# Accounting Requirements for RUS Electric Borrowers

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URL: https://www.frixlaw.com/law-library/documents/fr%3A97-20240

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** August 6, 1997
- **Citation:** 62 FR 42284

## Text

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,

[[Page 42285]]

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 Split-Dollar 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 entry-level 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
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 low-power 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

[[Page 42286]]

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

[[Page 42287]]

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.

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

[[Page 42288]]

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

[[Page 42289]]

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.

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:

Sec. 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

[[Page 42290]]

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 Sec. 1767.41, Interpretation No. 606, Pension Costs), remapping
expenses (See Sec. 1767.41, Interpretation No. 613, Mapping Costs), and
preliminary survey and investigation charges (See Sec. 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:

Sec. 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:

Sec. 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

[[Page 42291]]

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:

Sec. 1767.27 Operation and maintenance expense.

* * * * *

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 Sec. 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 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.

[[Page 42292]]

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 boiler-house 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

[[Page 42293]]

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:

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 Sec. 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

[[Page 42294]]

maintenance of steam structures, the book cost of which is includible
in Account 311, Structures and Improvements. (See Sec. 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 Sec. 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
Sec. 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
Sec. 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 Sec. 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.

[[Page 42295]]

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.
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.

[[Page 42296]]

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 Sec. 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 Sec. 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 Sec. 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 Sec. 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
Sec. 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
Sec. 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

[[Page 42297]]

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.
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.

[[Page 42298]]

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 Sec. 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 Sec. 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
Sec. 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 Sec. 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

[[Page 42299]]

Bridges. (See Sec. 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
Sec. 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.

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.

[[Page 42300]]

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.
* * * * *

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 Sec. 1767.17(a).)

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 Sec. 1767.17(b).)

553 Maintenance of Generating and Electric 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 343, Prime Movers;
Account 344, Generators; and Account 345, Accessory Electric Equipment.
(See Sec. 1767.17(b).)

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 Sec. 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.
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:
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.

[[Page 42301]]

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
Sec. 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.

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

[[Page 42302]]

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 t

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A97-20240. Public record. Not legal advice.