[Federal Register Volume 59, Number 181 (Tuesday, September 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-23164]


[[Page Unknown]]

[Federal Register: September 20, 1994]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 259

[Release No. 35-26124; File No. S7-27-94]
RIN 3235-AG05

 

Annual Reports by Mutual and Subsidiary Service Companies Under 
the Public Utility Holding Company Act of 1935

AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Proposed amendments to form and request for comment.

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SUMMARY: The Commission is requesting public comment upon proposed 
amendments to Form U-13-60, the annual report filed by service company 
subsidiaries of registered holding companies under the Public Utility 
Holding Company Act of 1935 (``Act''). The proposed amendments would 
clarify the requirements for these reports and improve the disclosure 
of financial, accounting and operational information.

DATES: Comments must be submitted on or before November 21, 1994.

ADDRESSES: Comments should be submitted in triplicate to Jonathan G. 
Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, 
N.W., Mail Stop 6-9, Washington, D.C. 20549. Comment letters should 
refer to File No. S7-27-94. All comment letters received will be made 
available for public inspection and copying in the Commission's Public 
Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549.

FOR FURTHER INFORMATION CONTACT: Brian P. Spires, Attorney, (202) 942-
0557, Joanne C. Rutkowski, Assistant Director, (202) 942-0545, Robert 
P. Wason, Chief Financial Analyst, (202) 942-0543, or David E. Marsh, 
Accountant, (202) 942-0558, Office of Public Utility Regulation, 
Division of Investment Management, Securities and Exchange Commission, 
450 Fifth Street, N.W., Washington, D.C. 20549.

SUPPLEMENTARY INFORMATION: The Commission is requesting comment on 
proposed amendments to Form U-13-60 [17 CFR Part 259] under the Act [15 
U.S.C. 79 et seq.]. The Annual Report for Mutual and Subsidiary Service 
Companies on Form U-13-60 was adopted December 29, 1939 and last 
revised on February 22, 1980 (Holding Co. Act Release No. 21447).

I. Introduction

    Service company subsidiaries of registered holding companies serve 
the needs of associate companies by providing managerial, 
administrative, technical and other services. Section 13(b) of the Act 
requires that contracts by which service companies perform services or 
construction work for, or sell goods to, associate companies must be 
performed at cost, fairly and equitably allocated among such 
companies.1
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    \1\``Service company'' is not a defined term under the Act. 
Rather, a service company is a subsidiary company of a registered 
holding company that the Commission has found, pursuant to rule 88, 
to be ``so organized and conducted . . . as to meet the requirements 
of section 13(b) of the Act with respect to reasonable assurance of 
efficient and economical performance of services or construction or 
sale of goods for the benefit of associate companies, at cost fairly 
and equitable allocated among them (or as permitted by [rule] 90).'' 
Under rule 90, these transactions are generally conducted at cost. 
Rule 92, however, applies a lower-of-cost-or market standard to 
transfers of seller-produced goods.
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    Commission rules set forth accounting and reporting requirements 
with respect to these intrasystem transactions. Under rule 93, the 
accounts and records of a service company subsidiary of a registered 
holding company must be consistent with the accounts required by the 
Uniform System of Accounts for Mutual and Subsidiary Service Companies 
(``Uniform System of Accounts'').2 Rule 94 requires the filing of 
an annual report on Form U-13-60 by every service company.3
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    \2\The Uniform System of Accounts [17 CFR 256] was adopted May 
12, 1936 and amended February 2, 1979 (Holding Co. Act Release No. 
20910). See also 17 CFR 250.93, 250.94.
    \3\See Holding Co. Act Release No. 1858 (Dec. 29, 1939) 
(adopting Form U-13-60); Holding Co. Act Release No. 21447 (Feb. 22, 
1980) (amendment).
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    On November 4, 1992, the Commission, as part of its efforts to 
update and streamline regulation under the Act, proposed certain 
amendments to Form U-13-60.4 The proposed amendment was intended 
to provide the service companies with the flexibility to use accounts 
from the Uniform System of Accounts of the Federal Energy Regulatory 
Commission (``FERC System of Accounts'') in preparing the Form U-13-
60.5
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    \4\See Holding Co. Act Release No. 25668, 57 FR 54025 (Nov. 16, 
1992).
    \5\The FERC System of Accounts prescribes a system of accounting 
for electric-utility companies under the Federal Power Act and 
natural gas companies under the Natural Gas Act.
    The Commission's Uniform System of Accounts prescribes a system 
of accounting specifically for service companies in order to, among 
other things, track reimbursable costs and charges to customers and 
account for compensation for use of capital.
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    The Commission received six comment letters addressing the proposed 
form amendment.6 Several commenters noted with approval the 
purpose of the amendment to provide additional flexibility. The 
commenters observed that because the Uniform System of Accounts does 
not always contain accounts needed to classify properly charges 
incurred, the service companies are obliged to use accounts from the 
FERC System of Accounts or classify certain categories of costs 
improperly.7 One commenter stated that, at present, service 
companies are effectively required to maintain two sets of books, one 
using the Uniform System of Accounts, the other using the FERC System 
of Accounts.8 The commenter stated that the proposed amendments 
would greatly simplify the accounting system and permit service 
companies to classify costs more accurately.
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    \6\The six commenters were five registered holding companies, 
American Electric Power Company (``AEP''), The Columbia Gas System, 
Inc. (``Columbia''), Consolidated Natural Gas Company (``CNG''), 
Northeast Utilities (``Northeast''), and New England Electric System 
(``NEES''), and one service company subsidiary of a registered 
holding company, EUA Service Corporation (``EUA'').
    \7\See, e.g., EUA.
    \8\See NEES at 2-3.
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    Other commenters, however, were concerned as to how the 
Commission's proposal would harmonize the FERC System of Accounts with 
the Commission's Uniform System of Accounts. These commenters asked 
that the Commission clarify its proposal. In view of these comments, 
the Commission is today resubmitting the proposal for public comment.
    In response to these comments and upon further consideration, the 
Commission has modified its proposal. Initially, the Commission had 
requested comments on the need to amend the Uniform System of Accounts 
to reflect the proposed changes to Form U-13-60. On balance, however, 
it does not appear necessary to amend the Commission's Uniform System 
of Accounts in the event that Form U-13-60 is amended. The Commission's 
Uniform System of Accounts follows the FERC System of Accounts, with 
modifications, and contemplates that accounts and financial statements 
of service companies will comply with that system.9 As the 
commenters suggest, the proposed amendments to Form U-13-60 will 
effectively incorporate in the Uniform System of Accounts additional 
accounts corresponding to the FERC System of Accounts.10
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    \9\Specifically, Sec. 256.01-7(g) provides:
    The Uniform System of Accounts promulgated by the Federal Energy 
Regulatory Commission, as amended from time to time, and the 
interpretations thereof adopted from time to time by the Federal 
Energy Regulatory Commission, . . . shall be complied with unless 
expressly inconsistent with the requirements of this system.
    17 CFR 256.01-7(g).
    \1\0See CNG, EUA and NEES.
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    The Commission has modified its proposal to add several new 
schedules to Form U-13-60 and to modify the existing schedules by 
adding new accounts and other requirements. The amendments are intended 
to result in more detailed disclosure of certain categories of 
information, and to ensure generally that accounting for services 
rendered to a system utility is consistent with the accounting for such 
expenses on the utility's balance sheet and income statement. In 
addition, the amendments will reduce some regulatory burdens by 
creating or modifying dollar thresholds for reporting purposes and by 
simplifying the reporting requirements.11
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    \1\1The amendments will also make certain changes in format to 
facilitate Commission review, and various other minor conforming 
revisions.
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    The various accounts proposed to be added to Form U-13-60 
correspond, in each instance, to accounts under the FERC System of 
Accounts.

A. Instructions for Use of Form U-13-60

    The Commission proposes to amend the instructions to provide that 
use of the new accounts is mandatory. The Commission has considered 
whether the use of the new accounts should be discretionary or 
mandatory. On the one hand, the mandatory use of these accounts could 
entail additional expense for some companies.12 On the other hand, 
a requirement of mandatory use would help to ensure fuller 
identification of charges to facilitate accounting by the associate 
companies and regulatory examination. The Commission believes that the 
goal of improved disclosure should prevail, but invites particular 
comment on this aspect of the proposed amendments.
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    \1\2It would, however, conform to the current accounting 
practice of others.
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    In addition, the amended instructions would require service company 
charges to be presented in the accompanying schedules on an ``as 
billed'' basis.13 At present, the costs of a transaction may be 
classified differently on the financial statements of its associate 
company customers. For example, salary expenses associated with the 
construction of a transmission line may be classified as expenses on 
the income statement of the service company but as capital items on the 
balance sheet of the associate company. Consistent treatment of these 
items should aid ratemakers and others in identifying service company 
charges on the financial statements of associate public-utility 
companies. The Commission requests comment, in particular, on the need 
for a phase-in period of up to three years for this requirement.
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    \1\3``As billed'' refers to the treatment of an item on the 
financial statements of an associate company customer.
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B. Schedule II, Service Company Property

    The Commission proposes to add a new Account 101.1--Property Under 
Capital Leases to this schedule.14 Capitalized lease assets are 
not currently reported in Form U-13-60. The amendment is necessary to 
provide disclosure concerning this significant category of service 
company property. There would be a corresponding amendment to Schedule 
I, the balance sheet.15
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    \1\4A capital lease is defined in Paragraphs 6(a) and 7 of the 
Statement of Financial Accounting Standards No. 13, Accounting for 
Leases, as a lease meeting one of four specified criteria concerning 
economic indicia of ownership. The criteria include length of lease 
term, present value of lease payments, and provision for transfer or 
purchase of the underlying asset at the lease term.
    \1\5A capital lease generally is recorded on a company's balance 
sheet both as an asset and as a corresponding liability.
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C. Schedule IV, Investments

    Currently, Schedule IV contains three accounts: Account 123--
Investment in Associate Companies; Account 124--Other Investments; and 
Account 136--Temporary Cash Investments. The Commission proposes to add 
a new Account 128--Other Special Funds. Account 128 would include 
investments that have been segregated in special funds for insurance, 
employee pensions, savings, relief, hospital, and other purposes not 
provided for elsewhere. The proposed amendment would provide detail, 
currently lacking, with respect to these investments.

D. Schedule V, Accounts Receivable

    Schedule V requires the reporting of accounts receivable from 
associate companies in Account 146--Accounts Receivable From Associate 
Companies. The Commission is proposing to amend the instructions to 
Schedule V to require identification of associate company receivables 
that have been outstanding for 60-90 days and for more than 90 days 
from the due date. Companies that do not pay in a timely manner are 
effectively subsidized by the other system companies that do timely 
pay. The Commission believes that the proposed amendment will encourage 
service companies to adopt administrative controls to ensure that 
receivables are collected within ninety days.
    The Commission has proposed a $25,000 threshold for reporting under 
this account but requests comment on whether a higher threshold, such 
as a $50,000 limit, as suggested by AEP, would be more appropriate.
    In addition, the Commission is proposing to amend Schedule V to add 
a new Account 143 that would require the reporting of accounts 
receivable from nonassociate companies, to provide more complete 
information in this area.

E. Schedule XIV, Statement of Income

    This schedule, currently under Schedule XV, requires the reporting 
of the income and expenses of the service company. Because the schedule 
does not contain any balance sheet accounts, a service company cannot 
necessarily report an item in a manner consistent with its treatment on 
the books of the associate company customer. As a result, commenters 
have noted that service companies are effectively required to maintain 
two sets of books, one for purposes of Form U-13-60 and the Uniform 
System of Accounts, and another to comply with the FERC System of 
Accounts.16 The Commission is concerned that the current system 
results in unnecessary expense and duplication of effort for system 
companies.
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    \1\6See supra note 8 and accompanying text.
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    Accordingly, the Commission proposes to include two categories of 
expenses, one relating to the income statement and the other relating 
to the balance sheet. A number of new accounts would be added to the 
present income statement accounts. Specifically, the amendment would 
add new Accounts 500-557--Power Production, Accounts 560-598--
Transmission & Distribution Expenses, Accounts 901-905--Customer 
Accounts, and Accounts 906-917--Customer Service & Information. New 
accounts would also be added in Accounts 927--935--Other Administrative 
and General Expenses, Accounts 403--407--Depreciation and Amortization, 
Accounts 409--411.4--Income Taxes, Accounts 426.1--426.5--Other 
Deductions, and Accounts 427--431--Interest Expense. In addition, the 
amended schedule would include the following balance sheet accounts: 
Account 107--Construction Work in Progress, Accounts 108-115--
Accumulated Provision for Depreciation, Account 163--Store Expenses 
Undistributed, Account 174--Miscellaneous Current & Accrued Assets, 
Account 183--Preliminary Engineering, Account 186--Miscellaneous 
Deferred Debits, Account 188--Research & Development, and an unnumbered 
account for other balance sheet expenses. The Commission also proposes 
to add a new income account, Account 419--Interest Income.

F. Schedule XV, Analysis of Charges-Direct vs. Indirect

    Under the current schedule, service companies must report the 
amount of charges to associate and nonassociate companies, and 
categorize the charges as either direct (i.e., a charge for a specific 
service provided to a customer) or indirect (i.e., an allocated charge 
for an overhead expense of the service company). The Commission 
proposes to amend the schedule to require consistent treatment of a 
charge on the books of the service company and its associate company 
customers, to eliminate unnecessary expense and duplication of effort 
in system company accounting.

G. Schedule XX, Other Administrative & General Expenses

    Account 930.1--General Advertising Expenses and Account 930.2--
Miscellaneous General Expenses are currently reported in separate 
unnumbered schedules. The Commission has found that separate reporting 
for these items is unnecessary since historically the amounts involved 
have been immaterial. The Commission proposes to combine the existing 
schedules in a new Schedule XX which would require a detailed 
description of these expenses and other service company billings 
corresponding to Accounts 927-935 of the FERC System of 
Accounts.17
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    \1\7See 18 CFR 101, 201; 17 CFR 256 (the FERC System of Accounts 
and the Uniform System of Accounts, respectively).
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H. Schedule XXII, Other Deductions

    The Commission proposes to combine the requirements of Account 
426.1--Donations, and Account 426.5--Other Deductions, and add Account 
426.2--Life Insurance, Account 426.3--Penalties, and Account 426.4--
Expenditures for Certain Civic, Political and Related Activities in a 
new Schedule XXII.
    The new schedule would require more detailed reporting in Account 
426.5 to the extent that the annual aggregate amount of other 
deductions exceeded $25,000. The Commission believes that $25,000 is an 
appropriate threshold but requests comment on the need for a higher or 
lower threshold.
    In addition, the Commission proposes to modify the reporting 
requirement for Account 408--Taxes, Other than Income Taxes. Based on 
its experience in this area, the Commission believes it is appropriate 
to eliminate the requirement of detailed reporting. Instead, the 
account will appear as a single line item on proposed Schedule XIV, the 
income statement.

I. Schedule XXIII, Miscellaneous Income or Loss

    Schedule XV, the current income statement, requires the reporting 
of income or loss other than from services rendered to associate and 
nonassociate companies in Account 421--Miscellaneous Income or Loss. 
Although significant amounts of income and loss have been reported in 
this account, service companies at present are not required to disclose 
the source of the income or the cause of the loss. To obtain such 
information, the Commission proposes to create a new Schedule XXIII 
that will require a detailed description of the items contained in 
Account 421.

J. Schedule XXIV, Interest Expense

    Interest expense is reported on present Schedule XV in Account 
427--Interest on Long-Term Debt, Account 430--Interest on Debt to 
Associate Companies, and Account 431--Other Interest Expense, and on 
Schedule I, the balance sheet, in Account 237--Interest Accrued. The 
Commission proposes to create a new Schedule XXIV that would 
differentiate between long and short term debt interest expense, and 
require more detailed information concerning the debt and debt holders. 
The new schedule will enable the Commission to monitor the overall cost 
of capital of the service companies.

K. Schedule XXV, Notes to Financial Statements

    The notes to financial statements and notes to statement of income 
are furnished in current Schedules XIV and XVIII, respectively. The 
Commission believes it is more appropriate for the notes to appear in a 
single schedule, and so proposes to create a new Schedule XXV for this 
purpose.

L. Schedule XVIII, Outside Services Employed

    The Commission also proposes to amend this schedule to require 
separate itemizations of legal, auditing and other services.

M. Other Matters

    The Commission proposes to amend certain schedules to include a 
footnote that the amounts referenced in these schedules include charges 
to both income statement and balance sheet accounts. The footnotes 
would cross-reference the expenses related to the income statement of 
new Schedule XIV for a more particular breakdown of these expense 
items.18
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    \1\8See, e.g., Schedule XVII (Departmental Analysis of 
Salaries), Schedule XVIII (Outside Services Employed), Schedule XIX 
(Employee Pensions and Benefits), and Schedule XXI (Rents).
---------------------------------------------------------------------------

    Finally, certain schedules would be renumbered, and the format of 
some items slightly changed.

II. Regulatory Flexibility Act Certification

    Pursuant to section 605(b) of the Regulatory Flexibility Act, 5 
U.S.C. 605(b), the Chairman of the Commission has certified that the 
proposed amended Form will not, if adopted, have a significant economic 
impact on a substantial number of small entities. This certification, 
including the reasons therefor, is attached to this release.

III. Costs and Benefits

    The proposed amendments to Form U-13-60 would enable the seventeen 
service company subsidiaries of registered holding companies to prepare 
income statements and balance sheets that properly reflect the 
accounting of the billings to their utility customers. The enhanced 
ability to properly classify billings should ease the record keeping 
burdens presently incurred by the service companies and would permit 
service companies to classify costs more accurately.
    In addition, the proposed amendments would provide the service 
companies the flexibility to use FERC Accounts as appropriate given the 
nature of the services provided their customers. The Commission 
anticipates that these benefits will reduce the accounting costs of a 
service company by $10,000 to $20,000 per year.

IV. Paperwork Reduction Act

    The proposed amended Form U-13-60 is subject to the Paperwork 
Reduction Act and will be submitted to the Office of Management and 
Budget.

V. Statutory Authority

    The Commission is proposing amendments to Form U-13-60 pursuant to 
sections 14, 15, and 20(a) [15 U.S.C. 79n, 79o, 79t(a)] of the Act. The 
authority citation for the action precedes the text.

List of Subjects in 17 CFR Part 259

    Utilities.

Text of Proposed Form Amendment

    For the reasons set out in the preamble, the Commission is 
proposing to amend chapter II, Title 17 of the Code of Federal 
Regulations as follows:

PART 259--FORMS PRESCRIBED UNDER THE PUBLIC UTILITY HOLDING COMPANY 
ACT OF 1935

    1. The authority citation for Part 259 continues to read as 
follows:

    Authority: 15 U.S.C. 79e, 79f, 79g, 79j, 79l, 79m, 79n, 79q, 
79t.

Subpart D--Forms for Periodic Accounting Reports

    Note: Form U-13-60 does not and the amendments will not appear 
in the Code of Federal Regulations.

* * * * *
    2. Form U-13-60 (referenced in Sec. 259.313) is amended by adding 
instruction 12 to Instructions For Use Of Form U-13-60 to read as 
follows:
FORM U-13-60
* * * * *
Instructions for Use of Form U-13-60
* * * * *
    12. Account Numbers--The accompanying schedules shall be prepared 
reflecting the Commission's Uniform System of Accounts, as modified. 
The service company shall present the schedules on an ``as billed'' 
basis and so designate. The accompanying schedules include certain 
accounts which may not be applicable, depending on the presentation 
basis designated.
* * * * *
    3. Form U-13-60 (referenced in Sec. 259.313) is amended by revising 
the ``Listing of Schedules and Analysis of Accounts'' to read as 
follows:
FORM U-13-60
* * * * *

                          Listing of Schedules                          
------------------------------------------------------------------------
    Description of schedules            Schedule No.          Page No.  
------------------------------------------------------------------------
COMPARATIVE BALANCE SHEET.......  Schedule I...............  ...........
  Service company property......  Schedule II..............  ...........
  Accumulated provision for       Schedule III.............  ...........
   depreciation and amortization                                        
   of service company property.                                         
  Investments...................  Schedule IV..............  ...........
  Accounts receivable...........  Schedule V...............  ...........
  Fuel stock expenses             Schedule VI..............  ...........
   undistributed.                                                       
  Stores expense undistributed..  Schedule VII.............  ...........
  Miscellaneous current and       Schedule VIII............  ...........
   accrued assets.                                                      
  Miscellaneous deferred debits.  Schedule IX..............  ...........
  Research, development, or       Schedule X...............  ...........
   demonstration expenditures.                                          
  Proprietary capital...........  Schedule XI..............  ...........
  Long-term debt................  Schedule XII.............  ...........
  Current and accrued             Schedule XIII............  ...........
   liabilities.                                                         
COMPARATIVE INCOME STATEMENT....  Schedule XIV.............  ...........
  Analysis of billing--associate  Schedule 457.............  ...........
   companies.                                                           
  Analysis of billing--           Schedule 458.............  ...........
   nonassociate companies.                                              
  Analysis of charges for         Schedule XV..............  ...........
   service--associate and                                               
   nonassociate companies.                                              
  Schedule of expense             Schedule XVI.............  ...........
   distribution by department or                                        
   service function.                                                    
  Departmental analysis of        Schedule XVIII...........  ...........
   salaries.                                                            
  Outside services employed.....  Schedule XVIII...........  ...........
  Employee pensions and benefits  Schedule XIX.............  ...........
  Other Administrative & General  Schedule XX..............  ...........
   expenses.                                                            
  Rents.........................  Schedule XXI.............  ...........
  Other Deductions..............  Schedule XXII............  ...........
  Miscellaneous Income or Loss..  Schedule XXIII...........  ...........
  Interest Expense..............  Schedule XXIV............  ...........
  Notes to Financial Statements.  Schedule XXV.............  ...........
------------------------------------------------------------------------


              Listing of Instructional Filing Requirements              
------------------------------------------------------------------------
           Description of reports or statements               Page No.  
------------------------------------------------------------------------
Organization Chart Methods of Allocation...................  ...........
Annual Statement of Compensation for Use of Capital Billed.  ...........
------------------------------------------------------------------------

* * * * *
    4. Schedule I, Comparative Balance Sheet, of Form U-13-60 
(referenced in Sec. 259.313) is amended by revising the heading; by 
adding ``101.1 Property Under Capital Leases (Schedule II)'' under the 
heading ``SERVICE COMPANY PROPERTY''; by adding ``128 Other Special 
Funds (Schedule IV)'' under the heading ``INVESTMENTS''; by revising 
``141 Notes receivable'' and ``143 Accounts receivable'' under the 
heading ``CURRENT AND ACCRUED ASSETS'' to read ``141 Notes receivable 
from associate companies'' and ``143 Accounts receivable (Schedule 
V)''; by adding ``243 Obligations under capital lease--current'' under 
the heading ``CURRENT AND ACCRUED LIABILITIES''; revising the heading 
``DEFERRED CREDITS'' to read ``DEFERRED CREDITS & OTHER NON-CURRENT 
LIABILITIES''; and adding under the heading ``227 Obligations under 
capital lease--noncurrent'' and ``228.3 Accumulated provision for 
pension and benefits,'' to read as follows:
FORM U-13-60
* * * * *
Schedule I--Comparative Balance Sheet
    Give balance sheet of Company as of December 31 of the current and 
prior year
* * * * *

Service Company Property

* * * * *
101.  I Property Under Capital Leases (Schedule II)
* * * * *

Investments

* * * * *
128  Other Special Funds (Schedule IV)
* * * * *

Current and Accrued Assets

* * * * *
141  Notes receivable from associate companies
143  Accounts receivable (Schedule V)
* * * * *

Current and Accrued Liabilities

* * * * *
243  Obligations under capital lease--current
* * * * *

Deferred Credits & Other Non-Current Liabilities

227  Obligations under capital lease--non-current
228.3  Accumulated provision for pension and benefits
* * * * *
    5. Schedule II, Service Company Property, of Form U-13-60 
(referenced in Sec. 259.313) is amended by revising the heading; adding 
``Account 101.1--Property Under Capital Leases\4\'' under ``SUB-
TOTAL''; and redesignating note\4\ as note\5\, to read as follows:

FORM U-13-60

* * * * *

Annual Report of

For the Year Ended December 31, 199X

(In Thousands of Dollars)

Schedule II

Service Company Property

* * * * *
Account
* * * * *

Sub-Total

101.1  Property Under Capital Leases\4\
107  Construction Work In Progress\5\
* * * * *
\4\Describe Property Under Capital Leases.
\5\Describe Construction Work in Progress.

    6. Schedule IV, Investments, of Form U-13-60 (referenced in 
Sec. 259.313) is amended by revising the instructions, by adding 
``ACCOUNT 128--OTHER SPECIAL FUNDS'' and by adding ``TOTAL'' under each 
account, to read as follows:
FORM U-13-60
* * * * *
Schedule IV--Investments
    Instructions: Complete the following schedule concerning 
investments.
    For Account 123, ``Investment in Associate Companies,'' describe 
investments in associate companies.
    Under Account 124, ``Other Investments'' and Account 128, ``Other 
Special Funds'' state each investment separately, with description, 
including, the name of issuing company, number of shares or principal 
amount, etc.
    Under Account 136, ``Temporary Cash Investments,'' list each 
investment separately.
* * * * *
Account 123--Investment in Associate Companies
    Total
Account 124--Other Investments
    Total
Account 128--Other Special Funds
    Total
Account 136--Temporary Cash Investments
    Total

    7. Schedule V, Accounts Receivable From Associate Companies, of 
Form U-13-60 (referenced in Sec. 259.313) is revised to read as 
follows:
FORM U-13-60
* * * * *
Annual Report of
For the Year Ended December 31, 199X
(In Thousands of Dollars)
Schedule V--Accounts Receivable
    Instructions: Complete the following schedule listing total 
accounts receivable and aging of amounts outstanding over 90 days from 
the due date and list separately those amounts over $25,000.

------------------------------------------------------------------------
                                                 Balance at   Balance at
                                                 beginning     close of 
                                                  of year       year    
------------------------------------------------------------------------
Description...................................  ...........  ...........
Account 143--Accounts Receivable..............  ...........  ...........
------------------------------------------------------------------------


              Accounts Receivable Outstanding Over 90 Days              
------------------------------------------------------------------------
                           Entity                              Amount   
------------------------------------------------------------------------
                                                             ...........
                                                            ------------
Total......................................................  ...........
                                                            ============
------------------------------------------------------------------------

    Instructions: Complete the following schedule listing accounts 
receivable from each associate company. Where the service company has 
provided accommodation or convenience payments for associate companies, 
a separate listing of total payments for each associate company by 
subaccount should be provided. Provide an aging of all amounts 
outstanding 60-90 days and over 90 days from the due date in the space 
provided below. 

------------------------------------------------------------------------
                                                 Balance at   Balance at
                                                 beginning     close of 
                                                  of year       year    
------------------------------------------------------------------------
Description                                                             
  Account 146--Accounts Receivable From                                 
   Associate Companies........................  ...........  ...........
                                               -------------------------
    Total.....................................  ...........  ...........
                                               =========================
------------------------------------------------------------------------


------------------------------------------------------------------------
                                                                Total   
     Analysis of convenience or accommodation payments        payments  
------------------------------------------------------------------------
                                                             ...........
                                                            ------------
  Total payments...........................................  ...........
                                                            ============
------------------------------------------------------------------------


                      Aging of Accounts Receivable                      
------------------------------------------------------------------------
                                              Days outstanding          
              Entity              --------------------------------------
                                      60-90       Over 90       Total   
------------------------------------------------------------------------
                                   ...........  ...........  ...........
                                  --------------------------            
Total............................  ...........  ...........  ...........
                                  ==========================            
------------------------------------------------------------------------

    8. Schedule XIII, Current and Accrued Liabilities, of Form U-13-60 
(referenced in Sec. 259.313) is amended by revising the instructions to 
read as follows:
FORM U-13-60
* * * * *
Schedule XIII--Current and Accrued Liabilities
* * * * *
    Instructions: Provide balance of notes and accounts payable to each 
associate company and provide a summary of short-term debt. Describe 
and provide the amount of miscellaneous current and accrued 
liabilities. Items less than $10,000 may be grouped, showing the number 
of items in each group.
* * * * *
    9. Schedule XIV, Notes to Financial Statements, of Form U-13-60 
(referenced in Sec. 259.313) is removed and Schedule XV, Statement of 
Income, is redesignated as Schedule XIV; Schedule XVI, Analysis of 
Charges for Service--Associate and Nonassociate Companies, is 
redesignated as Schedule XV; and Schedule XVII, Expense Distribution by 
Department or Service Function, is redesignated as Schedule XVI. Newly 
redesignated Schedule XIV is revised to read as follows (the separate 
reporting of Account 457 ``Analysis of Billing--Associate Companies'' 
and Account 458 ``Analysis of Billing--Nonassociate Companies'' is 
unchanged):
FORM U-13-60
* * * * *
Annual Report of 
For the Year Ended December 31, 199X
(In Thousands of Dollars)
Schedule XIV--Statement of Income
    Instructions: Provide Income Statement of the Company for the year 
ended December 31, for the current year and the prior year. Indicate 
whether the amounts shown have been ``billed to'' the account ranges 
listed on the financial statements of associate companies.

Account        Reference  Current  Prior

----------------------------------------------------------------------------------------------------------------
        Range                             Description                        Column         Year         Year   
----------------------------------------------------------------------------------------------------------------
                      Income............................................                                        
457.................  Services Rendered to Associate Companies..........  ............  ...........  ...........
458.................  Services Rendered to Nonassociated Companies......  ............  ...........  ...........
421.................  Miscellaneous Income or Loss......................  XXIII         ...........  ...........
419.................  Interest Income...................................  ............  ...........  ...........
                     -------------------------------------------------------------------------------------------
                      Total Income......................................  ............  ...........  ...........
                      EXPENSES-Income Statement:                                                                
500-557.............  Power Production..................................  ............  ...........  ...........
560-598.............  Transmission & Distribution Expenses..............  ............  ...........  ...........
901-905.............  Customer Accounts.................................  ............  ...........  ...........
906-917.............  Customer Service & Information....................  ............  ...........  ...........
920.................  Administrative & General Salaries.................  ............  ...........  ...........
921.................  Office Supplies & Expenses........................  ............  ...........  ...........
922.................  Administrative Expenses Transferred--Credit.......  ............  ...........  ...........
923.................  Outside Services Employed.........................  XVIII         ...........  ...........
924.................  Property Insurance................................  ............  ...........  ...........
925.................  Injuries & Damages................................  ............  ...........  ...........
926.................  Employee Pension & Benefits.......................  XIX           ...........  ...........
927-935.............  Other Administrative & General Expenses...........  XX            ...........  ...........
403-407.............  Depreciation & Amortization.......................  ............  ...........  ...........
408.................  Taxes, Other Than Income..........................  ............  ...........  ...........
409-411.4...........  Income Taxes......................................  ............  ...........  ...........
426.1-426.5.........  Other Deductions..................................  XXII          ...........  ...........
427-431.............  Interest Expense..................................  XXIV          ...........  ...........
                     -------------------------------------------------------------------------------------------
                      Total Expenses--Income Statement..................  ............  ...........  ...........
                      EXPENSES--Balance Sheet:                                                                  
107.................  Construction Work in Progress.....................  ............  ...........  ...........
108-115.............  Accumulated Provision for Depreciation............  ............  ...........  ...........
163.................  Stores Expenses Undistributed.....................  ............  ...........  ...........
174.................  Miscellaneous Current & Accrued Assets............  ............  ...........  ...........
183.................  Preliminary Engineering...........................  ............  ...........  ...........
186.................  Miscellaneous Deferred Debits.....................  ............  ...........  ...........
188.................  Research & Development............................  ............  ...........  ...........
                      Other.............................................  ............  ...........  ...........
                     -------------------------------------------------------------------------------------------
                      Total Expenses--Balance Sheet.....................  ............  ...........  ...........
                      NET INCOME OR (LOSS)..............................  ............  ...........  ...........
----------------------------------------------------------------------------------------------------------------

* * * * *
    10. Newly designated Schedule XV of Form U-13-60 (referenced in 
Sec. 259.313) is amended by revising the heading, adding a new 
instruction, revising the heading ``Description of Items'' to read 
``Description of Expenses,'' and revising the accounts below the 
description, to read as follows:
FORM U-13-60
* * * * *
Schedule XV--Analysis of Charges--Direct vs. Indirect
    Instruction: Provide a breakdown of ``Direct Costs'' vs. ``Indirect 
Costs'' for charges appearing on the Income Statement for the current 
year. Indicate whether amounts shown have been ``billed to'' the 
account ranges listed.
* * * * *

------------------------------------------------------------------------
   Account range      Description of expenses                           
------------------------------------------------------------------------
                      EXPENSES--Income          ...........  ...........
                       Statement:.                                      
500-557.............  Power Production........  ...........  ...........
560-598.............  Transmission &            ...........  ...........
                       Distribution Expenses.                           
901-905.............  Customer Accounts.......  ...........  ...........
906-917.............  Customer Service &        ...........  ...........
                       Information.                                     
920.................  Administrative & General  ...........  ...........
                       Salaries.                                        
921.................  Office Supplies &         ...........  ...........
                       Expenses.                                        
922.................  Administrative Expenses   ...........  ...........
                       Transferred-Credit.                              
923.................  Outside Services          ...........  ...........
                       Employed.                                        
924.................  Property Insurance......  ...........  ...........
925.................  Injuries & Damages......  ...........  ...........
926.................  Employee Pension &        ...........  ...........
                       Benefits.                                        
927-935.............  Other Administrative &    ...........  ...........
                       General Expenses.                                
403-407.............  Depreciation &            ...........  ...........
                       Amortization.                                    
408.................  Taxes, Other Than Income  ...........  ...........
409-411.4...........  Income Taxes............  ...........  ...........
426.1-426.5.........  Other Deductions........  ...........  ...........
427-431.............  Interest Expense........  ...........  ...........
                     ---------------------------------------------------
                      Total Expenses--Income    ...........             
                       Statement.                                       
                      EXPENSES--Balance Sheet:  ...........  ...........
107.................  Construction Work in      ...........  ...........
                       Progress.                                        
108-115.............  Accumulated Provision     ...........  ...........
                       for Depreciation.                                
163.................  Stores Expenses           ...........  ...........
                       Undistributed.                                   
174.................  Miscellaneous Current &   ...........  ...........
                       Accrued Assets.                                  
183.................  Preliminary Engineering.  ...........  ...........
186.................  Miscellaneous Deferred    ...........  ...........
                       Debits.                                          
188.................  Research & Development..  ...........  ...........
188.................  Other...................  ...........  ...........
                     ---------------------------------------------------
                      Total Expenses Balance                            
                       Sheet.                                           
------------------------------------------------------------------------

Net Expenses
    11. Newly designated Schedule XVI of Form U-13-60 (referenced in 
Sec. 259.313) is amended by revising the instruction, revising the 
heading ``Description of items'' to read ``Description of Expenses'', 
and revising the accounts below the description, to read as follows:
FORM U-13-60
* * * * *
Schedule XVI--Expense Distribution by Department or Service Function
    Instructions: Provide distribution of expenses by department for 
the year ended December 31, for the current year and the prior year. 
Indicate whether amounts shown have been ``billed to'' the financial 
statements of associate companies. (See Instructions 01-3 General 
Structure of Accounting System: Uniform System of Accounts.)

------------------------------------------------------------------------
    Account range                   Description of expenses             
------------------------------------------------------------------------
                      Expenses--Income Statement.                       
500-557.............  Power Production.                                 
560-598.............  Transmission & Distribution Expenses.             
901-905.............  Customer Accounts.                                
906-917.............  Customer Service & Information.                   
920.................  Administrative & General Salaries.                
921.................  Office Supplies & Expenses.                       
922.................  Administrative Expenses Transferred--Credit.      
923.................  Outside Services Employed.                        
924.................  Property Insurance.                               
925.................  Injuries & Damages.                               
926.................  Employee Pension & Benefits.                      
927-935.............  Other Administrative & General Expenses.          
403-407.............  Depreciation & Amortization.                      
408.................  Taxes, Other Than Income.                         
409-411.4...........  Income Taxes.                                     
426.1-426.5.........  Other Deductions.                                 
427-431.............  Interest Expense.                                 
                      Total ExpensesIncome Statement.                   
                      Expenses--Balance Sheet:                          
107.................  Construction Work in Progress.                    
108-115.............  Accumulated Provision for Depreciation.           
163.................  Stores Expenses Undistributed.                    
174.................  Miscellaneous Current & Accrued Assets.           
183.................  Preliminary Engineering.                          
186.................  Miscellaneous Deferred Debits.                    
188.................  Research & Development.                           
                      Other.                                            
                      Total ExpensesBalance Sheet.                      
                      Total expenses.                                   
------------------------------------------------------------------------

    12. Form U-13-60 (referenced in Sec. 259.313) is amended by 
redesignating Account 920--Departmental Analysis of Salaries as 
Schedule XVII, Departmental Analysis of Salaries (currently, Account 
920 is separately reported in newly designated Schedule XVI), and by 
adding a note at the bottom of the Schedule to read as follows:
FORM U-13-60
* * * * *
Schedule XVII--Departmental Analysis of Salaries
    Note.--These amounts include charges to all accounts (i.e. 
Income Statement and Balance Sheet accounts). Therefore the total 
salaries expense is included on various lines in Schedule XIV if the 
income statement is presented on an ``as billed'' basis.

    13. Form U-13-60 (referenced in Sec. 259.313) is amended by 
redesignating Account 923--Outside Services Employed as Schedule XVIII, 
Outside Services Employed (currently, Account 923 is separately 
reported in newly designated Schedule XVI), and by adding a new heading 
entitled ``Nature of Service'' and a note, to read as follows:
FORM U-13-60
* * * * *
Schedule XVIII--Outside Services Employed
* * * * *

------------------------------------------------------------------------
                                         Relationship ``A''--           
  From whom        Nature of service        Assoc. ``NA''--      Amount 
  purchased                                    Nonassoc.                
------------------------------------------------------------------------
               Auditing Services:                                       
               Total Auditing Services.                                 
               Legal Services:                                          
               Total Legal Services....                                 
               Other Outside Services:                                  
               Total Other Services....                                 
               Total Outside Services..                                 
------------------------------------------------------------------------
Note.--These amounts include charges to all accounts (i.e. Income       
  Statement and Balance Sheet accounts). Therefore the total outside    
  services expense is included on various lines in Schedule XIV if      
  income statement is presented on an ``as billed'' basis.              

    14. Form U-13-60 (referenced in Sec. 259.313) is amended by 
redesignating Account 926--Employee Pensions and Benefits as Schedule 
XIX--Employee Pensions and Benefits, to read as follows (Currently, 
Account 926 is separately reported in newly designated Schedule XVI):
* * * * *
Schedule XIX--Employee Pensions and Benefits
* * * * *
    15. Form U-13-60 (referenced in Sec. 259.313) is amended by 
redesignating Account 930.1--General Advertising Expenses and Account 
930.2--Miscellaneous General Expenses as Schedule XX, Other 
Administrative & General Expenses, to read as follows (currently, 
Account 930.1 and Account 930.2 are separately reported in newly 
designated Schedule XVI):
FORM U-13-60
* * * * *
Schedule XX--Other Administrative & General Expenses
    Instructions: Provide a detail listing of the amounts included in 
Account Range 927-935, ``Other Administrative & General Expenses'', 
classifying each amount by account as defined in the account definition 
for each of the accounts within the account range.

Account    Description    Amount
Total
* * * * *
    16. Form U-13-60 (referenced in Sec. 259.313) is amended by 
redesignating Account 931--Rents as Schedule XXI--Rents (currently, 
Account 931 is separately reported in newly designated Schedule XVI) 
and by adding a note, to read as follows:
FORM U-13-60
* * * * *
Schedule XXI--Rents
* * * * *
    Note.--These amounts include charges to all accounts (i.e. 
Income Statement and Balance Sheet accounts). Therefore the total 
rent expense is included on various lines in Schedule XIV if the 
income statement is presented on an ``as billed'' basis.
* * * * *
    17. Account 408--Taxes Other Than Income Taxes of Form U-13-60 
(referenced in Sec. 259.313) is removed (currently, Account 408 is 
separately reported in newly designated Schedule XVI).
    18. Form U-13-60 (referenced in Sec. 259.313) is amended by 
redesignating Account 426.1--Donations and Account 426.5--Other 
Deductions as Schedule XXII, Other Deductions, to read as follows 
(currently, Account 426.1 and Account 426.5 are separately reported in 
newly designated Schedule XVI):
FORM U-13-60
* * * * *
Schedule XXII--Other Deductions
    INSTRUCTIONS: Provide a listing of the amounts included in Account 
Range 426.1-426.5, ``Other Deductions'' by account. Provide a detailed 
listing to account 426.5 if the total account balance exceeds $25,000.

Account   Description  Amount
    Total  $
    Account 426.5 Detail:
Description  Amount
    Total

    19. Form U-13-60 (referenced in Sec. 259.313) is amended by 
removing Schedule XVIII, Notes to Statement of Income, and adding new 
Schedules XXIII, Miscellaneous Income or Loss, Schedule XXIV, Interest 
Expense, and Schedule XXV, Notes to Financial Statements, to read as 
follows:
FORM U-13-60
* * * * *
Schedule XXIII--Miscellaneous Income or Loss
    Instructions: Provide a detailed listing of the amounts included in 
Account 421, ``Miscellaneous Income or Loss''.
Description    Amount
    Total    $
Schedule XXIV--Interest Expense
    INSTRUCTIONS: Provide a detail of interest expense by note and 
associate company as reported on Schedules XII and XIII. Segregate by 
Long-Term Debt (including current maturities) and Short-Term Debt. 

------------------------------------------------------------------------
                                                  Current               
                                                   year      Prior year 
------------------------------------------------------------------------
Interest on Long-Term Debt Debt (Incl. Current                          
 Maturities):                                                           
                                                                        
  Total.......................................  ...........  ...........
Interest on Short-Term Debt:                                            
                                                                        
  Total.......................................  ...........  ...........
  Total Interest Expense......................  ...........  ...........
------------------------------------------------------------------------

Schedule XXV--Notes To Financial Statements
    Instructions: The space below is provided for important notes 
regarding the balance sheet and income statement, or any account 
thereof. Furnish particulars as to any significant items incurred 
during the year or existing at the end of the year. Notes relating to 
financial statements shown elsewhere in this report may be indicated 
here by reference.

    By the Commission.
September 13, 1994.
Margaret H. McFarland,
Deputy Secretary.

    Note. This attachment to the preamble will not appear in the 
Code of Federal Regulations.

Regulatory Flexibility Certification

    I, Arthur Levitt, Chairman of the Securities and Exchange 
Commission, hereby certify pursuant to 5 U.S.C. 605(b) that proposed 
amendment to Form U-13-60 under the Public Utility Holding Company Act 
of 1935, as amended [15 U.S.C. 79 et seq.], concerning the annual 
report filed by service company subsidiaries of registered holding 
companies will not, if promulgated, have a significant impact on a 
substantial number of small businesses. The reason for this 
certification is that it does not appear that any small businesses 
would be affected by the proposed form amendment.

    Dated: September 12, 1994.
Arthur Levitt,
Chairman.
[FR Doc. 94-23164 Filed 9-19-94; 8:45 am]
BILLING CODE 8010-01-P