Ch. 68: Water Utilities Depreciation Rates

SUMMARY: This rule governs the essential information and procedures for estimating the depreciation rates for the plant of water utilities. 1. Definitions. A. Service Life - The average length of time a unit of equipment will remain in service taking into account factors such as the effect of normal wear and tear, economic and technological obsolescence and public requirements. B. Net Salvage Price - The price that the sale of a unit of equipment will bring upon the end of its useful service life to a utility, less the estimated cost of removal involved in retiring such property. C. Depreciation Rate - This rate is derived by using the following formula: 100% - Net Salvage Price as Annual Depreciation Rate = percent of original cost Service life (in years) 2. Except as provided in Section 3 the following are the maximum depreciation rates which will be allowed by the Commission for ratemaking and accounting purposes. MAXIMUM DEPRECIATION RATES WATER UTILITIES % STRUCTURES Brick, Concrete 2 Frame 3 IMPOUNDING DAMS & RESERVOIRS 1.3 SPRINGS & WELLS 2 INTAKES & SUCTION MAINS 1.5 PURIFICATION SYSTEM Filters (Mfg. in Place) 3 Filters (Package Plant) 3 Chlorinators 10 Chemical Feeders 10 Test Equipment 10 Other Related Equip. 5 PUMPING EQUIPMENT Electric 5 Gas & Oil 5 Hydraulic 5 TRANSMISSION MAINS 1.3 SUBMARINE MAINS 5 DISTRIBUTION MAINS 6" & Larger 1.3 4" & Smaller (Buried & Surface) 3 DISTRIBUTION RESERVOIRS 1 Floating Covers 2 STANDPIPES & TANKS Above Ground (Conc. & Steel) 1.7 Below Ground (Conc.) 1.3 SERVICES Copper 3 C.I. & D.I. (Large) 1.3 Plastic 3 METERS 4 Remote Readers 7.5 HYDRANTS 2 FOUNTAINS & TROUGHS 1 GENERAL EQUIPMENT Office-Electronic 12 Office Furniture 5 Shop 7 Stores 5 TRANSPORTATION Trucks 10 Cars & Pickups 20 Telephone 10 Radio 10 Laboratory 10 Misc

ting Covers 2 STANDPIPES & TANKS Above Ground (Conc. & Steel) 1.7 Below Ground (Conc.) 1.3 SERVICES Copper 3 C.I. & D.I. (Large) 1.3 Plastic 3 METERS 4 Remote Readers 7.5 HYDRANTS 2 FOUNTAINS & TROUGHS 1 GENERAL EQUIPMENT Office-Electronic 12 Office Furniture 5 Shop 7 Stores 5 TRANSPORTATION Trucks 10 Cars & Pickups 20 Telephone 10 Radio 10 Laboratory 10 Misc. Construction 10 Garage 7 Utilities may continue to use rates previously allowed by the Commission until their next rate case after the effective date of this rule. 3. The Commission may allow a utility to use alternative depreciation rates which may be justified using on e or more of the methods described in two manuals published by the National Association of Regulatory Utility Commissioners, Public Utility Depreciation Practices (1968) and Depreciation Practices for Small Water Utilities (1979). Requests to use alternative depreciation rates may be ruled upon by the Director of the Technical Analysis Division, in consultation with the Director of the Finance Division whose decision shall be contained in a written order. This delegation of authority shall not affect the Commission's authority to rule upon requests or review the decision of the Director of Technical Analysis.