930.1, General
Advertising Expenses.)

916

Miscellaneous Sales Expenses

This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, materials
used, and expenses incurred in
connection with sales activities, except
merchandising, which are not
includible in other sales expense
accounts.
Items
Labor:
1. General clerical and stenographic
work not assigned to specific functions.
2. Special analysis of customer
accounts and other statistical work for
sales purposes not a part of the regular

customer accounting and billing
routine.
3. Miscellaneous labor.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Materials and Expenses:
1. Communication service.
2. Printing, postage, office supplies,
and expenses applicable to sales
activities, except those chargeable to
Account 913, Advertising Expenses.
9. Section 1767.31 is amended by
revising Accounts 920, 924, 925, 926,
930.1, 930.2, and 935 to read as follows:
§ 1767.31 Administrative and general
expenses.

*

*

*

*

*

920 Administrative and General
Salaries
A. This account shall include the
compensation (salaries, bonuses,
employee pensions and benefits, social
security and other payroll taxes, injuries
and damages, and other consideration
for services, but not including directors’
fees) of officers, executives, and other
employees of the utility properly
chargeable to utility operations and not
chargeable directly to a particular
operating function.
B. This account may be subdivided in
accordance with a classification
appropriate to the departmental or other
functional organization of the utility.
*
*
*
*
*
924 Property Insurance
A. This account shall include the cost
of insurance or reserve accruals to
protect the utility against losses and
damages to owned or leased property
used in its utility operations. It shall
also include the cost of labor, employee
pensions and benefits, social security
and other payroll taxes, injuries and
damages, and the related supplies and
expenses incurred in property insurance
activities.
B. Recoveries from insurance
companies or others for property
damages shall be credited to the account
charged with the cost of the damage. If
the damaged property has been retired,
the credit shall be to the appropriate
account for accumulated provision for
depreciation.

C. Records shall be kept so as to show
the amount of coverage for each class of
insurance carried, the property covered,
and the applicable premiums. Any
dividends distributed by mutual
insurance companies shall be credited
to the accounts to which the insurance
premiums were charged.
Items
1. Premiums payable to insurance
companies for fire, storm, burglary,
boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
Note A: The cost of insurance or reserve
accruals capitalized, shall be charged to
construction and retirement either directly or
by transfers to construction and retirement
work orders from this account.
Note B: The cost of insurance or reserve
accruals for the following classes of property
shall be charged as indicated:
1. Materials, supplies, and stores
equipment to Account 163, Stores Expense
Undistributed, or appropriate materials
account.
2. Transportation and other general
equipment to appropriate clearing accounts
that may be maintained.
3. Electric plant leased to others to
Account 413, Expenses of Electric Plant
Leased to Others.
4. Nonutility property to the appropriate
nonutility income account.
5. Merchandise and jobbing property to
Account 416, Costs and Expenses of
Merchandising, Jobbing and Contract Work.
Note C: The cost of labor, employee
pensions and benefits, social security and
other payroll taxes, and the related supplies
and expenses of administrative and general
employees who are only incidentally engaged
in property insurance work may be included
in Account 920 and Account 921, as
appropriate.
Note D: The cost of insurance or reserve
accruals applicable to the various utility
functions shall be charged to the specific
functional operations and the appropropriate
miscellaneous administrative expense
accounts either directly or by transfers from
this account.

925 Injuries and Damages
A. This account shall include the cost
of insurance or reserve accruals to
protect the utility against injuries and
damages claims of employees or others,
losses of such character not covered by
insurance, and expenses incurred in
settlement of injuries and damages
claims. It shall also include the cost of
labor, employee pensions and benefits,

42317

social security and other payroll taxes,
injuries and damages, related supplies,
and expenses incurred in injuries and
damages activities.
B. Reimbursements from insurance
companies or others for expenses
charged hereto on account of injuries,
damages, and insurance dividends or
refunds shall be credited to this
account.
Items
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
Note A: Payments to or in behalf of
employees for accident or death benefits,
hospital expenses, medical expenses, or for
salaries while incapacitated for service or on
leave of absence beyond periods normally
allowed, when not the result of occupational
injuries, shall be charged to Account 926,
Employee Pensions and Benefits. (See also
Note B of Account 926.)
Note B: The cost of injuries and damages
or reserve accruals capitalized shall be
charged to construction and retirement
activities either directly or by transfers from
this account to the applicable construction
and retirement work orders.
Note C: The cost of insurance or reserve
accruals applicable to the various utility
functions shall be charged to the specific
functional operations and the appropropriate
miscellaneous administrative expense
accounts either directly or by transfers from
this account.
Note D: Exclude herefrom the time and
expenses of employees (except those engaged
in injuries and damages activities) spent in
attendance at safety and accident prevention
educational meetings, if occurring during the
regular work period.
Note E: The cost of labor, employee
pensions and benefits, social security and
other payroll taxes, and the related supplies

42318

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

and expenses of administrative and general
employees who are only incidentally engaged
in injuries and damages activities, may be
included in Account 920 and Account 921,
as appropriate.

926 Employee Pensions and Benefits
A. This account shall include
pensions paid to or on behalf of retired
employees or accruals to provide for
pensions or payments for the purchase
of annuities for this purpose, when the
utility has definitely, by contract,
committed itself to a pension plan
under which the pension funds are
irrevocably devoted to pension purposes
and payments for employee accident,
sickness, hospital, and death benefits, or
insurance therefor. Include, also,
expenses incurred in medical,
educational, or recreational activities for
the benefit of employees and
administrative expenses in connection
with employee pensions and benefits.
B. The utility shall maintain a
complete record of accruals or payments
for pensions and be prepared to furnish
full information to RUS of the plan
under which it has created or proposes
to create a pension fund and a copy of
the declaration of trust or resolution
under which the pension plan is
established.
C. There shall be credited to this
account, the portion of pensions and
benefits expenses which is applicable to
nonutility operations, the specific
functional operations, maintenance, and
administrative expense accounts, and to
construction and retirement activities
unless such amounts are distributed
directly to the accounts involved and
are not included herein in the first
instance.
D. Records in support of this account
shall be so kept that the total pensions
expense, the total benefits expense, the
administrative expenses included
herein, and the amounts of pensions
and benefits expenses transferred to the
operations, maintenance,
administrative, construction or
retirement accounts will be readily
available.
Items
1. Payment of pensions to retirees on
a nonaccrual basis.
2. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
3. Group and life insurance premiums
(credit dividends received).
4. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
5. Payments for accident, sickness,
hospital, and death benefits or
insurance.

6. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
7. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Note A: The cost of labor, employee
pensions and benefits, social security and
other payroll taxes, injuries and damages,
and the related supplies and expenses of
administrative and general employees who
are only incidentally engaged in employee
pension and benefit activities may be
included in Account 920 and Account 921,
as appropriate.
Note B: Salaries paid to employees during
periods of nonoccupational sickness may be
charged to the appropriate labor account
rather than to employee benefits.

*

*

*

*

*

930.1 General Advertising Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in advertising
and related activities, the cost of which
by their content and purpose are not
provided for elsewhere.
Items
Labor:
1. Supervision.
2. Preparing advertising material for
newspapers, periodicals, and billboards
and preparing or conducting motion
pictures, radio, and television programs.
3. Preparing booklets and bulletins
used in direct mail advertising.
4. Preparing window and other
displays.
5. Clerical and stenographic work.
6. Investigating and employing
advertising agencies, selecting media,
and conducting negotiations in
connection with the placement and
subject matter of advertising.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).

3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
2. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
3. Fees and expenses of claim
investigators.
4. Payment of awards to claimants for
court costs and attorneys’ services.
5. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
6. Compensation payments under
workmen’s compensation laws.
7. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
8. Cost of safety, accident prevention,
and similar educational activities.
Materials and Expenses:
1. Advertising in newspapers,
periodicals, billboards, and radios.
2. Advertising matter such as posters,
bulletins, booklets, and related items.
3. Fees and expenses of advertising
agencies and commercial artists.
4. Postage and direct mail advertising.
5. Printing of booklets, dodgers, and
bulletins.
6. Supplies and expenses in preparing
advertising materials.
7. Office supplies and expenses.
Note A: Properly includible in this account
is the cost of advertising activities on a local
or national basis of a goodwill or institutional
nature, which is primarily designed to
improve the image of the utility or the
industry, including advertisements which
inform the public concerning matters
affecting the company’s operations, such as,
the cost of providing service, the company’s

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
efforts to improve the quality of service, and
the company’s efforts to improve and protect
the environment. Entries relating to
advertising included in this account shall
contain or refer to supporting documents
which identify the specific advertising
message. If references are used, copies of the
advertising message shall be readily
available.
Note B: Exclude from this account and
include in Account 426.4, Expenditures for
Certain Civic, Political and Related
Activities, expenses for advertising activities,
which are designed to solicit public support
or the support of public officials in matters
of a political nature.

930.2 Miscellaneous General Expenses
This account shall include the cost of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, property
insurance, property taxes, and expenses
incurred in connection with the general
management of the utility not provided
for elsewhere.
Items
Labor:
1. Miscellaneous labor not elsewhere
provided for.
Taxes:
1. Federal and state unemployment.
2. F.I.C.A.
3. Property.
Employee Pensions and Benefits: The
portion of employee pensions and
benefits specifically identifiable with
employees’ labor costs charged herein
or, in the absence of specific employee
identification, the portion of employee
pensions and benefits, allocated on the
more equitable basis of either direct
labor dollars or direct labor hours,
applicable to the labor items detailed
above, including:
1. Accruals for or payments to
pension funds or to insurance
companies for pension purposes.
2. Group and life insurance premiums
(credit dividends received).
3. Payments for medical and hospital
services and expenses of employees
when not the result of occupational
injuries.
4. Payments for accident, sickness,
hospital, and death benefits or
insurance.
5. Payments to employees
incapacitated for service or on leave of
absence beyond periods normally
allowed when not the result of
occupational injuries or in excess of
statutory awards.
6. Expenses in connection with
educational and recreational activities
for the benefit of employees.
Insurance:
1. Premiums payable to insurance
companies for fire, storm, burglary,

boiler explosion, lightning, fidelity, riot,
and similar insurance.
2. Amounts credited to Account
228.1, Accumulated Provision for
Property Insurance, for similar
protection.
3. Special costs incurred in procuring
insurance.
4. Insurance inspection service.
5. Insurance counsel, brokerage fees,
and expenses.
6. Premiums payable to insurance
companies for protection against claims
from injuries and damages by
employees or others, such as public
liability, property damages, casualty,
employee liability, etc., and amounts
credited to Account 228.2, Accumulated
Provision for Injuries and Damage, for
similar protection.
7. Losses not covered by insurance or
reserve accruals on account of injuries
or deaths to employees or others and
damages to the property of others.
8. Fees and expenses of claim
investigators.
9. Payment of awards to claimants for
court costs and attorneys’ services.
10. Medical and hospital service and
expenses for employees as the result of
occupational injuries or resulting from
claims of others.
11. Compensation payments under
workmen’s compensation laws.
12. Compensation paid while
incapacitated as the result of
occupational injuries. (See Account 924,
Note A.)
13. Cost of safety, accident
prevention, and similar educational
activities.
Expenses:
1. Industry association dues for
company memberships.
2. Contributions for conventions and
meetings of the industry.
3. Research, development, and
demonstration expenses not charged to
other operation and maintenance
expense accounts on a functional basis.
4. Communication service not
chargeable to other accounts.
5. Trustee, registrar, and transfer agent
fees and expenses.
6. Stockholders meeting expenses.
7. Dividend and other financial
notices.
8. Printing and mailing dividend
checks.
9. Directors’ fees and expenses.
10. Publishing and distributing
annual reports to stockholders.
11. Public notices of financial,
operating, and other data required by
regulatory statutes, not including,
however, notices required in connection
with security issues or acquisitions of
property.
*
*
*
*
*

42319

935 Maintenance of General Plant
A. This account shall include the cost
assignable to customer accounts, sales,
administrative, and general functions of
labor, employee pensions and benefits,
social security and other payroll taxes,
injuries and damages, materials used,
and expenses incurred in the
maintenance of property, the book cost
of which is includible in Account 390,
Structures and Improvements; Account
391, Office Furniture and Equipment;
Account 397, Communication
Equipment; and Account 398,
Miscellaneous Equipment. (See
§ 1767.17(b).)
B. Maintenance expenses on office
furniture and equipment used elsewhere
than in general, commercial, and sales
offices shall be charged to the following
accounts:
1. Steam Power Generation, Account
514.
2. Nuclear Power Generation, Account
532.
3. Hydraulic Power Generation,
Account 545.
4. Other Power Generation, Account
554.
5. Transmission, Account 573.
6. Distribution, Account 598.
7. Merchandise and Jobbing, Account
416.
8. Garages, Shops, etc., Appropriate
clearing account, if used.
Note: Maintenance of plant included in
other general equipment accounts shall be
included herein unless charged to clearing
accounts or to the particular functional
maintenance expense account indicated by
the use of the equipment.

10. In § 1767.41, the introductory text
preceding the Numerical Index is
revised to read as follows:
§ 1767.41 Accounting methods and
procedures required of all RUS borrowers.

All RUS borrowers shall maintain and
keep their books of accounts and all
other books and records which support
the entries in such books of accounts in
accordance with the accounting
principles prescribed in this section.
Interpretations Nos. 133, 134, 137, 403,
404, 602, 606, 618, 627, 628, and 629
adopt and implement the provisions of
standards issued by the Financial
Accounting Standards Board (FASB).
Each interpretation includes a synopsis
of the requirements of the standard as
well as specific accounting
requirements and interpretations
required by RUS. The synopsis provides
general information to assist borrowers
in determining whether the standard
applies to an individual cooperative’s
operations. The synopsis is not intended
to change the requirements of the FASB

42320

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

standards unless it is set forth in the
section entitled RUS Accounting
Requirements in each interpretation. If a
particular borrower believes a conflict
exists between the FASB standard and
an RUS interpretation, the borrower
shall contact the Director, PASD, to seek
resolution of the issue.
*
*
*
*
*
11.–20. In § 1767.41, make the
following changes:
a. In the Numerical Index, the entries
No. 137, No. 138, No. 139, No. 140, No.
630, and No. 631, are added in
numerical order.
b. In the Subject Matter Index listing
under ‘‘A’’, entries for ‘‘Automatic
Meter Reading Systems—Radio-Based’’
and ‘‘Automatic Meter Reading
Systems—Turtles’’ are added in
alphabetical order.
c. In the Subject Matter Index listing
under ‘‘E’’, an entry for ‘‘Early
Retirement Plan’’ is added in
alphabetical order.
d. In the Subject Matter Index listing
under ‘‘G’’, an entry for ‘‘Global
Positioning Systems’’ is added in
alphabetical order.
e. In the Subject Matter Index listing
under ‘‘I’’, entries for ‘‘Impairment of
Long-Lived Assets’’ and ‘‘Insurance—
Split Dollar’’ are added in alphabetical
order.
f. In the Subject Matter Index listing
under ‘‘L’’, entries for ‘‘Life Insurance—
Split Dollar’’ and ‘‘Long-Lived Assets—
Impairment’’ are added in alphabetical
order.
g. In the Subject Matter Index listing
under ‘‘M’’, entries for ‘‘Meter Reading
Systems—Radio-Based’’ and ‘‘Meter
Reading Systems—Turtles’’ are added in
alphabetical order.
h. In the Subject Matter Index listing
under ‘‘R’’, an entry for ‘‘Radio-Based
Automatic Meter Reading Systems’’ is
added in alphabetical order.
i. In the Subject Matter Index listing
under ‘‘S’’, entries for ‘‘Special Early
Retirement Plan’’ and ‘‘Split Dollar Life
Insurance’’ are added in alphabetical
order.
j. In the Subject Matter Index listing
under ‘‘T’’, an entry for ‘‘TurtlesAutomatic Meter Reading Systems’’ is
added in alphabetical order.
The additions read as follows:
*
*
*
*
*
Numerical Index
Number

Title

*
*
*
*
*
137 ........................... Impairment of LongLived Assets.

Number

Title

138 ...........................

Automatic Meter
Reading SystemsTurtles.
Global Positioning
Systems.
Radio-Based Automatic Meter Reading
Systems.

139 ...........................
140 ...........................

*
*
*
*
*
630 ........................... Split Dollar Life Insurance.
631 ........................... Special Early Retirement Plan.
Subject Matter Index
Number

Number
*

*

*
S

*

*

*

*
631.

*

*
*
*
*
Split Dollar Life Insur- 630.
ance.

*

*
*
Special Early Retirement Plan.

*

*

*
T

*

*

*
*
*
*
Turtles—Automatic
138.
Meter Reading Systems.

*

A
*
*
Automatic Meter
Reading SystemsRadio-Based.
Automatic Meter
Reading SystemsTurtles.
*

*

*

*

138.

*
E

Early Retirement Plan
*

*
140.

*

*

631.

*

*
G

*

*

*
*
Global Positioning
Systems.

*

*
139.

*

I
Impairment of LongLived Assets.

137.

*
*
*
*
Insurance—Split Dol630.
lar.
*

*

*
L

*

*

*

*
*
*
*
Life Insurance—Split
630.
Dollar.

*

*
*
Long-Lived AssetsImpairment.

*
137.

*

*
*
*
*
Meter Reading Sys140.
tems—Radio-Based.
Meter Reading Sys138.
tems—Turtles.

*

*
M

*

*

Radio-Based Automatic Meter Reading Systems.

*
R

*
140.

*

*

*
*
*
*
21. In § 1767.41, Interpretation No.
104 is revised to read as follows:
*
*
*
*
*
104 Terminal Facilities
Borrowers are sometimes required to
construct terminal facilities in the
transmission line of another utility in
order to receive power from their power
supplier. The document executed
between the borrower and the utility is
normally referred to as a ‘‘License
Agreement’’. The license agreement may
stipulate that certain items of the
terminal facilities are to be transferred
to, and become the property of, the
other utility upon completion of the
construction. The accounting for this
type of transaction shall be as follows:
1. All construction costs incurred
shall be charged to a work order. Upon
completion of the construction and
accumulation of all costs, the cost of the
facilities that become the property of
another utility shall be transferred from
construction work-in-progress to
Account 303, Miscellaneous Intangible
Plant. The cost of the plant for which
the borrower retains title shall be
charged to the appropriate plant
accounts.
2. The cost of the facilities recorded
in Account 303 shall be amortized to
Account 405, Amortization of Other
Electric Plant, over the contract term or
the estimated useful service life of the
plant, whichever is shorter. If the
related contract or contracts for this
power supply are terminated, the
unamortized balance shall be expensed,
in the current period, in Account 557.
*
*
*
*
*
22. In § 1767.41, Interpretation Nos.
137, 138, 139 and 140 are added in
numerical order to read as follows:
*
*
*
*
*

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
137 Impairment of Long-Lived Assets
Statement of Financial Accounting
Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of
(Statement No. 121), requires reporting
entities to review all long-lived assets
and certain identifiable intangibles that
are to be held, used, or disposed of by
that entity for impairment whenever
events and changes in circumstances
indicate that the carrying amount of the
asset may not be recoverable. If the sum
of the expected future cash flows
(undiscounted and without interest
charges) is less than the carrying value
of the asset, the entity must recognize an
impairment loss. The impairment loss is
measured as the amount by which the
carrying amount of the asset exceeds the
fair value of the asset. The impairment
loss is reported as a component of
income from continuing operations
before income taxes for entities
presenting an income statement and in
the statement of activities of not-forprofit organizations. Statement No. 121
does not apply to assets included in the
scope of Statement of Financial
Accounting Standards No. 90, Regulated
Enterprises—Accounting for
Abandonments and Disallowances of
Plant Costs.
Assets To Be Held or Used
Entities are required to review longlived assets and certain identifiable
intangibles whenever events or changes
in circumstances indicate that the
carrying value of the asset may not be
recoverable. For example:
1. A significant decrease in the market
value of an asset;
2. A significant change in the extent
or manner in which an asset is used;
3. A significant physical change in an
asset;
4. A significant adverse change in
legal factors or in the business climate
that could affect the value of an asset;
5. An adverse action or assessment by
a regulator;
6. An accumulation of costs
significantly in excess of the amount
originally expected to acquire or
construct an asset; and
7. A current period operating or cash
flow loss combined with a history of
operating or cash flow losses or a
projection or forecast that demonstrates
continued losses associated with an
asset used for the purpose of producing
revenue.
The impairment of the asset is
measured by estimating the future cash
flows expected to result from the use of
the asset and its disposition. Assets are
grouped at the lowest level for which

there are identifiable cash flows that are
largely independent of the cash flows of
other groups of assets. Future cash flows
are those cash inflows that are expected
to be generated by the asset less the cash
outflows expected to be necessary to
maintain those inflows. If the future
cash flows (undiscounted and without
interest charges) are less than the
carrying value of the asset, an
impairment loss must be recognized. If
the expected future cash flows are
greater than the carrying value of the
asset, no impairment loss exists.
The impairment loss is the amount by
which the carrying amount (acquisition
cost less accumulated depreciation) of
the asset exceeds the fair value of the
asset. The fair value of the asset is the
amount for which the asset could be
bought or sold in an arms-length
transaction between willing parties. A
quoted market price is the best evidence
of fair value. If this information is not
available, the fair value should be based
upon the best information available.
Consideration should be given to the
price of similar assets and valuation
techniques such as the present value of
the expected future cash flows
discounted at a rate representative of the
risk involved, option-pricing models,
matrix pricing, option-adjusted spread
models, and fundamental analysis. All
available information should be
considered when using the above
pricing techniques.
If an impairment is recognized, the
carrying value of the asset is reduced to
the lower of its fair value or its carrying
value and, if depreciable, depreciated
over the remaining useful life.
Previously recognized impairment
losses cannot be restored. If the asset
was acquired in a business combination
and there is goodwill resulting from the
transaction, the goodwill is included in
the asset grouping and reduced or
eliminated before any adjustment is
made to the carrying value of the asset.
The following financial statement
disclosures are required in the period in
which the impairment is recognized:
1. A description of the impaired assets
and the facts and circumstances
surrounding the impairment;
2. The amount of the impairment and
how fair value was determined;
3. The caption in the income
statement or the statement of activities
in which the impairment loss is
aggregated if that loss has not been
presented as a separate caption or
reported parenthetically on the face of
the statement; and
4. If applicable, the business
segment(s) affected.

42321

Assets To Be Disposed
Statement No. 121 also applies to all
long-lived assets and certain identifiable
intangibles for which management,
having the authority to approve the
action, has committed to a plan of
disposal except those assets covered by
APB No. 30, Reporting the Results of
Operations—Reporting the Effects of
Disposal of a Segment of a Business, and
Extraordinary, Unusual and
Infrequently Occurring Events and
Transactions. An asset to be disposed of
is carried at the lower of its carrying
amount (acquisition cost less
accumulated depreciation) or its fair
value less cost to sell.
The fair value of the asset to be
disposed of is computed in the same
manner as that for an asset to be held
or used by the entity. Selling costs
include the incremental direct cost to
transact the sale—broker commissions,
legal fees, title transfer, and other
closing costs that must be incurred
before legal title can be transferred.
Costs such as insurance, security
service, and utilities are generally
excluded unless these costs are part of
a contractual agreement that obligates
the entity to incur such costs in the
future. If the asset’s fair value is based
upon current market price or the current
selling price for a similar asset, the fair
value is considered a current amount
and is not discounted. If, however, the
fair value is based upon discounted
expected future cash flows and if the
sale is to occur beyond one year, the
cost to sell must also be discounted.
Assets covered by this statement are not
depreciated (amortized) while being
held for disposal.
Subsequent revisions in estimates of
fair value less cost to sell are reported
as adjustments to the carrying amount of
the asset to be disposed of as long as the
carrying amount of the asset does not
exceed the original carrying amount.
The following financial statement
disclosures are required in the period in
which the impairment is recognized:
1. A description of the assets to be
disposed of including the facts and
circumstances leading to the expected
disposal, the expected disposal date,
and the carrying amount of those assets;
2. If applicable, the business
segment(s) in which the assets to be
disposed of are held;
3. The amount, if any, of the
impairment loss resulting from the
adoption of this statement;
4. The gain or loss, if any, resulting
from subsequent revisions in the
estimates of fair value less cost to sell;
5. The caption in the income
statement or statement of activities in

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Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

which the gains or losses are aggregated
if those gains or losses have not been
presented as a separate caption or
reported parenthetically on the face of
the statement; and
6. The results of operations for assets
to be disposed of to the extent that those
results are included in the entity’s
results of operations for the period and
can be identified.
Accounting Requirements
All borrowers must adopt the
accounting prescribed by Statement No.
121.
Effective Date and Implementation
Statement No. 121 is effective for
financial statements for fiscal years
beginning after December 15, 1995.
Impairment losses resulting from the
application of this statement to assets
that are held or used by the entity must
be reported in the period in which the
recognition criteria are first applied and
met. Impairment losses attributable to
assets to be disposed of must be
reported as the cumulative effect of a
change in accounting principle as
prescribed in Accounting Principles
Board Opinion No. 20, Accounting
Changes.
Accounting Journal Entries—
Implementation Date
If a borrower has impaired assets that
are held or used at the implementation
date, the following entry should be
recorded:
Dr. 426.5, Other Deductions
Cr. 300 Series of Accounts, Plant Accounts
To record the adoption of Statement No. 121
for the impairment of assets that are held
or used.

If a borrower has impaired assets to be
disposed of at the implementation date,
the following entry should be recorded:
Dr. 435.1, Cumulative Effect on Prior Years
of a Change in Accounting Principle
Cr. 300 Series—Plant Accounts
To record the adoption of Statement No. 121
for assets that are to be disposed.

Accounting Journal Entries—
Subsequent to Implementation Date
If an asset that is either held, used or
to be disposed of becomes impaired, the
following entry should be recorded:
Dr. 426.5, Other Deductions
Cr. 300 Series—Plant Accounts
To record the impairment of a plant asset.

If a borrower makes a subsequent
revision in the estimate of the fair value
less the cost to sell of an asset to be
disposed of, the following entry should
be recorded:
Dr. 300 Series—Plant Accounts
Cr. 421, Miscellaneous Nonoperating Income

To revise the fair value of an asset to be
disposed.

138 Automatic Meter Reading
Systems—Turtles
Automatic meter reading systems
were developed from technology called
power line carrier communication
systems. One such system, developed by
Hunt Technologies, Inc., is called by its
brand name, the Turtle system. In
addition to its function as an automated
reading device, the Turtle can provide
outage detection, power failure counts,
and other potential applications. The
current Turtle system does not have the
capability for applications such as
collection of load survey or interval
data. A Turtle system consists of:
1. A meter reader mounted
(retrofitted) inside the meter;
2. A receiver located in each
substation; and
3. Monitoring and programming
equipment (software and personal
computer) usually located in the
headquarters building.
The system transmits continuous
information one way from the meter to
a receiver located in the substation. The
receiver constantly monitors every
Turtle meter served by the substation.
The substation receiver can be sized to
monitor up to 3,000 Turtle meter
readers at the same time. The data is
then transmitted to the headquarters
monitoring equipment via telephone
line or an equivalent communication
system.
The technical literature and other
information provided by the
manufacturer indicates that this system
can only be used for remote meter
reading, outage detection, power failure
counts, and phase identification. At this
time, there is no indication that the
system supports other functions such as
home security. Therefore, the
accounting prescribed for the Turtle
meter reading devices and support
equipment relates only to electric utility
operations.
Accounting Requirements
The function of the equipment is the
primary factor in determining the
account in which the equipment shall
be recorded. The components of the
Turtle automatic meter reading system
shall be recorded in Account 370,
Meters. The cost of the meter reader
encoding device and retrofitting the
meter with the meter reader unit shall
be capitalized to the cost of the existing
meter. Any associated operating
expenses shall be charged to Account
586, Meter Expenses, with maintenance
expenses charged to Account 597,
Maintenance of Meters.

Separate continuing property records
shall be established for the meters,
either fitted or retrofitted with the
device; the receiver; the personal
computer; and the system software. The
meters, receivers, and personal
computer shall be depreciated over the
manufacturer’s estimated useful service
life. The system software shall be
depreciated over the estimated useful
service life of the program not to exceed
5 years.
139 Global Positioning Systems
The Global Positioning System (GPS)
is a worldwide radio-navigation system
formed from a network of 24 satellites
and their ground stations. Utilities are
using this advanced technology
geographic data collection system to
update and modernize their system
maps. GPS uses a system of satellites
orbiting the earth to establish plant
locations with pinpoint accuracy. By
triangulating from three satellites and
using radio signals to measure distances
and locate items, system-wide maps can
be created of the utility’s service area. A
field inventory is then taken of the
utility’s plant and plotted onto the map.
The GPS consists of base station
equipment, remote station equipment,
the GPS program, and mapping
conversion software.
All equipment associated with GPS is
dedicated to the mapping effort. The
base station is installed at a fixed
location and ties satellite measurements
into a solid local reference. The remote
station is a portable receiver that is
taken into the field to determine
locations and is moved from site to site.
The GPS program is the application
software that operates the station
equipment and is used by layout
technicians to gather information of
existing and new facilities in the field.
The conversion software is used for
converting the GPS and inventory
information gathered in the field into a
form usable by the mapping program.
Accounting Requirements
The function and location of the
equipment are the primary factors in
determining the account in which the
equipment shall be recorded. The
components of the GPS shall be
accounted for as follows:
1. Remote and Base Station
Equipment. The cost of the equipment,
both remote and fixed, shall be
capitalized in a subaccount of Account
391, Office Furniture and Equipment.
2. GPS Program and Conversion
Software for Mapping. The cost of GPS
program and conversion software shall
be capitalized in a subaccount of

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
Account 391, Office Furniture and
Equipment.
3. GPS/GIS Field Inventory of System.
The cost of performing a GPS/GIS
survey and field inventory of the
existing system, by either a consultant
or the utility’s own forces, shall be
charged to Account 588, Miscellaneous
Distribution Expenses.
140 Radio-Based Automatic Meter
Reading Systems
Radio-based automatic meter reading
technology allows meters equipped with
a low-power radio device called an ERT
(Encoder, Receiver, Transmitter) to be
read from a remote location. The ERT
device can either be retrofitted to an
existing meter or purchased installed in
a new meter. The ERT device ‘‘encodes’’
energy consumption and transmits this
information to a radio transceiver
equipped handheld computer. The data
collected and stored in the handheld
computer is then uploaded to a billing
computer using specialized software for
that purpose.
Accounting Requirements
The function of the equipment is the
primary factor in determining the
account in which the equipment shall
be recorded. The components of the
radio-based automatic meter reading
system shall be recorded in Account
370, Meters. The cost of the meter
reader encoding device and retrofitting
the meter with the meter reader unit
shall be capitalized to the cost of the
existing meter. Any associated operating
expenses shall be charged to Account
586, Meter Expenses, with maintenance
expenses charged to Account 597,
Maintenance of Meters.
Separate continuing property records
shall be established for the meters,
either fitted or retrofitted with the
device; the handheld computer; and the
upload software. The meters and
handheld computer shall be depreciated
over the manufacturer’s estimated
useful service life. The upload software
shall be depreciated over the estimated
useful service life of the program not to
exceed 5 years.
*
*
*
*
*
23. In Section 1767.41, Interpretations
Nos. 601, 602, 603, 604, 606, 608, 618,
627, and 628 are revised to read as
follows:
*
*
*
*
*
601 Employee Benefits
The costs of employees’ fringe
benefits (hospitalization, retirement,
holiday, sick and vacation pay, etc.)
shall be accumulated in an appropriate
clearing account and allocated monthly
on the basis of payroll. Vacation costs

shall be accrued monthly by appropriate
credits to an accrual account. These
monthly accruals shall be allocated on
the basis of direct payroll costs to
construction, retirement, and the
applicable operations, maintenance, and
administrative expense accounts.
Sick leave costs are not normally
accrued unless the employee is entitled
to be paid for accumulated sick leave at
the termination of employment. Salary
payments and the associated employee
pensions and benefits and social
security and other payroll taxes for an
employee who is actually sick shall be
charged to the same account or accounts
to which his or her salary is normally
charged.
602 Compensated Absences
Statement of Financial Accounting
Standards No. 43, Accounting for
Compensated Absences (Statement No.
43), requires employers to accrue a
liability as an employee earns the right
to be paid for future absences. Four
criteria were established for this accrual:
1. The employer’s obligation for
payment for future absences is
attributable to employees’ services
already performed.
2. The obligation relates to employee
rights which vest or accumulate. Vested
rights are considered those for which
the employer is obligated to make
payment even if the employee
terminates. Rights which accumulate are
those earned but unused rights to
compensated absences which may be
carried forward to one or more periods,
subsequent to the period in which they
are earned.
3. Payment of the compensation is
probable.
4. The amount can be reasonably
estimated.
A company’s liability shall be
estimated based upon payments it
expects to make as a result of
employees’ work already performed. If a
reasonable estimate cannot be made, the
company shall disclose that fact in the
financial statements.
Statement No. 43 does not apply to
severance or termination pay,
postretirement benefits, deferred
compensation, stock or stock options,
group insurance, or other long-term
fringe benefits.
The entries required to account for the
accrual of compensated absences are as
follows:
Dr. 435.1, Cumulative Effect on Prior Years
of a Change in Accounting Principle
Cr. 242.3, Accrued Employees’ Vacation and
Holidays
To record the liability for benefits earned in
prior years.
Dr. 107, Construction Work in Progress

42323

Dr. 108.8, Retirement Work in Progress
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Cr. 242.3, Accrued Employees Vacation and
Holidays
To record the liability for benefits earned in
the current period.

603 Employee Retirement and Group
Insurance
Some borrowers have group insurance
or retirement plans or both for their
employees. As a general rule the cost of
these programs is borne partially by the
cooperative and partially by its
employees. The cooperative may pay
the full cost in advance and recover the
employee’s share through payroll
deductions. The accounting for these
transactions is as follows:
1. The cooperative’s advanced
payment of premiums on insurance and
retirement agreements shall be charged
to Account 165, Prepayments, for the
employers portion, and Account 143,
Other Accounts Receivable, for the
employee’s portion.
2. The cost of the employer’s portion
of a retirement and group insurance
program shall be charged to
construction and retirement activities
and the applicable operations,
maintenance, and administrative
expense accounts based upon a specific
identification with employees’ labor
costs charged therein or, in the absence
of specific employee identification,
based upon direct labor dollars or direct
labor hours depending upon which
allocation technique provides the most
equitable distribution of costs.
604 Deferred Compensation
Many utilities participate in the
NRECA Deferred Compensation
Program. Based upon the provisions of
the program, the following accounting
entries shall be made:
Dr. 186.XX, Miscellaneous Deferred Debits—
Deferred Compensation
Cr. 228.3, Accumulated Provision for
Pensions and Benefits
To increase the deferred compensation
provision by the amount of the annual
deposit to NRECA’s Deferred
Compensation Fund.
Dr. 128, Other Special Funds—Deferred
Compensation
Cr. 131.1, Cash—General
To record the annual deposit to NRECA’s
Deferred Compensation Fund.
Dr. Construction Work in Progress,
Retirement Work in Progress, or the
Various Operations, Maintenance, and
Administrative Expense Accounts, as
appropriate.
Cr. 186.XX, Miscellaneous Deferred Debits—
Deferred Compensation
To record monthly accrual of deferred
compensation.

42324

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

Note: If an employee joins the deferred
compensation program during the year, use
entry #1 to record the additional deposit to
the NRECA Deferred Compensation Fund
and increase the monthly accrual in entry #2
to reflect this deposit.

NRECA provides borrowers that
participate in the deferred
compensation program with an annual
account statement disclosing the
activity for each Homestead Fund
investment including the number of
shares owned, interest income, dividend
income, capital gains/losses, and the
value of the shares owned at statement
date. Funds may be invested in the
Short-term Bond Fund, the Value Fund,
the Short-term Government Securities
Fund, and the Daily Income Fund.
Depending upon the Homestead Fund
selected, invested funds may earn
interest and dividend income and may
experience unrealized holding gains or
losses. Based upon the information
provided on the annual statement, the
following journal entries shall be
recorded to recognize the increase or
decrease in the fund assets:
Dr. 128, Other Special Funds—Deferred
Compensation
Cr. 419, Interest and Dividend Income
Cr. 421, Miscellaneous Nonoperating Income
To record an increase in the fund value as
of December 31, 19xx, resulting from
interest and dividend income and from
unrecognized holding gains on trading
securities.
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Cr. 228.3, Accumulated Provision for
Pensions and Benefits
To record an increase in the liability to the
employee resulting from an increase in the
investment account.
Dr. 426.5, Other Deductions
Cr. 128, Other Special Funds—Deferred
Compensation
To record a decrease in fund value as of
December 31, 19xx, resulting from
unrecognized holding losses on trading
securities.
Dr. 228.3, Accumulated Provision for
Pensions and Benefits
Cr. Various Operations, Maintenance, and
Administrative Expense Accounts
To record a decrease in the liability to the
employee resulting from a decrease in the
investment account.

Payments made to participating
employees because of retirement or
separation for other reasons shall be
recorded using the following entries:
Dr. 131.1, Cash—General
Cr. 128, Other Special Funds—Deferred
Compensation
To record the receipt of funds from NRECA.
and
Dr. 228.3, Accumulated Provision for
Pensions and Benefits
Cr. 131.1, Cash—General

To record payment to employee for deferred
compensation.

If the borrower has elected to bear the
market risk of the funds which
guarantee that the amount of money an
employee receives will not be less than
the amount of salary deferred, the
following entry shall be recorded if total
payment(s) from NRECA are less than
the amount of salary deferred:
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Cr. 131.1, Cash—General
To record payment to employee for deferred
compensation. Payment was made because
amount returned did not equal salary
deferred.

Appropriate disclosure of the terms of
the program shall be made in the notes
to the financial statements.
*
*
*
*
*
606

Pension Costs

With the issuance of Statement of
Financial Accounting Standards No. 87,
Employers’ Accounting for Pensions
(Statement No. 87), there have been
significant changes in the accounting
and reporting requirements relating to
pension costs. This section will
highlight the accounting and reporting
requirements for the major types of
pension plans. It should be noted,
however, that the definitions and
accounting procedures outlined in this
section relate to financial accounting
and they may differ from those used for
tax accounting.
Defined Benefit Pension Plans
A defined benefit pension plan is a
plan that defines an amount of pension
benefit to be provided, usually as a
function of one or more factors such as
age, years of service, or compensation.
In a defined benefit plan, the employer
promises to provide, in addition to
current wages, retirement income
payments in future years after the
employee retires or terminates service.
Generally, the amount of benefit to be
paid depends upon a number of future
events that are incorporated into the
plan’s benefit formula, after including
how long the employee and any
survivors live, how many years of
service the employee renders, and the
employee’s compensation in the years
immediately before retirement or
termination.
Under a defined benefit plan, the
determination of pension costs, assets,
liabilities, and the disclosures in the
financial statements require many
calculations and assumptions to be
made. This section provides a general
overview of the accounting and
reporting requirements associated with

a defined benefit pension plan. Consult
Statement No. 87 for guidance in
making the necessary calculations and
assumption.
The accounting and reporting
requirements related to a defined benefit
pension plan are as follows:
1. The following components shall be
included in the periodic recognition of
net pension cost by an employer
sponsoring a defined benefit pension
plan:
a. The service cost component
recognized in a period shall be
determined as the actuarial present
value of benefits attributed by the
pension plan formula to employee
service during that period. The
measurement of the service cost
component requires use of an
attribution method and assumptions.
b. The interest cost component
recognized in a period shall be
determined as the increase in the
projected benefit obligation due to the
passage of time. Measuring the projected
benefit obligation as a present value
requires accrual of an interest cost at
rates equal to the assumed discount
rates.
c. For a funded plan, the actual return
on plan assets, if any, shall be
determined based upon the fair value of
plan assets at the beginning and the end
of the period, adjusted for contributions
and benefit payments.
d. Plan amendments (including
initiation of a plan) often include
provisions that grant increased benefits
based upon services rendered in prior
period. Because plan amendments are
granted with the expectation that the
employer will realize economic benefits
in future period, Statement No. 87 does
not require the cost of providing such
retroactive benefits (prior service cost)
to be included in net periodic pension
cost entirely in the year of the
amendment but provides for recognition
during the future service periods of
those employees active at the date of the
amendment who are expected to receive
benefits under the plan.
The cost of retroactive benefits
(including benefits that are granted to
retirees) is the increase in the projected
benefit obligation at the date of the
amendment. Except as noted below,
prior service cost shall be amortized by
assigning an equal amount to each
future period of service of each
employee active at the date of the
amendments who is expected to receive
benefits under the plan. If all or almost
all of the plan’s participants are
inactive, the cost of retroactive plan
amendments affecting benefits of
inactive participants shall be amortized
based upon the remaining life

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
expectancy of those participants rather
than the remaining service period.
To reduce the complexity and detail
of the computations required, consistent
use of an alternative amortization
approach that more rapidly reduces the
unrecognized cost of retroactive
amendments is acceptable. For example,
a straight-line amortization of the cost
over the average remaining service
period of employees expected to receive
benefits under the plan is acceptable.
The alternative method used shall be
disclosed.
In some situations, a history of regular
plan amendments and other evidence
may indicate that the period during
which the employee expects to realize
economic benefits from an amendment
granting retroactive benefits is shorter
than the entire remaining service period
of the active employees. Identification
of such situations requires an
assessment of the individual
circumstances and the substance of the
particular plan situation. In those
circumstances, the amortization of prior
service cost shall be accelerated to
reflect the more rapid expiration of the
employer’s economic benefits and to
recognize the cost in the periods
benefited.
A plan amendment can reduce rather
than increase the projected benefit
obligation. Such a reduction shall be
used to reduce an existing unrecognized
prior service cost, and the excess, if any,
shall be amortized on the same basis as
the cost of benefit increases.
e. Gains and losses are changes in the
amount of either the projected benefit
obligation or plan assets resulting from
experience different from that assumed
and changes in assumptions. Gains and
losses include amounts that have been
realized. Because gains and losses may
reflect refinements in estimates as well
as real changes in economic values, and
because some gains in one period may
be offset by losses in another or vice
versa, the recognition of gains and
losses as components of net pension
cost of the period in which they arise is
not required.
The expected return on plan assets
shall be determined based upon the
expected long-term rate of return on
plan assets and the market-related value
of plan assets. The market-related value
of plan assets shall be either fair value
or a calculated value that recognizes
changes in fair value in a systematic and
rational manner over not more than 5
years. Different ways of calculating
market-related value may be used for
different classes of assets but the
manner of determining market-related
value shall be applied consistently from
year to year for each asset class.

Asset gains and losses are the
differences between the actual return on
assets during a period and the expected
return on assets for that period. Assets
gains and losses include both changes
reflected in the market-related value of
assets and changes not yet reflected in
the market-related value (that is, the
difference between the fair value of
assets and the market-related value).
Asset gains and losses not yet reflected
in market-related values are not
required to be amortized.
As a minimum, amortization of an
unrecognized gain or loss (excluding
asset gains and losses not yet reflected
in market-related value) shall be
included as a component of net pension
cost for a year if, as of the beginning of
the year, that unrecognized net gain or
loss exceeds 10 percent of the greater of
the projected benefit obligation or the
market-related value of plan assets. If
amortization is required, the minimum
amortization shall be that excess
divided by the average remaining
service period of active employees
expected to receive benefits under the
plan. If all or almost all of a plan’s
participants are inactive, the average
remaining life expectancy of the
inactive participants shall be used
instead of average remaining service
life.
Any systematic method of
amortization of gains and losses may be
used in lieu of the minimum specified
in the previous paragraph provided that
the minimum is used in any period in
which the minimum is greater (i.e.,
reduces the net balance by more), the
method is applied consistently, the
method is applied similarly to both
gains and losses, and the method is
disclosed.
The gain or loss component of net
periodic pension cost shall consist of
the difference between the actual return
on plan assets and the expected return
on plan assets and amortization of the
unrecognized net gain or loss from
previous periods.
2. A liability (unfunded accrued
pension cost) shall be recognized if the
net periodic pension cost recognized
pursuant to Statement No. 87 exceeds
amounts the employer has contributed
to the plan. An asset (prepaid pension
cost) shall be recognized if the net
periodic pension cost is less than the
amounts the employer has contributed
to the plan.
If the accumulated benefit obligation
exceeds the fair value of plan assets, the
employer shall recognize a liability
(including unfunded accrued pension
cost) that is at least equal to the
unfunded accumulated benefit
obligation. Recognition of an additional

42325

minimum liability is required if an
unfunded accumulated benefit
obligation exists and an asset has been
recognized as a prepaid pension cost,
the liability already recognized as
unfunded accrued pension cost is less
than the unfunded accumulated benefit
obligation, or no accrued or prepaid
pension cost has been recognized.
If an additional minimum liability is
recognized, an equal amount shall be
recognized as an intangible asset,
provided that the asset does not exceed
the amount of unrecognized prior
service cost. If an additional liability
required to be recognized exceeds
unrecognized prior service cost, the
excess (which represents a net loss not
yet recognized as a net periodic pension
cost) shall be reported as a separate
component (reduction) of equity.
When a new determination of the
amount of additional liability is made to
prepare a balance sheet, the related
intangible asset and separate component
of equity shall be eliminated or
adjusted, as necessary.
3. An employer sponsoring a defined
benefit pension plan shall disclose the
following information:
a. A description of the plan including
employee groups covered, type of
benefit formula, funding policy, types of
assets held and significant nonbenefit
liabilities, if any, and the nature and
effect of significant matters affecting
comparability of information for all
period presented.
b. The amount of net periodic pension
cost for the period showing separately
the service cost component, the interest
cost component, the actual return on
assets for the period, and the net total
of other components.
c. A schedule reconciling the funded
status of the plan with amounts reported
in the employer’s balance sheet,
showing separately, the fair value of
plan assets, the projected benefit
obligation identifying the accumulated
benefit obligation and the vested benefit
obligation, the amount of unrecognized
prior service cost, the amount of
unrecognized net gain or loss including
asset gains and losses not yet reflected
in market-related value), the amount of
any remaining unrecognized net
obligation or net asset existing at the
date of initial application of Statement
No. 87, the amount of any additional
liability recognized, and the amount of
net pension asset or liability recognized
in the balance sheet (which is the net
result of combining the previous six
items).
d. The weighted-average assumed
discount rate and rate of compensation
increase (if applicable) used to measure
the projected benefit obligation and the

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Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

weighted-average expected long-term
rate of return on plan assets.
e. If applicable, the amount and type
of securities of the employer and related
parties included in plan assets, and the
approximate amount of annual benefits
of employees and retirees covered by
annuity contracts issued by the
employer and related parties. Also, if
applicable, the alternative amortization
periods used.
f. An employer that sponsors two or
more separate defined benefit pension
plans shall determine net periodic
pension cost, liabilities, and assets by
separately applying the provisions of
Statement No. 87 to each plan. In
particular, unless an employer clearly
has a right to use the assets of one plan
to pay benefits of another, a liability
required to be recognized for one plan
shall not be reduced or eliminated
because another plan has assets in
excess of its accumulated benefit
obligation or because the employer has
prepaid pension cost related to another
plan.
The required disclosures may be
aggregated for all of an employer’s
single-employer defined benefit plans,
or plans may be disaggregated into
groups so as to provide the most useful
information. Plans with assets in excess
of the accumulated benefit obligation,
however, shall not be aggregated with
plans that have accumulated benefit
obligations that exceed plan assets.
Annuity Contracts
An annuity contract is a contract in
which an insurance company
unconditionally undertakes a legal
obligation to provide specified benefits
to specific individuals in return for a
fixed consideration or premium. An
annuity contract is irrevocable and
involves the transfer of significant risk
from the employer to the insurance
company. Some annuity contracts
(participating annuity contracts) provide
that the purchaser (either the plan or the
employer) may participate in the
experience of the insurance company.
Under these contracts, the insurance
company ordinarily pays dividends to
the purchaser. If the substance of a
participating contract is such that the
employer remains subject to all or most
of the risks and rewards associated with
the benefit obligation covered and the
assets transferred to the insurance
company, that contract is not an annuity
contract for purposes of Statement No.
87.
To the extent that benefits currently
earned are covered by annuity contracts,
the cost of these benefits shall be the
cost of purchasing the contracts, except
as noted below. That is, if all benefits

attributed by the plan’s benefits formula
to service in the current period are
covered by nonparticipating annuity
contracts, the cost of the contracts
determines the service cost component
of net pension cost for that period.
Benefits provided by the pension
benefit formula beyond benefits
provided by annuity contracts (for
example, benefits related to future
compensation levels) shall be accounted
for according to the provisions
applicable to plans not involving
insurance contracts.
Benefits covered by annuity contracts
shall be excluded from the projected
benefit obligation and the accumulated
benefit obligation. Except as noted
below, annuity contracts shall be
excluded from plan assets.
Some annuity contracts provide that
the purchaser (either the plan or the
employer) may participate in the
experience of the insurance company.
Under these contracts, the insurance
company ordinarily pays dividends to
the purchaser, the effect of which is to
reduce the cost of the plan. The
purchase price of a participating
annuity contract ordinarily is higher
than the price of an equivalent contract
without participation rights. The cost of
the participation right shall be
recognized, at the date of purchase, as
an asset. In subsequent periods, the
participation right shall be measured at
its fair value if the contract is such that
the fair value is reasonably estimable.
Otherwise, the participation right shall
be measured at its amortized cost (not
in excess of its net realizable value), and
the cost shall be amortized
systematically over the expected
dividend period under the contract.
Other Contracts with Insurance
Companies
Insurance contracts that are, in
substance, equivalent to the purchase of
annuities shall be accounted for as such.
Other contracts with insurance
companies shall be accounted for as
investments and measured at fair value.
For some contracts, the best available
evidence of fair value may be contract
value. If a contract has a determinable
cash surrender value or conversion
value, that is presumed to be its fair
value.
Defined Contribution Plans
A defined contribution pension plan
is a plan that provides pension benefits
in return for services rendered, provides
an individual account for each
participant, and has terms that specify
how contributions to the individual’s
accounts are to be determined rather
than the amount of pension benefits the

individual is to receive. Under a defined
contribution plan, the pension benefits
a participant will receive depend only
upon the amount contributed to the
participant’s account, the returns earned
on investments of those contributions,
and forfeitures of other participants’
benefits that may be allocated to the
participant’s account.
To the extent that a plan’s defined
contributions to an individual’s account
are to be made for periods in which that
individual renders services, the net
pension cost for a period shall be the
contribution called for in that period. If
a plan calls for contributions for periods
after an individual retires or terminates,
the estimated cost shall be accrued
during the employee’s service period.
An employer that sponsors one or
more defined contribution plans shall
disclose the following separately from
its defined benefit plan disclosures:
1. A description of the plan(s)
including employee groups covered, the
basis for determining contributions, and
the nature and effect of significant
matters affecting comparability of
information for all periods presented.
2. The amount of cost recognized
during the period.
A pension plan having characteristics
of both a defined benefit plan and a
defined contribution plan requires
careful analysis. If the substance of the
plan is to provide a defined benefit, as
may be the case with some ‘‘target
benefit’’ plans, the accounting and
disclosure requirements shall be
determined in accordance with the
provisions applicable to a defined
benefit plan.
Multiemployer Plans
A multiemployer plan is a pension
plan to which two or more unrelated
employers contribute, usually pursuant
to one or more collective-bargaining
agreements. A characteristic of
multiemployer plans is that assets
contributed by one participating
employer may be used to provide
benefits to employees of other
participating employers since assets
contributed by an employer are not
segregated in a separate account or
restricted to provide benefits only to
employees of that employer.
An employer participating in a
multiemployer plan shall recognize as
net pension cost, the required
contribution for the period and shall
recognize as a liability, any
contributions due and unpaid. The
required contribution includes both
current costs and prior service costs. If
an employer elects to fund prior service
cost in full at the inception of the plan,
the total payment becomes the

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
employer’s required contribution, and
accordingly, its pension cost for the
period.
The following provisions are
applicable to RUS borrowers
participating in a multiemployer
pension plan:
1. An electric utility participating in
a multiemployer plan may defer current
period pension expenses if the
provisions of Statement of Financial
Accounting Standards No. 71
(Statement No. 71), Accounting for the
Effects of Certain Types of Regulation,
are applied.
Under the provisions of Statement No.
71, pension costs may be deferred
provided such costs are recovered
through future rates.
2. An electric utility instituting an
amendment to the NRECA Retirement
and Security plan enters into a
contractual agreement to pay the costs
incurred (prior service pension costs)
for the amendment. In such cases, the
agreement is noncancelable and payable
regardless of continued participation in
the plan.
Since the utility is unconditionally
committed to making these payments
and such payments are not contingent
upon the utility’s continued
participation in the plan, the
recognition of that liability is
appropriate. The costs associated with
this liability shall be expensed, in their
entirety, when the liability is
recognized.
The accounting journal entries
required to record the transactions
associated with a multiemployer
pension plan are as follows:
Sample 1—Current Pension Expense
The journal entry required to record the
normal costs associated with the NRECA
Retirement and Security Program is as
follows:
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
Cr. 131.1, Cash—General
To record the payment of pension costs to
NRECA.
Note: This entry shall not be recorded
during the moratorium.
Sample 2—Prior Service Pension Expense
The journal entries required to record the
prior service costs associated with the
NRECA Retirement and Security Program are
as follows:
1. If the RUS borrower elects to pay the
prior service pension costs in full, and there
is no deferral of costs under the provision of
Statement No. 71, the following entry shall
be recorded:
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Dr. 107, Construction Work-in-Progress

Dr. 108.8, Retirement Work-in-Progress
Cr. 131.1, Cash—General
To record the payment of prior service
pension costs to NRECA.
2. If the RUS borrower elects to finance
prior service pension costs over a period of
years and there is no deferral of costs under
the provisions of Statement No. 71, the
following entries shall be recorded:
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
Cr. 224, Other Long-Term Debt
To record the liability to NRECA for prior
service pension costs.
Dr. 224, Other Long-Term Debt
Dr. 427, Interest on Long-Term Debt
Cr. 131.1, Cash—General
To record the annual payment to NRECA for
prior service pension costs.
3. If the RUS borrower elects to finance
prior service pension costs over a period of
years and such costs are being deferred and
amortized in accordance with the provisions
of Statement No. 71, the following entries
shall be recorded:
Dr. 182.3, Other Regulatory Assets
Cr. 224, Other Long-Term Debt
To record the liability to NRECA for prior
service pension costs.
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
Cr. 182.3, Other Regulatory Assets
To record the amortization of deferred prior
service pension costs.
Dr. 224, Other Long-Term Debt
Dr. 427, Interest on Long-Term Debt
Cr. 131.1, Cash—General
To record the annual payment to NRECA for
prior service pension costs.
4. If the RUS borrower elects to pay the
prior service pension costs in full and such
costs are being deferred and amortized in
accordance with the provisions of Statement
No. 71, the following entries shall be
recorded:
Dr. 182.3, Other Regulatory Assets
Cr. 131.1, Cash—General
To record the payment to NRECA for prior
service pension costs.
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
Cr. 182.3, Other Regulatory Assets
To record the amortization of deferred prior
service pension costs.

It should be noted that although the
above entries relate specifically to the
NRECA Retirement and Security
Program, they are applicable to all
multiemployer pension plans.
An employer that participates in one
or more multiemployer plans shall
disclose the following separately from
disclosures for a single-employer plan:
1. A description of the multiemployer
plan(s) including the employee groups
covered, the type of benefits provided

42327

(defined benefit or defined
contribution), and the nature and effect
of significant matters affecting
comparability of information for all
periods presented.
2. The amount of cost recognized
during the period.
Multiple-Employer Plans
A multiple-employer plan is, in
substance, aggregations of singleemployer plans combined to pool their
assets for investment purposes to reduce
the cost of plan administration. Under a
multiple-employer plan, assets are
segregated and specifically identified to
an employer. In addition, such plans
may have features that allow
participating employers to have
different benefit formulas. Such plans
shall be considered single-employer
plans for financial accounting purposes
and each employer’s accounting shall be
based upon its respective interest in the
plan.
*
*
*
*
*
608 Training Costs, Attendance at
Meetings, Etc.
Utilities engage in many types of
training programs. Seminars are
conducted for directors, managers,
office managers, attorneys, engineers,
and others. Bookkeepers and office
managers attend accountants’ meetings.
Safety engineers attend safety schools
and subsequently conduct regular safety
meetings at the cooperative. Costs
incurred for the various types of training
activities shall be accounted for as
follows:
1. Managers’ and directors’ expenses
to attend the NRECA national and state
conventions shall be charged to Account
930.2, Miscellaneous General Expenses.
2. Management or engineering
seminar fees, salary time attending such
seminars including the associated
pensions and benefits expense and
payroll taxes, and the related per diem
and expenses shall be charged to the
functional expense accounts. Salaries
paid to employees shall also be charged
to the appropriate functional expense
account. Fees and expenses for
directors’ attendance shall be charged to
Account 930.2, Miscellaneous General
Expenses.
3. When the office manager,
bookkeeper, or work order clerk attends
a state or regional accounting meeting,
their salary time and the associated
employee pensions and benefits and
social security and other payroll taxes
shall be charged to the account to which
the employees’ time is ordinarily
charged.
4. Employees’ salary time employee
and the associated pensions and

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Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

benefits and social security and other
payroll taxes spent attending regular
safety meetings conducted by the
cooperative shall be charged to the
account to which the employees’ time is
ordinarily charged.
5. A safety engineer’s salary time and
the associated employee pensions and
benefits and social security and other
payroll taxes spent attending a
statewide safety school shall be charged
to Account 925, Injuries and Damages.
6. The salary time and the associated
employee pensions and benefits and
social security and other payroll taxes
spent by a manager or line foreman
conducting weekly safely meetings shall
be charged to the appropriate functional
expense accounts including Account
590, Maintenance, Supervision and
Engineering, and Account 920,
Administrative and General Services.
*
*
*
*
*
618 Theft Losses not Covered by
Insurance
Utilities may suffer losses as a result
of thefts of cash, materials and supplies,
equipment, or electric plant-in-service
that is not covered by insurance. The
charges for nominal uninsured losses
shall be recorded in the following
accounts:
1. Cash—Account 924, Property
Insurance, shall be charged.
2. Plant materials and operating
supplies—Account 163, Stores Expense
Undistributed, shall be charged.
3. Equipment—Account 163, Stores
Expense Undistributed, shall be charged
for stores equipment; and Account 184,
Transportation Expense—Clearing, for
transportation and garage equipment.
The appropriate miscellaneous
operations or administrative expense
account (Account 506, 524, 539, 549,
566, 588, 905, 910, 916, or 930.2, as
appropriate) shall be charged for all
other equipment.
4. Electric Plant-in-Service—A
retirement work order shall be prepared
for electric plant constituting a unit of
property. The loss due to retirement
shall be charged to Account 108.6,
Accumulated Provision for Depreciation
of Distribution Plant. If the plant does
not constitute a retirement unit, the loss
shall be charged to the appropriate
maintenance expense account.
*
*
*
*
*
627

Postretirement Benefits

Statement of Financial Accounting
Standards No. 106, Employers’
Accounting for Postretirement Benefits
Other than Pensions (Statement No.
106), requires reporting entities to
accrue the expected cost of

postretirement benefits during the years
the employee provides service to the
entity. For purposes of applying the
provisions of Statement No. 106,
members of the board of directors are
considered to be employees of the
cooperative. Prior to the issuance of
Statement No. 106, most reporting
entities accounted for postretirement
benefit costs on a ‘‘pay-as-you-go’’ basis;
that is, costs were recognized when
paid, not when the employee provided
service to the entity in exchange for the
benefits.
As defined in Statement No. 106, a
postretirement benefit plan is a deferred
compensation arrangement in which an
employer promises to exchange future
benefits for an employee’s current
services. Postretirement benefit plans
may be funded or unfunded.
Postretirement benefits include, but are
not limited to, health care, life
insurance, tuition assistance, day care,
legal services, and housing subsidies
provided outside of a pension plan.
This statement applies to both written
plans and to plans whose existence is
implied from a practice of paying
postretirement benefits. An employer’s
practice of providing postretirement
benefits to selected employees under
individual contracts with specified
terms determined on an employee-byemployee basis does not, however,
constitute a postretirement benefit plan
under the provisions of this statement.
Postretirement benefit plans generally
fall into three categories: singleemployer defined benefit plans, multiemployer plans, and multiple-employer
plans.
The accounting requirements set forth
in this interpretation focus on singleand multiple-employer plans. The
accounting requirements set forth in
Statement No. 106 for multiemployer
plans or defined contribution plans
shall be adopted for borrowers electing
those types of plans.
Under the provisions of Statement No.
106, there are two components of the
postretirement benefit cost: the current
period cost and the transition
obligation. The transition obligation is a
one-time accrual of the costs resulting
from services already provided.
Statement No. 106 allows the transition
obligation to be deferred and amortized
on a straight-line basis over the average
remaining service period of the active
employees. If the average remaining
service life of the employees is less than
20 years, a 20-year amortization period
may be used.
Accounting Requirements
All RUS borrowers must adopt the
accrual accounting provisions and

reporting requirements set forth in
Statement No. 106. The transition
obligation and accrual of the current
period cost must be based upon an
actuarial study. This study must be
updated to allow the borrower to
comply with the measurement date
requirements of Statement No. 106;
however, the study must, at a minimum,
be updated every five years. RUS will
not allow electric borrowers to account
for postretirement benefits on a ‘‘pay-asyou-go’’ basis.
The deferral and amortization of the
transition obligation does not require
RUS approval provided that it complies
with the provisions of Statement No.
106. If, however, a borrower elects to
expense the transition obligation in the
current period and subsequently defer
this expense in accordance with
Statement of Financial Accounting
Standards No. 71, Accounting for the
Effects of Certain Types of Regulation,
the deferral must be approved by RUS.
In those states in which the commission
will not allow the recovery of the
transition obligation through future
rates, the transition obligation must be
expensed, in its entirety, in the year in
which Statement No. 106 is adopted. A
portion of the transition obligation may
be charged to construction and
retirement activities provided such
charges are properly supported.
Effective Date and Implementation
For plans outside the United States
and for defined benefit plans of
employers that (a) are nonpublic
enterprises and (b) sponsor defined
benefit postretirement plans with no
more than 500 plan participants in the
aggregate, Statement No. 106 is effective
for fiscal years beginning after December
15, 1994. For all other plans, Statement
No. 106 is effective for fiscal years
beginning after December 15, 1992.
RUS borrowers must comply with the
implementation dates set forth in
Statement No. 106. At the time of the
adoption of Statement No. 106, rates
must be in place sufficient to recover
the current period expense and any
amortization of the transition obligation.
A copy of a board resolution or
commission order, as appropriate,
indicating that the transition obligation
and current period expense have been
included in the borrower’s rates must be
submitted to RUS.
Accounting Journal Entries—Transition
Obligation
The journal entries required to record
the transition obligation are as follows:
1. If the borrower elects to expense
the transition obligation in the current

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
period and there is no deferral of costs,
the following entry shall be recorded:

To record cash payments on a ‘‘pay-as-yougo’’ basis for postretirement benefits.

Dr. 435.1, Cumulative Effect on Prior Years
of a Change in Accounting Principle
or
Dr. 926, Employee Pensions and Benefits
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
Cr. 228.3, Accumulated Provision for
Pensions and Benefits
To record the current period recognition of
the transition obligation for postretirement
benefits. Note: A portion of the transition
obligation may be charged to construction
and retirement activities provided such
charges are properly supported.

Accounting Journal Entry—Funding
If a borrower elects to voluntarily
fund its postretirement benefits
obligation in an external, irrevocable
trust, the following entry shall be
recorded:

2. If the borrower elects to defer and
amortize the transition obligation in
accordance with the provisions of
Statement No. 71, the following entry
shall be recorded:
Dr. 182.3, Other Regulatory Assets
Cr. 228.3, Accumulated Provision for
Pensions and Benefits
To record the deferral of the transition
obligation under the provisions of
Statement No. 71.
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
Cr. 182.3, Other Regulatory Assets
To record the amortization of postretirement
benefits expenses as they are recovered
through rates in accordance with Statement
No. 71.

3. The deferral and amortization of
the transition obligation under the
provisions of Statement No. 106 is
considered to be an off balance sheet
item. If, therefore, the borrower elects to
defer and amortize the transition
obligation on a straight-line basis over
the average remaining service period of
the active employees or 20 years in
accordance with Statement No. 106, no
entry is required. Instead, the transition
obligation is recognized as a component
of postretirement benefit cost as it is
amortized. It should be noted, however,
that the amount of the unamortized
transition obligation must be disclosed
in the notes to the financial statements.
Accounting Journal Entries—Current
Period Expense
The current period postretirement
expense should be recorded by the
following entry:
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
Cr. 228.3, Accumulated Provision for
Pensions and Benefits
To record current period postretirement
benefit expense.
Dr. 228.3X, Accumulated Provision for
Pensions and Benefits—Funded
Cr. 131.1, Cash—General

Dr. 228.3X, Accumulated Provision for
Pensions and Benefits—Funded
Cr. 131.1, Cash—General
To record the funding of postretirement
benefits expense into an external,
irrevocable trust.

If a borrower elects to voluntarily
fund its postretirement benefits
obligation in an investment vehicle
other than an external, irrevocable trust,
the following entry shall be recorded:
Dr. 128, Other Special Funds
Cr. 131.1, Cash—General
To record the funding of postretirement
benefits expense into an investment
vehicle other than an external, irrevocable
trust.

628 Postemployment Benefits
Statement of Financial Accounting
Standards No. 112, Employers’
Accounting for Postemployment
Benefits (Statement No. 112) establishes
the standards of financial accounting
and reporting for employers who
provide benefits to former or inactive
employees after employment but before
retirement. Inactive employees are those
who are not currently rendering service
to the employer but who have not been
terminated, including employees who
are on disability leave, regardless of
whether they are expected to return to
active service. For purposes of applying
the provisions of Statement No. 112,
former members of the board of
directors are considered to be
employees of the cooperative.
Postemployment benefits include
benefits provided to former or inactive
employees, their beneficiaries, and
covered dependents. They include, but
are not limited to, salary continuation,
supplemental benefits (including
workmen’s compensation), health care,
job training and counseling, and life
insurance coverage. Benefits may be
provided in cash or in kind and may be
paid upon cessation of active
employment or over a specified period
of time.
The cost of providing
postemployment benefits is considered
to be a part of the compensation
provided to an employee in exchange
for current service and should,
therefore, be accrued as the employee
earns the right to be paid for future
postemployment benefits. Applying the
criteria set forth in Statement of

42329

Financial Accounting Standards No. 43,
Accounting for Compensated Absences,
a postemployment benefit obligation is
accrued when all of the following
conditions are met:
1. The employer’s obligation for
payment for future absences is
attributable to employees’ services
already performed;
2. The obligation relates to employee
rights that vest or accumulate. Vested
rights are considered those rights for
which the employer is obligated to make
payment even if the employee
terminates. Rights that accumulate are
those earned, but unused rights to
compensated absences that may be
carried forward to one or more periods
subsequent to the period in which they
are earned;
3. Payment of the compensation is
probable; and
4. The amount can be reasonably
estimated.
If all of these conditions are not met,
the employer must account for its
postemployment benefit obligation in
accordance with Statement of Financial
Accounting Standards No. 5,
Accounting for Contingencies
(Statement No. 5) when it becomes
probable that a liability has been
incurred and the amount of that liability
can be reasonably estimated.
If an obligation for postemployment
benefits is not accrued in accordance
with the provisions of Statement No. 5
or Statement No. 43 only because the
amount cannot be reasonably estimated,
the financial statements should disclose
that fact.
Accounting Requirements
All RUS borrowers must adopt the
accrual accounting provisions and
reporting requirements set forth in
Statement No. 112 as of the statement’s
implementation date. A portion of the
cumulative effect may be charged to
construction and retirement activities
provided such charges are properly
supported. If a borrower elects to defer
the cumulative effect of implementing
Statement No. 112 in accordance with
the provisions of Statement of Financial
Accounting Standards No. 71,
Accounting for the Effects of Certain
Types of Regulation, the deferral must
be approved by RUS.
Effective Date and Implementation
Statement No. 112 is effective for
fiscal years beginning after December
15, 1993. Previously issued financial
statements should not be restated.
RUS borrowers must comply with the
implementation date set forth in
Statement No. 112. At the time of the
adoption of Statement No. 112, rates

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Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations

must be in place sufficient to recover
the current period expense.
Accounting Journal Entries
The journal entries required to
account for postemployment benefits
are as follows:
Dr. 435.1, Cumulative Effect on Prior Years
of a Change in Accounting Principle
Dr. 107, Construction Work in Progress
Dr. 108.8, Retirement Work in Progress
Cr. 228.3, Accumulated Provision for
Pensions and Benefits
To record the cumulative effect of
implementing Statement No. 112.
Note: A portion of the cumulative effect
may be charged to construction and
retirement activities provided such charges
are properly supported. Account 435.1 is
closed to Account 219.2, Nonoperating
Margins.

If the borrower elects to defer and
amortize the cumulative effect in
accordance with the provisions of
Statement No. 71, the following entry
shall be recorded:
Dr. 182.3, Other Regulatory Assets
Cr. 228.3, Accumulated Provision for
Pensions and Benefits
To record the deferral of the cumulative
effect of implementing Statement No. 112
in accordance with the provisions of
Statement No. 71.
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Dr. 107, Construction Work in Progress
Dr. 108.8, Retirement Work in Progress
Cr. 182.3, Other Regulatory Assets
To record the amortization of the cumulative
effect of implementing Statement No. 112
as it is recovered through rates in
accordance with Statement No. 71.
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Dr. 107, Construction Work in Progress
Dr. 108.8, Retirement Work in Progress
Cr. 228.3, Accumulated Provision for
Pensions and Benefits
To record current period postemployment
benefit expense.
Note: If postemployment benefits are
accrued under the criteria set forth in
Statement No. 43, this journal entry is made
on a monthly basis. If, however, the accrual
is based upon the provisions of Statement
No. 5, this is a one-time entry unless the
liability is reevaluated and subsequently
adjusted.

*

*
*
*
*
23. In § 1767.41, Interpretation Nos.
630 and 631 are added in numerical
order to read as follows:
*
*
*
*
*
630 Split Dollar Life Insurance
The National Rural Electric
Cooperative Association Split Dollar
Life Insurance provides life insurance
benefits to cooperative employees. The
benefits provided under this policy
consist of two components, the face

value of the insurance policy and the
accumulated cash surrender value.
While the employee is the owner of the
policy, the employee must sign a
collateral assignment giving the
cooperative absolute right to the cash
surrender value of the policy. Under the
terms of this collateral assignment, the
employee must reimburse the
cooperative for the premiums paid upon
the employee’s termination of
employment or attainment of the age of
62 if the employee wishes to maintain
the insurance coverage. If death occurs
prior to either of these events, the
premiums paid to date by the
cooperative are deducted from the death
benefits payable to the policy
beneficiary.

631 Special Early Retirement Plan

Accounting Requirements
Financial Accounting Standards
Board Technical Bulletin 85–4,
Accounting for Purchase of Life
Insurance (Bulletin 85–4), states that the
amount that could be realized under an
insurance contract as of the date of the
financial statements should be reported
as an asset. The change in the cash
surrender or contract value of that asset
during the period should be reported as
an adjustment to the premiums paid in
determining the expense or income to
be recognized for the period. The
cooperative shall, therefore, record the
cash surrender value of the policy as an
asset because of its absolute right to
receive that value based upon the
employee’s collateral assignment. Any
receivable that may occur as a result of
the employee reimbursement for the
premiums paid is contingent upon the
employee electing to maintain the
insurance coverage after termination of
employment or reaching the age of 62
and is not recorded as an asset on the
cooperative’s records.

The Special Early Retirement Plan
(SERP) being offered through the
National Rural Electric Cooperative
Association (NRECA) constitutes an
amendment to its Retirement and
Security (R&S) program. The SERP is
often chosen as a vehicle through which
the cooperative may reduce the size of
its workforce or replace more highly
paid employees with lower paid entry
level employees. If an employee covered
by an NRECA retirement plan chose to
retire before his/her normal retirement
date, that employee would receive an
actuarially reduced benefit. However,
when a cooperative elects to offer a
SERP, no such reduction is required.
The cooperative selects the criteria
under which an employee will be
eligible to participate such as age, years
of service, or a combination of age and
benefit service requirements. As with
other amendments to the R&S program,
NRECA calculates the cost of the plan
based upon the criteria selected by the
cooperative and allows the cooperative
to pay the cost immediately or on an
installment basis.
Under this plan, the employee
receives full retirement benefits in the
form of either an immediate lump-sum
settlement or annuity payments. It is not
unusual for the cooperative to add an
incentive to encourage participation
such as medical or life insurance, either
in whole or in part, until age 65. The
actuarial analysis provided by NRECA
includes the cost of the SERP and the
estimated reduction and/or increase in
costs associated with Statement of
Financial Accounting Standards No.
106, Employer’s Accounting for
Postretirement Benefits Other Than
Pensions (Statement No. 106).

Accounting Journal Entries
The journal entries required to
account for the NRECA Split Dollar Life
Insurance Program are as follows:

Statement of Financial Accounting
Standards No. 87, Employer’s
Accounting for Pensions (Statement No.
87)

Dr. 124, Other Investments
Cr. Various Operations, Maintenance, and
Administrative Expense Accounts
To record an increase in the cash surrender
value of the insurance contract.
or
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Cr. 124, Other Investments
To record a decrease in the cash surrender
value of the insurance contract.
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
Cr. 131.1, Cash—General
To record the premium cost of the insurance
contract.

In accordance with the provisions of
Statement No. 87, the costs associated
with an amendment to a multiemployer
plan are recognized when they become
due and payable. Since NRECA
calculates the amount due and payable
at the time of the amendment, the entire
amount due, whether paid immediately
or financed through NRECA or any
other institution, must be recognized as
an expense at that time. This cost may,
however, be deferred in accordance
with the provisions of Statement of
Financial Accounting Standards No. 71,
Accounting for the Effects of Certain
Types of Regulation (Statement No. 71).

Federal Register / Vol. 62, No. 151 / Wednesday, August 6, 1997 / Rules and Regulations
Accounting Journal Entries
The journal entry required to record
the additional pension costs associated
with the SERP is as follows:
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
Cr. 131.1, Cash—General
or
Cr. 224, Other Long-Term Debt
To record the prior service pension costs
incurred as a result of adopting the SERP.

If the borrower elects to defer and
amortize the cost in accordance with
Statement No. 71, the following entries
shall be recorded:
Dr. 182.3, Other Regulatory Assets
Cr. 131.1, Cash—General
or
Cr. 224, Other Long-Term Debt
To record, under the provisions of Statement
No. 71, the deferral of the prior service
pension costs incurred as a result of
adopting the SERP.
Dr. Various Operations, Maintenance, and
Administrative Expense Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
Cr. 182.3, Other Regulatory Assets
To record the amortization of deferred prior
service pension costs as they are recovered
through rates in accordance with Statement
No. 71.

Statement No. 106
In the event that net reductions in
postretirement benefits result from this

plan amendment, the reductions are
recognized as follows:
1. The amount of the reduction shall
first reduce any existing unrecognized
prior service cost;
2. Any remaining reductions shall
next reduce any unrecognized transition
obligation; and
3. Any remaining reduction shall be
recognized in a manner consistent with
the accounting for prior service
postretirement benefit costs.
In accordance with Statement No.
106, prior service postretirement benefit
costs are recognized in equal amounts in
each remaining year of service for active
plan participants. Because it is an offbalance sheet item, only a memorandum
entry is required to reduce the amount
of unrecognized prior service cost.
At adoption, Statement No. 106
permitted the recognition of the
transition obligation in one of two ways.
The transition obligation was
recognized over the longer of the
average remaining service period of
current plan participants or 20 years, or
it may have been recognized
immediately. If the delayed recognition
option was chosen under Statement No.
106, this, too, was an off-balance sheet
item that requires only a memorandum
entry to reduce the amount of
unrecognized transition obligation.
However, if the immediate recognition
option was chosen, the cooperative
either recorded the expense in that year
or, with RUS approval, deferred the

42331

expense under the provisions of
Statement No. 71. If the expense were
recorded, in total, in the year of
adoption, no unrecognized transition
obligation remains to reduce. If,
however, the transition obligation was
deferred in accordance with Statement
No. 71, the journal entry required to
effect the reduction in Statement No.
106 expense is as follows:
Dr. 228.3, Accumulated Provision for
Pensions and Benefits
Cr. 182.3, Other Regulatory Assets
To record a reduction in the deferred
Statement No. 106 transition obligation
resulting from the adoption of the SERP.
Note: The dollar value of this entry must
not exceed the deferral shown on the balance
sheet.

If, after the two previous reductions
have been made, any net credit remains,
it shall be recognized in a manner
consistent with prior service costs; that
is, as an off balance sheet item that is
amortized over the remaining service
lives (to full eligibility) of the active
plan participants. The annual
amortization reduces amounts normally
charged to the various operations,
maintenance, and administrative
expense accounts and Account 228.3 as
postretirement benefit expenses.
Dated: July 28, 1997.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 97–20240 Filed 8–5–97; 8:45 am]
BILLING CODE 3410–15–P