[Federal Register Volume 62, Number 82 (Tuesday, April 29, 1997)]
[Proposed Rules]
[Pages 23298-23334]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-10104]



[[Page 23297]]

_______________________________________________________________________

Part II





Department of Agriculture





_______________________________________________________________________



Rural Utilities Service



_______________________________________________________________________



7 CFR Part 1767



Accounting Requirements for RUS Electric Borrowers; Proposed Rule

  Federal Register / Vol. 62, No. 82 / Tuesday, April 29, 1997 / 
Proposed Rules  

[[Page 23298]]


=======================================================================
-----------------------------------------------------------------------


DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1767


Accounting Requirements for RUS Electric Borrowers

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Rural Utilities Service (RUS) proposes to amend its 
regulations on accounting policies and procedures for RUS electric 
borrowers. This proposed rule would amend 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 would also 
institute activity-based costing (functional accounting) requirements 
for employee pensions and benefits, payroll taxes, and insurance and 
establish 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 proposed rule will also establish 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 proposed rule would also amend 
Accounting Interpretation No. 104 to record plant contributed by an RUS 
electric cooperative as an intangible asset.

DATES: Written comments must be received by RUS or carry a postmark or 
equivalent no later than May 29, 1997.

ADDRESSES: Submit written comments to 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, Washington, DC 20250-1523, telephone number (202) 
720-9450. RUS requires a signed original and three copies of all 
comments (7 CFR part 1700). All comments received will be made 
available for inspection at room 2234 South Building during regular 
business hours (7 CFR 1.27(b)).

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, Washington, DC 20250-1523, telephone number (202) 
720-9450.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed 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 this proposed rule 
will not have a significant economic impact on the substantial number 
of small entities, as defined by the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.).

Information Collection and Recordkeeping Requirements

    The reporting and recordkeeping requirements contained in the 
proposed 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 proposed 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 proposed rule is listed in the 
Catalog of Federal Domestic Assistance Program under numbers 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 proposed 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 proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. RUS has determined that this proposed 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

[[Page 23299]]

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, proposing to revise 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, 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 
proposing to eliminate 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, 
proposing to revise 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 proposing to amend the operations, maintenance, 
and administrative expense accounts to which labor charges are accrued 
to reflect this activity-based costing methodology. Accordingly, RUS is 
also proposing to amend the accounting interpretations that address 
insurance and pensions and benefits expense to reflect this cost 
allocation procedure.
    This rule also proposes to revise Sec. 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 proposing to adopt a new accounting interpretation that 
establishes 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 proposed 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 proposed 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 proposes to establish 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 proposed accounting records 
the various components of the system in the primary plant accounts 
based upon their functions.
    This rule proposes to establish 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 proposed accounting records the various components of the 
system in the primary plant accounts based upon their functions.
    This rule also proposes to adopt 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

[[Page 23300]]

computer. The data collected and stored in the handheld computer is 
then uploaded to a billing computer using specialized software for that 
purpose. The proposed accounting records the various components of the 
system in the primary plant accounts based upon their functions.
    This rule proposes to revise 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 the classification of contributed 
plant as an intangible asset is more appropriate and is, therefore, 
proposing a change in its accounting interpretations for RUS borrowers 
found in Interpretation No. 104.

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 proposes to 
amend 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 proposed to be amended by revising paragraph 
(d) to read as follows:


Sec. 1767.13  Departures from the prescribed RUS Uniform System of 
Accounts.

* * * * *
    (d) RUS borrowers will not implement the provisions of Statement of 
Financial Accounting Standards (SFAS) No. 71, Accounting for the 
Effects of Certain 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 Plan 
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.
    (1) The deferral and amortization of prior service pension costs, 
remapping expenses, and preliminary survey and investigation charges;
    (2) The deferral of any current period expense only if a borrower 
would have met its financial tests (Times Interest Earned Ratio or Debt 
Service Charge ratio) for the 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 cost increases.
* * * * *
    3. Section 1767.17 is proposed to be 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, 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);
    (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) Consultants' fees and expenses; and
    (iv) 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, materials, overheads, and other expenses incurred in maintenance 
work. A list of work operations applicable generally to utility plant 
is included hereunder. 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

[[Page 23301]]

    (viii) Replacing or adding minor items of plant which do not 
constitute a retirement unit.
* * * * *
    4. Section 1767.21 is proposed to be 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 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 appropriate miscellaneous 
operations or 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 proposed to be 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, 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.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    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.
    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.

[[Page 23302]]

    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, 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.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    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, 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.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    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, insurance, property 
taxes, 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.
    3. Property.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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

[[Page 23303]]

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. 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, 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, and materials used 
and expenses incurred in the 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, 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, and materials used 
and expenses incurred in the maintenance of electric plant, the book 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, 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, 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, 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.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.

[[Page 23304]]

    6. Expenses in connection with educational and recreational 
activities for the benefit of employees.
    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, 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.
    5. Waste disposal.
    6. Operating steam boilers and auxiliary steam, superheat 
facilities.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    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, 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.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    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, insurance, property 
taxes, 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.
    3. Property.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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

[[Page 23305]]

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. 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, 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, 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, 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, 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, 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, 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, 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 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.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    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, materials used, and 
expenses incurred in operating prime movers, generators, and their 
auxiliary apparatus, switchgear, and other electric

[[Page 23306]]

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.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    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, insurance, property 
taxes, 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.
    3. Property.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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. 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, 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, 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.

[[Page 23307]]

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, 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, 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, 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 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, 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, 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.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    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, insurance, property 
taxes, 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.
    3. Property.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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

[[Page 23308]]

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 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, 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, 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, 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, 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, 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.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    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, 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, 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.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.

[[Page 23309]]

    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.
    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, 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.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    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, 
materials used, and expenses incurred in the operation of transmission 
lines.
    B. If the expenses are not substantial for both overhead and 
underground lines, these accounts may be combined.

Items

    Labor:
    1. Supervising line operation.
    2. Inspecting and testing lightning arresters, circuit breakers, 
switches, and grounds.
    3. Load tests of circuits.
    4. Routine line patrolling.
    5. Routine voltage surveys made to determine the condition or 
efficiency of transmission system.
    6. Transferring loads, switching and reconnecting circuits and 
equipment for operating purposes. (Switching for construction or 
maintenance purposes is not includible in this account.)
    7. Routine inspection and cleaning of manholes, conduit, network, 
and transformer vaults.
    8. Electrolysis surveys.
    9. Inspecting and adjusting line-testing equipment, such as 
voltmeters, ammeters, and wattmeters.
    10. Regulation and addition of oil or gas in high-voltage cable 
systems.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    Materials and Expenses:
    1. Transportation expenses.
    2. Meals, traveling, and incidental expenses.
    3. Tool expenses.
    4. Operating supplies, such as instrument charts, and rubber goods.
* * * * *
566   Miscellaneous Transmission Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, insurance, property 
taxes, materials used, and expenses incurred in transmission map and 
record work, transmission office expenses, and other transmission 
expenses not provided for elsewhere.

Items

    Labor:
    1. General records of physical characteristics of lines and 
stations, such as capacities.
    2. Ground resistance records.
    3. Janitor work at transmission office buildings, including care of 
grounds, snow removal, and grass cutting.
    4. Joint pole maps and records.
    5. Line load and voltage records.
    6. Preparing maps and prints.
    7. General clerical and stenographic work.
    8. Miscellaneous labor.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    3. Property.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon direct labor hours, applicable to the labor 
items detailed above, including:

[[Page 23310]]

    1. Accruals for or payments to pension funds or to insurance 
companies for pension purposes.
    2. Group and life insurance premiums (credit dividends received).
    3. Payments for medical and hospital services and expenses of 
employees when not the result of occupational injuries.
    4. Payments for accident, sickness, hospital, and death benefits or 
insurance.
    5. Payments to employees incapacitated for service or on leave of 
absence beyond periods normally allowed when not the result of 
occupational injuries or in excess of statutory awards.
    6. Expenses in connection with educational and recreational 
activities for the benefit of employees.
    Insurance:
    1. Premiums payable to insurance companies for fire, storm, 
burglary, boiler explosion, lightning, fidelity, riot, and similar 
insurance.
    2. Amounts credited to Account 228.1, Accumulated Provision for 
Property Insurance, for similar protection.
    3. Special costs incurred in procuring insurance.
    4. Insurance inspection service.
    5. Insurance counsel, brokerage fees, and expenses.
    6. Premiums payable to insurance companies for protection against 
claims from injuries and damages by employees or others, such as public 
liability, property damages, casualty, employee liability, etc., and 
amounts credited to Account 228.2, Accumulated Provision for Injuries 
and Damage, for similar protection.
    7. Losses not covered by insurance or reserve accruals on account 
of injuries or deaths to employees or others and damages to the 
property of others.
    8. Fees and expenses of claim investigators.
    9. Payment of awards to claimants for court costs and attorneys' 
services.
    10. Medical and hospital service and expenses for employees as the 
result of occupational injuries or resulting from claims of others.
    11. Compensation payments under workmen's compensation laws.
    12. Compensation paid while incapacitated as the result of 
occupational injuries. (See Account 924, Note A.)
    13. Cost of safety, accident prevention, and similar educational 
activities.
    Materials and Expenses:
    1. Communication service.
    2. Building service supplies.
    3. Map and record supplies.
    4. Transmission office supplies and expenses, printing and 
stationery.
    5. First-aid supplies.
    6. Research, development, and demonstration expenses.
* * * * *
568  Maintenance Supervision and Engineering
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, and expenses 
incurred in the general supervision and direction of maintenance of the 
transmission system. Direct field supervision of specific jobs shall be 
charged to the appropriate maintenance account. (See Sec. 1767.17(a).)
569  Maintenance of Structures
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in the maintenance of structures, the book cost of 
which is includible in Account 352, Structures and Improvements. (See 
Sec. 1767.17(b).)
570  Maintenance of Station Equipment
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in maintenance of station equipment, the book cost of 
which is includible in Account 353, Station Equipment. (See 
Sec. 1767.17(b).)
571  Maintenance of Overhead Lines
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in maintenance of transmission plant, the book cost 
of which is includible in Accounts 354, Towers and Fixtures; 355, Poles 
and Fixtures; 356, Overhead Conductors and Devices; and 359, Roads and 
Trails. (See Sec. 1767.17(b).)

Items

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

[[Page 23311]]

    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.
572  Maintenance of Underground Lines
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in maintenance of transmission plant, the book cost 
of which is includible in Accounts 357, Underground Conduit, and 
Account 358, Underground Conductors and Devices. (See Sec. 1767.17(b).)

Items

    1. Work of the following character on underground conduit:
    a. Cleaning ducts, manholes, and sewer connections.
    b. Minor alterations of handholes, manholes, or vaults.
    c. Refastening, repairing, or moving racks, ladders, hangers in 
manholes, or vaults.
    d. Plugging and shelving or replugging ducts.
    e. Repairs to sewers and drains, walls and floors, rings and 
covers.
    2. Work of the following character on underground conductors and 
devices:
    a. Repairing oil circuit breakers, switches, cutouts, and control 
wiring.
    b. Repairing grounds.
    c. Retraining and reconnecting cables in manholes, including 
transfer of cables from one duct to another.
    d. Repairing conductors and splices.
    e. Repairing or moving junction boxes and potheads.
    f. Refireproofing of cables and repairing supports.
    g. Repairing electrolysis preventive devices for cables.
    h. Repairing cable bonding systems.
    i. Sampling, testing, changing, purifying, and replenishing 
insulating oil.
    j. Transferring loads, switching and reconnecting circuits, and 
equipment for maintenance purposes.
    k. Repairing line testing equipment.
    l. Repairs to oil or gas equipment in high-voltage cable system and 
replacement of oil or gas.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
573  Maintenance of Miscellaneous Transmission Plant
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in maintenance of owned or leased plant which is 
assignable to transmission operations and is not provided for 
elsewhere. (See Sec. 1767.17(b).)
* * * * *
580  Operation Supervision and Engineering
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, and expenses 
incurred in the general supervision and direction of the operation of 
the distribution system. Direct supervision of specific activities, 
such as station operation, line operation, and meter department 
operation shall be charged to the appropriate account. (See 
Sec. 1767.17(a).)
581  Load Dispatching
    This account (the keeping of which is optional with the utility) 
shall include the cost of labor, employee pensions and benefits, social 
security and other payroll taxes, materials used, and expenses incurred 
in load dispatching operations pertaining to the distribution of 
electricity.

Items

    Labor:
    1. Direct switching.
    2. Arranging and controlling clearances for construction, 
maintenance, test, and emergency purposes.
    3. Controlling system voltages.
    4. Preparing operating reports.
    5. Obtaining reports on the weather and special events.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    Expenses:
    1. Communication service provided for system control purposes.
    2. System record and report forms.
    3. Meals, traveling, and incidental expenses.
582  Station Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in the operation of distribution substations.

Items

    Labor:
    1. Supervising station operation.
    2. Adjusting station equipment where such adjustment primarily 
affects performance, such as regulating the flow of cooling water, 
adjusting current in fields of a machine, changing voltage of 
regulators, or changing station transformer taps.
    3. Keeping station log and records and preparing reports on station 
operation.
    4. Inspecting, testing, and calibrating station equipment for the 
purpose of checking its performance.
    5. Operating switching and other station equipment.
    6. Standing watch, guarding, and patrolling station and station 
yard.

[[Page 23312]]

    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.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    Materials and Expenses:
    1. Building service expenses.
    2. Operating, supplies, such as lubricants, commutator brushes, 
water, and rubber goods.
    3. Station meter and instrument supplies, such as ink and charts.
    4. Station record and report forms.
    5. Tool expense.
    6. Transportation expense.
    7. Meals, traveling, and incidental expenses.

    Note: If the utility owns storage battery equipment used for 
supplying electricity to customers in periods of emergency, the cost 
of operating labor and of supplies, such as acid, gloves, 
hydrometers, thermometers, soda, automatic cell fillers, and acid 
proof shoes shall be included in this account. If significant in 
amount, a separate subdivision shall be maintained for such 
expenses.
583  Overhead Line Expenses
584  Underground Line Expenses
    These accounts shall include, respectively, the cost of labor, 
employee pensions and benefits, social security and other payroll 
taxes, materials used, and expenses incurred in the operation of 
overhead and underground distribution lines.

Items

    Labor:
    1. Supervising line operation.
    2. Changing line transformer taps.
    3. Inspecting and testing lightning arresters, line circuit 
breakers, switches, and grounds.
    4. Inspecting and testing line transformers for the purpose of 
determining load, temperature, or operation performance.
    5. Patrolling lines.
    6. Load tests and voltage surveys of feeders, circuits, and line 
transformers.
    7. Removing line transformers and voltage regulators with or 
without replacement.
    8. Installing line transformers or voltage regulators with or 
without change in capacity provided that the cost of first installation 
of these items is included in Account 368, Line Transformers.
    9. Voltage surveys, either routine or upon request of customers, 
including voltage tests at customer's main switch.
    10. Transferring loads, switching and reconnecting circuits and 
equipment for operation purposes.
    11. Electrolysis surveys.
    12. Inspecting and adjusting line testing equipment.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    Materials and Expenses:
    1. Tool expense.
    2. Transportation expense.
    3. Meals, traveling, and incidental expenses.
    4. Operating supplies, such as instrument charts, and rubber goods.
585  Street Lighting and Signal System Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in: (1) The operation of street lighting and signal 
system plant which is owned or leased by the utility; and (2) the 
operation and maintenance of such plant owned by customers where such 
work is done regularly as a part of the street lighting and signal 
system service.

Items

    Labor:
    1. Supervising street lighting and signal systems operation.
    2. Replacing lamps and incidental cleaning of glassware and 
fixtures in connection therewith.
    3. Routine patrolling for lamp outages, extraneous nuisances, or 
encroachments.
    4. Testing lines and equipment including voltage and current 
measurement.
    5. Winding and inspection of time switch and other controls.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    Materials and Expenses:
    1. Street lamp renewals.
    2. Transportation and tool expense.
    3. Meals, traveling, and incidental expenses.
    586  Meter Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in the operation of customer meters and associated 
equipment.

Items

    Labor:

[[Page 23313]]

    1. Supervising meter operation.
    2. Clerical work on meter history and associated equipment record 
cards, test cards, and reports.
    3. Disconnecting and reconnecting, removing and reinstalling, 
sealing and unsealing meters and other metering equipment in connection 
with initiating or terminating services including the cost of obtaining 
meter readings, if incidental to such operation.
    4. Consolidating meter installations due to elimination of separate 
meters for different rates of service.
    5. Changing or relocating meters, instrument transformers, time 
switches, and other metering equipment.
    6. Resetting time controls, checking operation of demand meters and 
other metering equipment, when done as an independent operation.
    7. Inspecting and adjusting meter testing equipment.
    8. Inspecting and testing meters, instrument transformers, time 
switches, and other metering equipment on premises or in shops 
excluding inspecting and testing incidental to maintenance.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    Materials and Expenses: 
    1. Meter seals and miscellaneous meter supplies.
    2. Transportation expenses.
    3. Meals, traveling, and incidental expenses.
    4. Tool expenses.

    Note: The cost of the first setting and testing of a meter is 
chargeable to utility plant, Account 370, Meters.
587  Customer Installations Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in work on customer installations in inspecting 
premises and in rendering services to customers of the nature of those 
indicated by the list of items hereunder.

Items

    Labor:
    1. Supervising customer installations work.
    2. Inspecting premises, including the check of wiring for code 
compliance.
    3. Investigating, locating, and clearing grounds on customers' 
wiring.
    4. Investigating service complaints, including load tests of motors 
and lighting and power circuits on customers' premises; field 
investigations of complaints on bills or of voltage.
    5. Installing, removing, renewing, and changing lamps and fuses.
    6. Radio, television, and similar interference work including 
erection of new aerials on customers' premises and patrolling of lines, 
testing of lightning arresters, inspection of pole hardware, and 
examination on or off premises of customers' appliances, wiring, or 
equipment to locate cause of interference.
    7. Installing, connecting, reinstalling, or removing leased 
property on customers' premises.
    8. Testing, adjusting, and repairing customers' fixtures and 
appliances in the shop or on premises.
    9. Cost of changing customers' equipment due to changes in service 
characteristics.
    10. Investigation of current diversion including setting and 
removal of check meters and securing special readings thereon; special 
calls by employees in connection with discovery and settlement of 
current diversion; changes in customer wiring; and any other labor cost 
identifiable as caused by current diversion.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    Materials and Expenses: 
    1. Lamp and fuse renewals.
    2. Materials used in servicing customers' fixtures, appliances, and 
equipment.
    3. Power, light, heat, telephone, and other expenses of the 
appliance repair department.
    4. Tool expense.
    5. Transportation expense, including pickup and delivery charges.
    6. Meals, traveling, and incidental expenses.
    7. Rewards paid for discovery of current diversion.

    Note A: Amounts billed customers for any work, the cost of which 
is charged to this account, shall be credited to this account. Any 
excess over costs resulting therefrom, shall be transferred to 
Account 451, Miscellaneous Service Revenues.
    Note B: Do not include in this account expenses incurred in 
connection with merchandising, jobbing, and contract work.
588  Miscellaneous Distribution Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, insurance, property 
taxes, materials used, and expenses incurred in distribution system 
operation not provided for elsewhere.

Items

    Labor: 
    1. General records of physical characteristics of lines and 
substations, such as capacities.
    2. Ground resistance records.
    3. Joint pole maps and records.
    4. Distribution system voltage and load records.
    5. Preparing maps and prints.
    6. Service interruption and trouble records.
    7. General clerical and stenographic work except that chargeable to 
Account 586, Meter Expenses.
    Taxes: 
    1. Federal and state unemployment.
    2. F.I.C.A.
    3. Property.
    Employee Pensions and Benefits: The portion of employee pensions 
and

[[Page 23314]]

benefits, based upon 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. Operating records covering poles, transformers, manholes, 
cables, and other distribution facilities. Exclude meter records 
chargeable to Account 586, Meter Expenses, and station records 
chargeable to Account 582, Station Expenses, and stores records 
chargeable to Account 163, Stores Expense Undistributed.
    2. Janitor work at distribution office buildings including snow 
removal and grass cutting.
    3. Communication service.
    4. Building service expenses.
    5. Miscellaneous office supplies and expenses, printing and 
stationery, maps and records, and first-aid supplies.
    6. Research, development, and demonstration expenses.
* * * * *
590  Maintenance Supervision and Engineering
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, and expenses 
incurred in the general supervision and direction of maintenance of the 
distribution system. Direct field supervision of specific jobs shall be 
charged to the appropriate maintenance account. (See Sec. 1767.17(a).)
591  Maintenance of Structures
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in maintenance of structures, the book cost of which 
is includible in Account 361, Structures and Improvements. (See 
Sec. 1767.17(b).)
592  Maintenance of Station Equipment
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in maintenance of plant, the book cost of which is 
includible in Account 362, Station Equipment, and Account 363, Storage 
Battery Equipment. (See Sec. 1767.17(b).)
593  Maintenance of Overhead Lines
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in the maintenance of overhead distribution line 
facilities, the book cost of which is includible in Account 364, Poles, 
Towers and Fixtures; Account 365, Overhead Conductors and Devices; and 
Account 369, Services. (See Sec. 1767.17(b).)

Items

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

[[Page 23315]]

    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
594  Maintenance of Underground Lines
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in the maintenance of underground distribution line 
facilities, the book cost of which is includable in Account 366, 
Underground Conduit; Account 367, Underground Conductors and Devices; 
and Account 369, Services. (See Sec. 1767.17(b).)

Items

    1. Work of the following character on underground conduit:
    a. Cleaning ducts, manholes, and sewer connections.
    b. Moving or changing position of conduit or pipe.
    c. Minor alterations of handholes, manholes, or vaults.
    d. Refastening, repairing, or moving racks, ladders, or hangers in 
manholes or vaults.
    e. Plugging and shelving ducts.
    f. Repairs to sewers, drains, walls, and floors, rings, and covers.
    2. Work of the following character on underground conductors and 
devices:
    a. Repairing circuit breakers, switches, cutouts, network 
protectors, and associated relays and control wiring.
    b. Repairing grounds.
    c. Retraining and reconnecting cables in manholes including 
transfer of cables from one duct to another.
    d. Repairing conductors and splices.
    e. Repairing or moving junction boxes and potheads.
    f. Refireproofing cables and repairing supports.
    g. Repairing electrolysis preventive devices for cables.
    h. Repairing cable bonding systems.
    i. Sampling, testing, changing, purifying, and replenishing 
insulating oil.
    j. Transferring loads, switching and reconnecting circuits and 
equipment for maintenance purposes.
    k. Repairing line testing equipment.
    l. Repairing oil or gas equipment in high voltage cable systems and 
replacement of oil or gas.
    3. Work of the following character on underground services:
    a. Cleaning ducts.
    b. Repairing any underground service plant.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
595  Maintenance of Line Transformers
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in maintenance of distribution line transformers, the 
book cost of which is includable in Account 368, Line Transformers. 
(See Sec. 1767.17(b).)
596  Maintenance of Street Lighting and Signal Systems
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in maintenance of plant, the book cost of which is 
includable in Account 373, Street Lighting and Signal Systems. (See 
Sec. 1767.17(b).)
597  Maintenance of Meters
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in the maintenance of meters and meter testing 
equipment, the book cost of which is includable in Account 370, Meters, 
and Account 395, Laboratory Equipment, respectively. (See 
Sec. 1767.17(b).)
598  Maintenance of Miscellaneous Distribution Plant
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in maintenance of plant, the book cost of which is 
includable in Accounts 371, Installations on Customers' Premises, and 
Account 372, Leased Property on Customers' Premises, and any other 
plant the maintenance of which is assignable to the distribution 
function and is not provided for elsewhere. (See Sec. 1767.17(b).)

Items

    1. Work of similar nature to that listed in other distribution 
maintenance accounts.
    2. Maintenance of office furniture and equipment used by 
distribution system department.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.


[[Page 23316]]


6. Section 1767.28 is proposed to be amended by revising Accounts 901, 
902, 903, and 905 to read as follows:


Sec. 1767.28  Customer accounts expenses.

* * * * *
901  Supervision
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, and expenses 
incurred in the general direction and supervision of customer 
accounting and collecting activities. Direct supervision of a specific 
activity shall be charged to Account 902, Meter Reading Expenses, or 
Account 903, Customer Records and Collection Expenses, as appropriate. 
(See Sec. 1767.17(a).)
902  Meter Reading Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in reading customer meters, and determining 
consumption when performed by employees engaged in reading meters.

Items

    Labor:
    1. Addressing forms for obtaining meter readings by mail.
    2. Changing and collecting meter charts used for billing purposes.
    3. Inspecting time clocks and checking seals when performed by 
meter readers and the work represents a minor activity incidental to 
regular meter reading routine.
    4. Reading meters, including demand meters, and obtaining load 
information for billing purposes. Exclude and charge to Account 586, 
Meter Expenses, or to Account 903, Customer Records and Collection 
Expenses, as applicable, the cost of obtaining meter readings, first 
and final, if incidental to the operation of removing or resetting, 
sealing or locking, and disconnecting or reconnecting meters.
    5. Computing consumption from meter reader's book or from reports 
by mail when done by employees engaged in reading meters.
    6. Collecting from prepayment meters when incidental to meter 
reading.
    7. Maintaining record of customers' keys.
    8. Computing estimated or average consumption when performed by 
employees engaged in reading meters.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    Materials and Expenses:
    1. Badges, lamps, and uniforms.
    2. Demand charts, meter books and binders and forms for recording 
readings, but not the cost of preparation.
    3. Postage and supplies used in obtaining meter readings by mail.
    4. Transportation, meals, and incidental expenses.
903  Customer Records and Collection Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in work on customer applications, contracts, orders, 
credit investigations, billing and accounting, collections and 
complaints.

Items

    Labor:
    1. Receiving, preparing, recording, and handling routine orders for 
service, disconnections, transfers or meter tests initiated by the 
customer, excluding the cost of carrying out such orders, which is 
chargeable to the account appropriate for the work called for by such 
orders.
    2. Investigations of customers' credit and keeping of records 
pertaining thereto, including records of uncollectible accounts written 
off.
    3. Receiving, refunding, or applying customer deposits and 
maintaining customer deposit, line extension, and other miscellaneous 
records.
    4. Checking consumption shown by meter readers' reports where 
incidental to preparation of billing date.
    5. Preparing address plates and addressing bills and delinquent 
notices.
    6. Preparing billing data.
    7. Operating billing and bookkeeping machines.
    8. Verifying billing records with contracts or rate schedules.
    9. Preparing bills for delivery and mailing or delivering bills.
    10. Collecting revenues, including collection from prepayment 
meters, unless incidental to meter-reading operations.
    11. Balancing collections, preparing collections for deposit, and 
preparing cash reports.
    12. Posting collections and other credits or charges to customer 
accounts and extending unpaid balances.
    13. Balancing customer accounts and controls.
    14. Preparing, mailing, or delivering delinquent notices and 
preparing reports of delinquent accounts.
    15. Final meter reading of delinquent accounts when done by 
collectors incidental to regular activities.
    16. Disconnecting and reconnecting service because of nonpayment 
bills.
    17. Receiving, recording, and handling of inquiries, complaints, 
and requests for investigations from customers, including preparation 
of necessary orders, but excluding the cost of carrying out such 
orders, which is chargeable to the account appropriate for the work 
called for by such orders.
    18. Statistical and tabulating work on customer accounts and 
revenues, but not including special analyses for sales department, rate 
department, or other general purposes, unless incidental to regular 
customer accounting routines.
    19. Preparing and periodically rewriting meter reading sheets.
    20. Determining consumption and computing estimated or average 
consumption when performed by employees other than those engaged in 
reading meters.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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

[[Page 23317]]

occupational injuries or in excess of statutory awards.
    6. Expenses in connection with educational and recreational 
activities for the benefit of employees.
    Materials and Expenses:
    1. Address plates and supplies.
    2. Cash overages and shortages.
    3. Commissions or fees to others for collecting.
    4. Payments to credit organizations for investigations and reports.
    5. Postage.
    6. Transportation expenses, including transportation of customer 
bills and meter books under centralized billing procedures.
    7. Transportation, meals, and incidental expenses.
    8. Bank charges, exchange, and other fees for cashing and 
depositing customers' checks.
    9. Forms for recording orders for services, or removals.
    10. Rent of mechanical equipment.

    Note: The cost of work on meter history and meter location 
records is chargeable to Account 586, Meter Expenses.
* * * * *
905  Miscellaneous Customer Accounts Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, insurance, property 
taxes, materials used, and expenses incurred not provided for in other 
accounts.

Items

    Labor:
    1. General clerical and stenographic work.
    2. Miscellaneous labor.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    3. Property.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon direct labor hours, applicable to the labor 
items detailed above, including:
    1. Accruals for or payments to pension funds or to insurance 
companies for pension purposes.
    2. Group and life insurance premiums (credit dividends received).
    3. Payments for medical and hospital services and expenses of 
employees when not the result of occupational injuries.
    4. Payments for accident, sickness, hospital, and death benefits or 
insurance.
    5. Payments to employees incapacitated for service or on leave of 
absence beyond periods normally allowed when not the result of 
occupational injuries or in excess of statutory awards.
    6. Expenses in connection with educational and recreational 
activities for the benefit of employees.
    Insurance:
    1. Premiums payable to insurance companies for fire, storm, 
burglary, boiler explosion, lightning, fidelity, riot, and similar 
insurance.
    2. Amounts credited to Account 228.1, Accumulated Provision for 
Property Insurance, for similar protection.
    3. Special costs incurred in procuring insurance.
    4. Insurance inspection service.
    5. Insurance counsel, brokerage fees, and expenses.
    6. Premiums payable to insurance companies for protection against 
claims from injuries and damages by employees or others, such as public 
liability, property damages, casualty, employee liability, etc., and 
amounts credited to Account 228.2, Accumulated Provision for Injuries 
and Damage, for similar protection.
    7. Losses not covered by insurance or reserve accruals on account 
of injuries or deaths to employees or others and damages to the 
property of others.
    8. Fees and expenses of claim investigators.
    9. Payment of awards to claimants for court costs and attorneys' 
services.
    10. Medical and hospital service and expenses for employees as the 
result of occupational injuries or resulting from claims of others.
    11. Compensation payments under workmen's compensation laws.
    12. Compensation paid while incapacitated as the result of 
occupational injuries. (See Account 924, Note A.)
    13. Cost of safety, accident prevention, and similar educational 
activities.
    Materials and Expenses:
    1. Communication service.
    2. Miscellaneous office supplies and expenses and stationery and 
printing other than those specifically provided for in Account 902 and 
Account 903.
7. Section 1767.29 is proposed to be amended by revising Accounts 907, 
908, 909, and 910 to read as follows:


Sec. 1767.29  Customer service and informational expenses.

* * * * *
907  Supervision
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, and expenses 
incurred in the general direction and supervision of customer service 
activities, the object of which is to encourage safe, efficient, and 
economical use of the utility's service. Direct supervision of a 
specific activity within customer service and informational expense 
classification shall be charged to the account wherein the costs of 
such activity are included. (See Sec. 1767.17(a).)
908  Customer Assistance Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in providing instructions or assistance to customers, 
the object of which is to encourage safe, efficient, and economical use 
of the utility's service.

Items

    Labor:
    1. Direct supervision of department.
    2. Processing customer inquiries relating to the proper use of 
electric equipment, the replacement of such equipment, and information 
related to such equipment.
    3. Advice directed to customers as to how they may achieve the most 
efficient and safest use of electric equipment.
    4. Demonstrations, exhibits, lectures, and other programs designed 
to instruct customers in the safe, economical, or efficient use of 
electric service, and/or oriented toward conservation of energy.
    5. Engineering and technical advice to customers, the object of 
which is to promote safe, efficient, and economical use of the 
utility's service.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.

[[Page 23318]]

    Materials and Expenses:
    1. Supplies and expenses pertaining to demonstrations, exhibits, 
lectures, and other programs.
    2. Loss in value on equipment and appliances used for customer 
assistance programs.
    3. Office supplies and expenses.
    4. Transportation, meals, and incidental expenses.

    Note: Do not include in this account expenses that are provided 
for elsewhere, such as Accounts 416, Costs and Expenses of 
Merchandising, Jobbing, and Contract Work; 587, Customer 
Installations Expenses; and 912, Demonstrating and Selling Expenses.
909  Informational and Instructional Advertising Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in activities which primarily convey information as 
to what the utility urges or suggests customers should do in utilizing 
electric service to protect health and safety, to encourage 
environmental protection, to utilize their electric equipment safely 
and economically, or to conserve electric energy.

Items

    Labor:
    1. Direct supervision of information activities.
    2. Preparing informational materials for newspapers, periodicals, 
and billboards and preparing and conducting informational motion 
pictures, radio and television programs.
    3. Preparing informational booklets and bulletins used in direct 
mailings.
    4. Preparing informational window and other displays.
    5. Employing agencies, selecting media, and conducting negotiations 
in connection with the placement and subject matter of information 
programs.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    Materials and Expenses:
    1. Use of newspapers, periodicals, billboards, and radio for 
informational purposes.
    2. Postage on direct mailings to customers exclusive of postage 
related to billings.
    3. Printing of informational booklets, dodgers, and bulletins.
    4. Supplies and expenses in preparing informational materials by 
the utility.
    5. Office supplies and expenses.

    Note A: Exclude from this account and charge to Account 930.2, 
Miscellaneous General Expenses, the cost of publication of 
stockholder reports, dividend notices, bond redemption notices, 
financial statements, and other notices of a general corporate 
character. Also exclude all expenses of a promotional, 
institutional, goodwill, or political nature, which are includible 
in such accounts as 913, Advertising Expenses; 930.1, General 
Advertising Expenses; and 426.4, Expenditures for Certain Civic, 
Political and Related Activities.
    Note B: Entries relating to informational advertising included 
in this account shall contain or refer to supporting documents which 
identify the specific advertising message. If references are used, 
copies of the advertising message shall be readily available.
910  Miscellaneous Customer Service and Informational Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, insurance, property 
taxes, materials used, and expenses incurred in connection with 
customer service and informational activities which are not includible 
in other customer information expense accounts.

Items

    Labor:
    1. General clerical and stenographic work not assigned to specific 
customer service and informational programs.
    2. Miscellaneous labor.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    3. Property.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon direct labor hours, applicable to the labor 
items detailed above, including:
    1. Accruals for or payments to pension funds or to insurance 
companies for pension purposes.
    2. Group and life insurance premiums (credit dividends received).
    3. Payments for medical and hospital services and expenses of 
employees when not the result of occupational injuries.
    4. Payments for accident, sickness, hospital, and death benefits or 
insurance.
    5. Payments to employees incapacitated for service or on leave of 
absence beyond periods normally allowed when not the result of 
occupational injuries or in excess of statutory awards.
    6. Expenses in connection with educational and recreational 
activities for the benefit of employees.
    Insurance:
    1. Premiums payable to insurance companies for fire, storm, 
burglary, boiler explosion, lightning, fidelity, riot, and similar 
insurance.
    2. Amounts credited to Account 228.1, Accumulated Provision for 
Property Insurance, for similar protection.
    3. Special costs incurred in procuring insurance.
    4. Insurance inspection service.
    5. Insurance counsel, brokerage fees, and expenses.
    6. Premiums payable to insurance companies for protection against 
claims from injuries and damages by employees or others, such as public 
liability, property damages, casualty, employee liability, etc., and 
amounts credited to Account 228.2, Accumulated Provision for Injuries 
and Damage, for similar protection.
    7. Losses not covered by insurance or reserve accruals on account 
of injuries or deaths to employees or others and damages to the 
property of others.
    8. Fees and expenses of claim investigators.
    9. Payment of awards to claimants for court costs and attorneys' 
services.
    10. Medical and hospital service and expenses for employees as the 
result of occupational injuries or resulting from claims of others.
    11. Compensation payments under workmen's compensation laws.
    12. Compensation paid while incapacitated as the result of 
occupational injuries. (See Account 924, Note A.)
    13. Cost of safety, accident prevention, and similar educational 
activities.
    Materials and Expenses:
    1. Communication service.
    2. Printing, postage, and office supplies expenses.

8. Section 1767.30 is proposed to be amended by revising Accounts 911, 
912, 913, and 916 to read as follows:

[[Page 23319]]

Sec. 1767.30  Sales expenses.

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

Items

    Labor:
    1. Demonstrating uses of utility services.
    2. Conducting cooking schools, preparing recipes, and related home 
service activities.
    3. Exhibitions, displays, lectures, and other programs designed to 
promote use of utility services.
    4. Experimental and development work in connection with new and 
improved appliances and equipment, prior to general public acceptance.
    5. Solicitation of new customers or of additional business from old 
customers, including commissions paid employees.
    6. Engineering and technical advice to present or prospective 
customers in connection with promoting or retaining the use of utility 
services.
    7. Special customer canvasses when their primary purpose is the 
retention of business or the promotion of new business.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    Materials and Expenses:
    1. Supplies and expenses pertaining to demonstration, experimental, 
and development activities.
    2. Booth and temporary space rental.
    3. Loss in value on equipment and appliances used for demonstration 
purposes.
    4. Transportation, meals, and incidental expenses.
913  Advertising Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in advertising designed to promote or retain the use 
of utility service, except advertising the sale of merchandise by the 
utility.

Items

    Labor:
    1. Direct supervision of department.
    2. Preparing advertising material for newspapers, periodicals, and 
billboards, and preparing and conducting motion pictures, radio, and 
television programs.
    3. Preparing booklets and bulletins used in direct mail 
advertising.
    4. Preparing window and other displays.
    5. Clerical and stenographic work.
    6. Investigating advertising agencies and media and conducting 
negotiations in connection with the placement and subject matter of 
sales advertising.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon 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.
    Materials and Expenses:
    1. Advertising in newspapers, periodicals, billboards, and radio 
for sales promotion purposes, but not including institutional or 
goodwill advertising includible in Account 930.1, General Advertising 
Expenses.
    2. Materials and services given as prizes or otherwise in 
connection with civic lighting contests, canning, or cooking contests, 
and bazaars in order to publicize and promote the use of utility 
services.
    3. Fees and expenses of advertising agencies and commercial 
artists.
    4. Novelties for general distribution.
    5. Postage on direct mail advertising.
    6. Premiums distributed generally, such as recipe books when not 
offered as inducement to purchase appliances.
    7. Printing booklets, dodgers, and bulletins.
    8. Supplies and expenses in preparing advertising material.
    9. Office supplies and expenses.

    Note A: The cost of advertisements which set forth the value or 
advantages of utility service without reference to specific 
appliances, or, if reference is made to appliances, invites the 
reader to purchase appliances from his dealer or refer to appliances 
not carried for sale by the utility, shall be considered sales 
promotion advertising and charged to this account. However, 
advertisements which are limited to specific makes of appliances 
sold by the utility and price and terms, thereof, without referring 
to the value or advantages of utility service, shall be considered 
as merchandise advertising and the cost shall be charged to Costs 
and Expenses of Merchandising, Jobbing and Contract Work, Account 
416.
    Note B: Advertisements which substantially mention or refer to 
the value or advantages of utility service, together with specific 
reference to makes of appliance sold by the utility and the price, 
and terms, thereof, and designed for the joint purpose of increasing 
the use of utility service and the sales of appliances, shall be 
considered as a combination advertisement and the costs shall be 
distributed between this account and Account 416 on the basis of 
space, time, or other proportional factors.
    Note C: Exclude from this account and charge to Account 930.2, 
Miscellaneous General Expenses the cost of publication of 
stockholder reports, dividend notices, bond redemption notices, 
financial statements, and other notices of a general corporate 
character.

[[Page 23320]]

Also exclude all institutional or goodwill advertising. (See Account 
930.1, General Advertising Expenses.)
916  Miscellaneous Sales Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, insurance, property 
taxes, materials used, and expenses incurred in connection with sales 
activities, except merchandising, which are not includible in other 
sales expense accounts.

Items

    Labor:
    1. General clerical and stenographic work not assigned to specific 
functions.
    2. Special analysis of customer accounts and other statistical work 
for sales purposes not a part of the regular customer accounting and 
billing routine.
    3. Miscellaneous labor.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    3. Property.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon direct labor hours, applicable to the labor 
items detailed above, including:
    1. Accruals for or payments to pension funds or to insurance 
companies for pension purposes.
    2. Group and life insurance premiums (credit dividends received).
    3. Payments for medical and hospital services and expenses of 
employees when not the result of occupational injuries.
    4. Payments for accident, sickness, hospital, and death benefits or 
insurance.
    5. Payments to employees incapacitated for service or on leave of 
absence beyond periods normally allowed when not the result of 
occupational injuries or in excess of statutory awards.
    6. Expenses in connection with educational and recreational 
activities for the benefit of employees.
    Insurance:
    1. Premiums payable to insurance companies for fire, storm, 
burglary, boiler explosion, lightning, fidelity, riot, and similar 
insurance.
    2. Amounts credited to Account 228.1, Accumulated Provision for 
Property Insurance, for similar protection.
    3. Special costs incurred in procuring insurance.
    4. Insurance inspection service.
    5. Insurance counsel, brokerage fees, and expenses.
    6. Premiums payable to insurance companies for protection against 
claims from injuries and damages by employees or others, such as public 
liability, property damages, casualty, employee liability, etc., and 
amounts credited to Account 228.2, Accumulated Provision for Injuries 
and Damage, for similar protection.
    7. Losses not covered by insurance or reserve accruals on account 
of injuries or deaths to employees or others and damages to the 
property of others.
    8. Fees and expenses of claim investigators.
    9. Payment of awards to claimants for court costs and attorneys' 
services.
    10. Medical and hospital service and expenses for employees as the 
result of occupational injuries or resulting from claims of others.
    11. Compensation payments under workmen's compensation laws.
    12. Compensation paid while incapacitated as the result of 
occupational injuries. (See Account 924, Note A.)
    13. Cost of safety, accident prevention, and similar educational 
activities.
    Materials and Expenses:
    1. Communication service.
    2. Printing, postage, office supplies, and expenses applicable to 
sales activities, except those chargeable to Account 913, Advertising 
Expenses.

9. Section 1767.31 is proposed to be amended by revising Accounts 920, 
924, 925, 926, 930.1, 930.2, and 935 to read as follows:


Sec. 1767.31  Administrative and general expenses.

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

Items

    1. Premiums payable to insurance companies for fire, storm, 
burglary, boiler explosion, lightning, fidelity, riot, and similar 
insurance.
    2. Amounts credited to Account 228.1, Accumulated Provision for 
Property Insurance, for similar protection.
    3. Special costs incurred in procuring insurance.
    4. Insurance inspection service.
    5. Insurance counsel, brokerage fees, and expenses.

    Note A: The cost of insurance or reserve accruals capitalized, 
shall be charged to construction and retirement either directly or 
by transfers to construction and retirement work orders from this 
account.
    Note B: The cost of insurance or reserve accruals for the 
following classes of property shall be charged as indicated:
    1. Materials, supplies, and stores equipment to Account 163, Stores 
Expense Undistributed, or appropriate materials account.
    2. Transportation and other general equipment to appropriate 
clearing accounts that may be maintained.
    3. Electric plant leased to others to Account 413, Expenses of 
Electric Plant Leased to Others.
    4. Nonutility property to the appropriate nonutility income 
account.
    5. Merchandise and jobbing property to Account 416, Costs and 
Expenses of Merchandising, Jobbing and Contract Work.
    Note C: The cost of labor, employee pensions and benefits, 
social security and other payroll taxes, and the related supplies 
and expenses of administrative and general employees who are only 
incidentally engaged in property insurance work may be included in 
Account 920 and Account 921, as appropriate.
    Note D: The cost of insurance or reserve accruals applicable to 
the various utility

[[Page 23321]]

functions shall be charged to the appropriate miscellaneous 
operations or administrative expense accounts either directly or by 
transfers from this account.
925  Injuries and Damages
    A. This account shall include the cost of insurance or reserve 
accruals to protect the utility against injuries and damages claims of 
employees or others, losses of such character not covered by insurance, 
and expenses incurred in settlement of injuries and damages claims. It 
shall also include the cost of labor, employee pensions and benefits, 
social security and other payroll taxes, related supplies, and expenses 
incurred in injuries and damages activities.
    B. Reimbursements from insurance companies or others for expenses 
charged hereto on account of injuries, damages, and insurance dividends 
or refunds shall be credited to this account.

Items

    1. Premiums payable to insurance companies for protection against 
claims from injuries and damages by employees or others, such as public 
liability, property damages, casualty, employee liability, etc., and 
amounts credited to Account 228.2, Accumulated Provision for Injuries 
and Damage, for similar protection.
    2. Losses not covered by insurance or reserve accruals on account 
of injuries or deaths to employees or others and damages to the 
property of others.
    3. Fees and expenses of claim investigators.
    4. Payment of awards to claimants for court costs and attorneys' 
services.
    5. Medical and hospital service and expenses for employees as the 
result of occupational injuries or resulting from claims of others.
    6. Compensation payments under workmen's compensation laws.
    7. Compensation paid while incapacitated as the result of 
occupational injuries. (See NOTE A.)
    8. Cost of safety, accident prevention, and similar educational 
activities.

    Note A: Payments to or in behalf of employees for accident or 
death benefits, hospital expenses, medical expenses, or for salaries 
while incapacitated for service or on leave of absence beyond 
periods normally allowed, when not the result of occupational 
injuries, shall be charged to Account 926, Employee Pensions and 
Benefits. (See also Note B of Account 926.)
    Note B: The cost of injuries and damages or reserve accruals 
capitalized shall be charged to construction and retirement 
activities either directly or by transfers from this account to the 
applicable construction and retirement work orders.
    Note C: The cost of insurance or reserve accruals applicable to 
the various utility functions shall be charged to the appropriate 
miscellaneous operations or administrative expense accounts either 
directly or by transfers from this account.
    Note D: Exclude herefrom the time and expenses of employees 
(except those engaged in injuries and damages activities) spent in 
attendance at safety and accident prevention educational meetings, 
if occurring during the regular work period.
    Note E: The cost of labor, employee pensions and benefits, 
social security and other payroll taxes, and the related supplies 
and expenses of administrative and general employees who are only 
incidentally engaged in injuries and damages activities, may be 
included in Account 920 and Account 921, as appropriate.
926  Employee Pensions and Benefits
    A. This account shall include pensions paid to or on behalf of 
retired employees or accruals to provide for pensions or payments for 
the purchase of annuities for this purpose, when the utility has 
definitely, by contract, committed itself to a pension plan under which 
the pension funds are irrevocably devoted to pension purposes and 
payments for employee accident, sickness, hospital, and death benefits, 
or insurance therefor. Include, also, expenses incurred in medical, 
educational, or recreational activities for the benefit of employees 
and administrative expenses in connection with employee pensions and 
benefits.
    B. The utility shall maintain a complete record of accruals or 
payments for pensions and be prepared to furnish full information to 
RUS of the plan under which it has created or proposes to create a 
pension fund and a copy of the declaration of trust or resolution under 
which the pension plan is established.
    C. There shall be credited to this account, the portion of pensions 
and benefits expenses which is applicable to nonutility operations, the 
specific functional operations, maintenance, and administrative expense 
accounts, and to construction and retirement activities unless such 
amounts are distributed directly to the accounts involved and are not 
included herein in the first instance.
    D. Records in support of this account shall be so kept that the 
total pensions expense, the total benefits expense, the administrative 
expenses included herein, and the amounts of pensions and benefits 
expenses transferred to the operations, maintenance, administrative, 
construction or retirement accounts will be readily available.

Items

    1. Payment of pensions to retirees on a nonaccrual basis.
    2. Accruals for or payments to pension funds or to insurance 
companies for pension purposes.
    3. Group and life insurance premiums (credit dividends received).
    4. Payments for medical and hospital services and expenses of 
employees when not the result of occupational injuries.
    5. Payments for accident, sickness, hospital, and death benefits or 
insurance.
    6. Payments to employees incapacitated for service or on leave of 
absence beyond periods normally allowed when not the result of 
occupational injuries or in excess of statutory awards.
    7. Expenses in connection with educational and recreational 
activities for the benefit of employees.

    Note A: The cost of labor, employee pensions and benefits, 
social security and other payroll taxes, and the related supplies 
and expenses of administrative and general employees who are only 
incidentally engaged in employee pension and benefit activities may 
be included in Account 920 and Account 921, as appropriate.
    Note B: Salaries paid to employees during periods of 
nonoccupational sickness may be charged to the appropriate labor 
account rather than to employee benefits.
* * * * *
930.1  General Advertising Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, materials used, and 
expenses incurred in advertising and related activities, the cost of 
which by their content and purpose are not provided for elsewhere.

Items

    Labor:
    1. Supervision.
    2. Preparing advertising material for newspapers, periodicals, and 
billboards and preparing or conducting motion pictures, radio, and 
television programs.
    3. Preparing booklets and bulletins used in direct mail 
advertising.
    4. Preparing window and other displays.
    5. Clerical and stenographic work.
    6. Investigating and employing advertising agencies, selecting 
media, and conducting negotiations in connection with the placement and 
subject matter of advertising.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon direct labor hours, applicable to the labor 
items detailed above, including:

[[Page 23322]]

    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.
    Materials and Expenses:
    1. Advertising in newspapers, periodicals, billboards, and radios.
    2. Advertising matter such as posters, bulletins, booklets, and 
related items.
    3. Fees and expenses of advertising agencies and commercial 
artists.
    4. Postage and direct mail advertising.
    5. Printing of booklets, dodgers, and bulletins.
    6. Supplies and expenses in preparing advertising materials.
    7. Office supplies and expenses.

    Note A: Properly includible in this account is the cost of 
advertising activities on a local or national basis of a goodwill or 
institutional nature, which is primarily designed to improve the 
image of the utility or the industry, including advertisements which 
inform the public concerning matters affecting the company's 
operations, such as, the cost of providing service, the company's 
efforts to improve the quality of service, and the company's efforts 
to improve and protect the environment. Entries relating to 
advertising included in this account shall contain or refer to 
supporting documents which identify the specific advertising 
message. If references are used, copies of the advertising message 
shall be readily available.
    Note B: Exclude from this account and include in Account 426.4, 
Expenditures for Certain Civic, Political and Related Activities, 
expenses for advertising activities, which are designed to solicit 
public support or the support of public officials in matters of a 
political nature.
930.2  Miscellaneous General Expenses
    This account shall include the cost of labor, employee pensions and 
benefits, social security and other payroll taxes, insurance, property 
taxes, and expenses incurred in connection with the general management 
of the utility not provided for elsewhere.

Items

    Labor:
    1. Miscellaneous labor not elsewhere provided for.
    Taxes:
    1. Federal and state unemployment.
    2. F.I.C.A.
    3. Property.
    Employee Pensions and Benefits: The portion of employee pensions 
and benefits, based upon direct labor hours, applicable to the labor 
items detailed above, including:
    1. Accruals for or payments to pension funds or to insurance 
companies for pension purposes.
    2. Group and life insurance premiums (credit dividends received).
    3. Payments for medical and hospital services and expenses of 
employees when not the result of occupational injuries.
    4. Payments for accident, sickness, hospital, and death benefits or 
insurance.
    5. Payments to employees incapacitated for service or on leave of 
absence beyond periods normally allowed when not the result of 
occupational injuries or in excess of statutory awards.
    6. Expenses in connection with educational and recreational 
activities for the benefit of employees.
    Insurance:
    1. Premiums payable to insurance companies for fire, storm, 
burglary, boiler explosion, lightning, fidelity, riot, and similar 
insurance.
    2. Amounts credited to Account 228.1, Accumulated Provision for 
Property Insurance, for similar protection.
    3. Special costs incurred in procuring insurance.
    4. Insurance inspection service.
    5. Insurance counsel, brokerage fees, and expenses.
    6. Premiums payable to insurance companies for protection against 
claims from injuries and damages by employees or others, such as public 
liability, property damages, casualty, employee liability, etc., and 
amounts credited to Account 228.2, Accumulated Provision for Injuries 
and Damage, for similar protection.
    7. Losses not covered by insurance or reserve accruals on account 
of injuries or deaths to employees or others and damages to the 
property of others.
    8. Fees and expenses of claim investigators.
    9. Payment of awards to claimants for court costs and attorneys' 
services.
    10. Medical and hospital service and expenses for employees as the 
result of occupational injuries or resulting from claims of others.
    11. Compensation payments under workmen's compensation laws.
    12. Compensation paid while incapacitated as the result of 
occupational injuries. (See Account 924, Note A.)
    13. Cost of safety, accident prevention, and similar educational 
activities.
    Expenses:
    1. Industry association dues for company memberships.
    2. Contributions for conventions and meetings of the industry.
    3. Research, development, and demonstration expenses not charged to 
other operation and maintenance expense accounts on a functional basis.
    4. Communication service not chargeable to other accounts.
    5. Trustee, registrar, and transfer agent fees and expenses.
    6. Stockholders meeting expenses.
    7. Dividend and other financial notices.
    8. Printing and mailing dividend checks.
    9. Directors' fees and expenses.
    10. Publishing and distributing annual reports to stockholders.
    11. Public notices of financial, operating, and other data required 
by regulatory statutes, not including, however, notices required in 
connection with security issues or acquisitions of property.
* * * * *
935  Maintenance of General Plant
    A. This account shall include the cost assignable to customer 
accounts, sales, administrative, and general functions of labor, 
employee pensions and benefits, social security and other payroll 
taxes, materials used, and expenses incurred in the maintenance of 
property, the book cost of which is includable in Account 390, 
Structures and Improvements; Account 391, Office Furniture and 
Equipment; Account 397, Communication Equipment; and Account 398, 
Miscellaneous Equipment. (See Sec. 1767.17(b).)
    B. Maintenance expenses on office furniture and equipment used 
elsewhere than in general, commercial, and sales offices shall be 
charged to the following accounts:
    1. Steam Power Generation, Account 514.
    2. Nuclear Power Generation, Account 532.
    3. Hydraulic Power Generation, Account 545.
    4. Other Power Generation, Account 554.
    5. Transmission, Account 573.
    6. Distribution, Account 598.
    7. Merchandise and Jobbing, Account 416.
    8. Garages, Shops, etc., Appropriate clearing account, if used.


[[Page 23323]]


    Note: Maintenance of plant included in other general equipment 
accounts shall be included herein unless charged to clearing 
accounts or to the particular functional maintenance expense account 
indicated by the use of the equipment.

    10. In Sec. 1767.41, the introductory text preceding the Numerical 
Index is proposed to be revised to read as follows:


Sec. 1767.41  Accounting methods and procedures required of all RUS 
borrowers.

    All RUS borrowers shall maintain and keep their books of accounts 
and all other books and records which support the entries in such books 
of accounts in accordance with the accounting principles prescribed in 
this section. Interpretations Nos. 133, 134, 137, 403, 404, 602, 606, 
618, 627, 628, and 629 adopt and implement the provisions of standards 
issued by the Financial Accounting Standards Board (FASB). Each 
interpretation includes a synopsis of the requirements of the standard 
as well as specific accounting requirements and interpretations 
required by RUS. The synopsis provides general information to assist 
borrowers in determining whether the standard applies to an individual 
cooperative's operations. The synopsis is not intended to change the 
requirements of the FASB standards unless it is set forth in the 
section entitled RUS Accounting Requirements in each interpretation. If 
a particular borrower believes a conflict exists between the FASB 
standard and an RUS interpretation, the borrower shall request an 
interpretation of this part 1767 under the provisions of Sec. 1767.14. 
The request for interpretation shall specify the specific conflict that 
exists and the borrower's specific circumstances that necessitate the 
interpretation.
* * * * *
    11-20. In Sec. 1767.41, make the following changes:
    a. In the Numerical Index, the entries No. 137, Impairment of Long-
Lived Assets; No. 138, Automatic Meter Reading Systems--Turtles; No. 
139, Global Positioning Systems; No. 140, Radio-Based Automatic Meter 
Reading Systems; No. 630, Split Dollar Life Insurance; and No. 631, 
Special Early Retirement Plan, are proposed to be added in numerical 
order.
    b. In the Subject Matter Index listing under ``A'', entries for 
``Automatic Meter Reading Systems--Radio-Based'', and ``Automatic Meter 
Reading Systems--Turtles'', are proposed to be added in alphabetical 
order.
    c. In the Subject Matter Index listing under ``E'', an entry for 
``Early Retirement Plan,'' is proposed to be added in alphabetical 
order.
    d. In the Subject Matter Index listing under ``G'', an entry for 
``Global Positioning Systems'', is proposed to be added in alphabetical 
order.
    e. In the Subject Matter Index listing under ``I'', entries for 
``Impairment of Long-Lived Assets,'' and ``Insurance--Split Dollar,'' 
are proposed to be added in alphabetical order.
    f. In the Subject Matter Index listing under ``L'', entries for 
``Life Insurance--Split Dollar,'' and ``Long-Lived Assets--
Impairment,'' are proposed to be added in alphabetical order.
    g. In the Subject Matter Index listing under ``M'', entries for 
``Meter Reading Systems--Radio-Based'', and ``Meter Reading Systems--
Turtles'', are proposed to be added in alphabetical order.
    h. In the Subject Matter Index listing under ``R'', an entry for 
``Radio-Based Automatic Meter Reading Systems'', is proposed to be 
added in alphabetical order.
    i. In the Subject Matter Index listing under ``S'', entries for 
``Special Early Retirement Plan,'' and ``Split Dollar Life Insurance,'' 
are proposed to be added in alphabetical order.
    j. In the Subject Matter Index listing under ``T'', an entry for 
``Turtles--Automatic Meter Reading Systems,'' is proposed to be added 
in alphabetical order.
    The additions read as follows:
* * * * *

                             Numerical Index                            
------------------------------------------------------------------------
              Number                               Title                
------------------------------------------------------------------------
                                                                        
                  *        *        *        *        *                 
137..............................  Impairment of Long-Lived Assets.     
138..............................  Automatic Meter Reading Systems--    
                                    Turtles.                            
139..............................  Global Positioning Systems.          
140..............................  Radio-Based Automatic Meter Reading  
                                    Systems.                            
                                                                        
                  *        *        *        *        *                 
630..............................  Split Dollar Life Insurance.         
631..............................  Special Early Retirement Plan.       
------------------------------------------------------------------------


                          Subject Matter Index                          
------------------------------------------------------------------------
                                                                 Number 
------------------------------------------------------------------------
                                    A                                   
                                                                        
                  *        *        *        *        *                 
Automatic Meter Reading Systems--Radio-Based..................       140
Automatic Meter Reading Systems--Turtle.......................       138
                                                                        
                  *        *        *        *        *                 
                                    E                                   
                                                                        
Early Retirement Plan.........................................       631
                                                                        
                  *        *        *        *        *                 
                                    G                                   
                                                                        
                  *        *        *        *        *                 
Global Positioning Systems....................................       139
                                                                        
                  *        *        *        *        *                 
                                    I                                   
                                                                        
Impairment of Long-Lived Assets...............................       137
                                                                        
                  *        *        *        *        *                 
Insurance--Split Dollar.......................................       630
                                                                        
                  *        *        *        *        *                 
                                    L                                   
                                                                        
                  *        *        *        *        *                 
Life Insurance--Split Dollar..................................       630
                                                                        
                  *        *        *        *        *                 
Long-Lived Assets--Impairment.................................       137
                                                                        
                                    M                                   
                                                                        
                  *        *        *        *        *                 
Meter Reading Systems--Radio-Based............................       140
Meter Reading Systems--Turtles................................       138
                                                                        
                  *        *        *        *        *                 
                                    R                                   
                                                                        
Radio-Based Automatic Meter Reading Systems...................       138
                                                                        
                  *        *        *        *        *                 
                                    S                                   
                                                                        
                                                                        
                  *        *        *        *        *                 
Special Early Retirement Plan.................................       631
                                                                        
                  *        *        *        *        *                 
Split Dollar Life Insurance...................................       630
                                                                        
                  *        *        *        *        *                 
                                    T                                   
                                                                        
                  *        *        *        *        *                 
Turtles--Automatic Meter Reading Systems                                
                                                                        
                  *        *        *        *        *                 
------------------------------------------------------------------------

    21. In Sec. 1767.41, Interpretation No. 104 is proposed to be 
revised to read as follows:
* * * * *
104   Terminal Facilities
    Borrowers are sometimes required to construct terminal facilities 
in the transmission line of another utility in order to receive power 
from their power supplier. The document executed between the borrower 
and the utility is normally referred to as a ``License Agreement''. The 
license agreement may

[[Page 23324]]

stipulate that certain items of the terminal facilities are to be 
transferred to, and become the property of, the other utility upon 
completion of the construction. The accounting for this type of 
transaction shall be as follows:
    1. All construction costs incurred shall be charged to a work 
order. Upon completion of the construction and accumulation of all 
costs, the cost of the facilities that become the property of another 
utility shall be transferred from construction work-in-progress to 
Account 303, Miscellaneous Intangible Plant. The cost of the plant for 
which the borrower retains title shall be charged to the appropriate 
plant accounts.
    2. The cost of the facilities recorded in Account 303 shall be 
amortized to Account 405, Amortization of Other Electric Plant, over 
the estimated useful service life of the plant. If the related contract 
or contracts for this power supply are terminated, the unamortized 
balance shall be expensed, in the current period, in Account 557.
* * * * *
    22. In Sec. 1767.41, Interpretation Nos. 137, 138, 139 and 140 are 
proposed to be added to read as follows:
* * * * *
137  Impairment of Long-Lived Assets
    Statement of Financial Accounting Standards No. 121, Accounting for 
the Impairment of Long-Lived Assets and for Long-Lived Assets to be 
Disposed of (Statement No. 121), requires reporting entities to review 
all long-lived assets and certain identifiable intangibles that are to 
be held, used, or disposed of by that entity for impairment whenever 
events and changes in circumstances indicate that the carrying amount 
of the asset may not be recoverable. If the sum of the expected future 
cash flows (undiscounted and without interest charges) is less than the 
carrying value of the asset, the entity must recognize an impairment 
loss. The impairment loss is measured as the amount by which the 
carrying amount of the asset exceeds the fair value of the asset. The 
impairment loss is reported as a component of income from continuing 
operations before income taxes for entities presenting an income 
statement and in the statement of activities of not-for-profit 
organizations. Statement No. 121 does not apply to assets included in 
the scope of Statement of Financial Accounting Standards No. 90, 
Regulated Enterprises--Accounting for Abandonments and Disallowances of 
Plant Costs.

Assets To Be Held or Used

    Entities are required to review long-lived assets and certain 
identifiable intangibles whenever events or changes in circumstances 
indicate that the carrying value of the asset may not be recoverable. 
For example:
    1. A significant decrease in the market value of an asset;
    2. A significant change in the extent or manner in which an asset 
is used;
    3. A significant physical change in an asset;
    4. A significant adverse change in legal factors or in the business 
climate that could affect the value of an asset;
    5. An adverse action or assessment by a regulator;
    6. An accumulation of costs significantly in excess of the amount 
originally expected to acquire or construct an asset; and
    7. A current period operating or cash flow loss combined with a 
history of operating or cash flow losses or a projection or forecast 
that demonstrates continued losses associated with an asset used for 
the purpose of producing revenue.
    The impairment of the asset is measured by estimating the future 
cash flows expected to result from the use of the asset and its 
disposition. Assets are grouped at the lowest level for which there are 
identifiable cash flows that are largely independent of the cash flows 
of other groups of assets. Future cash flows are those cash inflows 
that are expected to be generated by the asset less the cash outflows 
expected to be necessary to maintain those inflows. If the future cash 
flows (undiscounted and without interest charges) are less than the 
carrying value of the asset, an impairment loss must be recognized. If 
the expected future cash flows are greater than the carrying value of 
the asset, no impairment loss exists.
    The impairment loss is the amount by which the carrying amount 
(acquisition cost less accumulated depreciation) of the asset exceeds 
the fair value of the asset. The fair value of the asset is the amount 
for which the asset could be bought or sold in an arms-length 
transaction between willing parties. A quoted market price is the best 
evidence of fair value. If this information is not available, the fair 
value should be based upon the best information available. 
Consideration should be given to the price of similar assets and 
valuation techniques such as the present value of the expected future 
cash flows discounted at a rate representative of the risk involved, 
option-pricing models, matrix pricing, option-adjusted spread models, 
and fundamental analysis. All available information should be 
considered when using the above pricing techniques.
    If an impairment is recognized, the carrying value of the asset is 
reduced to the lower of its fair value or its carrying value and, if 
depreciable, depreciated over the remaining useful life. Previously 
recognized impairment losses cannot be restored. If the asset was 
acquired in a business combination and there is goodwill resulting from 
the transaction, the goodwill is included in the asset grouping and 
reduced or eliminated before any adjustment is made to the carrying 
value of the asset.
    The following financial statement disclosures are required in the 
period in which the impairment is recognized:
    1. A description of the impaired assets and the facts and 
circumstances surrounding the impairment;
    2. The amount of the impairment and how fair value was determined;
    3. The caption in the income statement or the statement of 
activities in which the impairment loss is aggregated if that loss has 
not been presented as a separate caption or reported parenthetically on 
the face of the statement; and
    4. If applicable, the business segment(s) affected.

Assets To Be Disposed

    Statement No. 121 also applies to all long-lived assets and certain 
identifiable intangibles for which management, having the authority to 
approve the action, has committed to a plan of disposal except those 
assets covered by APB No. 30, Reporting the Results of Operations--
Reporting the Effects of Disposal of a Segment of a Business, and 
Extraordinary, Unusual and Infrequently Occurring Events and 
Transactions. An asset to be disposed of is carried at the lower of its 
carrying amount (acquisition cost less accumulated depreciation) or its 
fair value less cost to sell.
    The fair value of the asset to be disposed of is computed in the 
same manner as that for an asset to be held or used by the entity. 
Selling costs include the incremental direct cost to transact the 
sale--broker commissions, legal fees, title transfer, and other closing 
costs that must be incurred before legal title can be transferred. 
Costs such as insurance, security service, and utilities are generally 
excluded unless these costs are part of a contractual agreement that 
obligates the entity to incur such costs in the future. If the asset's 
fair value is based upon current market price or the current selling 
price for a similar asset, the fair value is considered a current 
amount

[[Page 23325]]

and is not discounted. If, however, the fair value is based upon 
discounted expected future cash flows and if the sale is to occur 
beyond one year, the cost to sell must also be discounted. Assets 
covered by this statement are not depreciated (amortized) while being 
held for disposal.
    Subsequent revisions in estimates of fair value less cost to sell 
are reported as adjustments to the carrying amount of the asset to be 
disposed of as long as the carrying amount of the asset does not exceed 
the original carrying amount.
    The following financial statement disclosures are required in the 
period in which the impairment is recognized:
    1. A description of the assets to be disposed of including the 
facts and circumstances leading to the expected disposal, the expected 
disposal date, and the carrying amount of those assets;
    2. If applicable, the business segment(s) in which the assets to be 
disposed of are held;
    3. The amount, if any, of the impairment loss resulting from the 
adoption of this statement;
    4. The gain or loss, if any, resulting from subsequent revisions in 
the estimates of fair value less cost to sell;
    5. The caption in the income statement or statement of activities 
in which the gains or losses are aggregated if those gains or losses 
have not been presented as a separate caption or reported 
parenthetically on the face of the statement; and
    6. The results of operations for assets to be disposed of to the 
extent that those results are included in the entity's results of 
operations for the period and can be identified.

Accounting Requirements

    All borrowers must adopt the accounting prescribed by Statement No. 
121.

Effective Date and Implementation

    Statement No. 121 is effective for financial statements for fiscal 
years beginning after December 15, 1995. Impairment losses resulting 
from the application of this statement to assets that are held or used 
by the entity must be reported in the period in which the recognition 
criteria are first applied and met. Impairment losses attributable to 
assets to be disposed of must be reported as the cumulative effect of a 
change in accounting principle as prescribed in Accounting Principles 
Board Opinion No. 20, Accounting Changes.

Accounting Journal Entries--Implementation Date

    If a borrower has impaired assets that are held or used at the 
implementation date, the following entry should be recorded:

Dr. 426.5, Other Deductions
    Cr. 300 Series of Accounts, Plant Accounts
To record the adoption of Statement No. 121 for the impairment of 
assets that are held or used.

    If a borrower has impaired assets to be disposed of at the 
implementation date, the following entry should be recorded:

Dr. 435.1, Cumulative Effect on Prior Years of a Change in 
Accounting Principle
    Cr. 300 Series--Plant Accounts
To record the adoption of Statement No. 121 for assets that are to 
be disposed.

Accounting Journal Entries--Subsequent to Implementation Date

    If an asset that is either held, used or to be disposed of becomes 
impaired, the following entry should be recorded:

Dr. 426.5, Other Deductions
    Cr. 300 Series--Plant Accounts
To record the impairment of a plant asset.

    If a borrower makes a subsequent revision in the estimate of the 
fair value less the cost to sell of an asset to be disposed of, the 
following entry should be recorded:

Dr. 300 Series--Plant Accounts
    Cr. 421, Miscellaneous Nonoperating Income
To revise the fair value of an asset to be disposed.
138  Automatic Meter Reading Systems--Turtles
    Automatic meter reading systems were developed from technology 
called power line carrier communication systems. One such system, 
developed by Hunt Technologies, Inc., is called by its brand name, the 
Turtle system. In addition to its function as an automated reading 
device, the Turtle can provide outage detection, power failure counts, 
and other potential applications. The current Turtle system does not 
have the capability for applications such as collection of load survey 
or interval data. A Turtle system consists of:
    1. A Meter reader mounted (retrofitted) inside the meter;
    2. A receiver located in each substation; and
    3. Monitoring and programming equipment (software and personal 
computer) usually located in the headquarters building.
    The system transmits continuous information one way from the meter 
to a receiver located in the substation. The receiver constantly 
monitors every Turtle meter served by the substation. The substation 
receiver can be sized to monitor up to 3,000 Turtle meter readers at 
the same time. The data is then transmitted to the headquarters 
monitoring equipment via telephone line or an equivalent communication 
system.
    The technical literature and other information provided by the 
manufacturer indicates that this system can only be used for remote 
meter reading, outage detection, power failure counts, and phase 
identification. At this time, there is no indication that the system 
supports other functions such as home security. Therefore, the 
accounting prescribed for Turtle systems remote meter reading devices 
and support equipment relates only to electric utility operations.

Accounting Requirements

    The function and location of the equipment are the primary factors 
in determining the account in which the equipment shall be recorded. 
The components of the Turtle system shall be accounted for as follows:
    1. Meter Reader Units. The cost of the meter reader and 
retrofitting the meter with the meter reader units shall be capitalized 
to the cost of the existing meter in Account 370, Meters. Any 
associated operating expenses shall be charged to Account 586, Meter 
Expenses, with maintenance expenses charged to Account 597, Maintenance 
of Meters.
    2. Turtle Receivers. The cost of substation receiver(s) shall be 
recorded in Account 362, Station Equipment. Any associated operating 
expenses shall be charged to Account 582, Station Expenses, with 
maintenance expenses charged to Account 592, Maintenance of Station 
Equipment.
    3. Monitoring and Programming Equipment. Since the computer and 
associated software are provided by the manufacturer of the Turtle 
system, it is assumed that the computer system is dedicated to the 
remote meter reading function and not used in general utility 
operations. The cost of the computer equipment and software shall, 
therefore, be charged to Account 362, Station Equipment. Operating 
expenses shall be charged to Account 582, Station Expenses, with 
maintenance expenses charged to Account 592, Maintenance of Station 
Equipment.
139  Global Positioning Systems
    The Global Positioning System (GPS) is a worldwide radio-navigation 
system formed from a network of 24 satellites and their ground 
stations. Utilities are using this advanced technology geographic data 
collection system to

[[Page 23326]]

update and modernize their system maps. GPS uses a system of satellites 
orbiting the earth to establish plant locations with pinpoint accuracy. 
By triangulating from three satellites and using radio signals to 
measure distances and locate items, system-wide maps can be created of 
the utility's service area. A field inventory is then taken of the 
utility's plant and plotted onto the map. The GPS consists of base 
station equipment, remote station equipment, the GPS program, and 
mapping conversion software.
    All equipment associated with GPS is dedicated to the mapping 
effort. The base station is installed at a fixed location and ties 
satellite measurements into a solid local reference. The remote station 
is a portable receiver that is taken into the field to determine 
locations and is moved from site to site. The GPS program is the 
application software that operates the station equipment and is used by 
layout technicians to gather information of existing and new facilities 
in the field. The conversion software is used for converting the GPS 
and inventory information gathered in the field into a form usable by 
the mapping program.

Accounting Requirements

    The function and location of the equipment are the primary factors 
in determining the account in which the equipment shall be recorded. 
The components of the GPS shall be accounted for as follows:
    1. Remote and Base Station Equipment. The cost of the equipment, 
both remote and fixed, shall be capitalized in a subaccount of Account 
391, Office Furniture and Equipment.
    2. GPS Program and Conversion Software for Mapping. The cost of GPS 
program and conversion software shall be capitalized in a subaccount of 
Account 391, Office Furniture and Equipment.
    3. GPS/GIS Field Inventory of System. The cost of performing a GPS/
GIS survey and field inventory of the existing system by either a 
consultant or the utility's own forces, shall be charged to Account 
588, Miscellaneous Distribution Expenses.
140  Radio-Based Automatic Meter Reading Systems
    Radio-based automatic meter reading technology allows meters 
equipped with a low-power radio device called an ERT (Encoder, 
Receiver, Transmitter) to be read from a remote location. The ERT 
device can either be retrofitted to an existing meter or purchased 
installed in a new meter. The ERT device ``encodes'' energy consumption 
and transmits this information to a radio transceiver equipped handheld 
computer. The data collected and stored in the handheld computer is 
then uploaded to a billing computer using specialized software for that 
purpose.

Accounting Requirements

    The function and location of the equipment are the primary factors 
in determining the account in which the equipment shall be recorded. 
The components of the radio-based automatic meter reading system shall 
be accounted for as follows:
    1. Meter Reader Units. The cost of the meter reader encoding device 
and retrofitting the meter with the meter reader unit shall be 
capitalized to the cost of the existing meter in Account 370, Meters. 
Any associated operating expenses shall be charged to Account 586, 
Meter Expenses, with maintenance expenses charged to Account 597, 
Maintenance of Meters. Meters either fitted or retrofitted with the 
device shall be segregated as separate retirement units in the 
continuing property records.
    2. Handheld Computer. The primary function of the hand held 
computer is to meter energy usage for billing purposes; therefore, the 
cost of the handheld computer(s) and any associated devices required to 
upload the data to the billing computer, shall be recorded in Account 
370, Meters.
    3. Upload Software. Since the application software required to 
upload the energy usage to the billing computer is related to the 
billing function, the cost of the software shall be capitalized in a 
subaccount of Account 391, Office Furniture and Equipment.
* * * * *
    23. In Section 1767.41, Interpretations Nos. 601, 602, 603, 604, 
606, 608, 618, 627, and 628 are proposed to be revised to read as 
follows:
* * * * *
601  Employee Benefits
    The costs of employees' fringe benefits (hospitalization, 
retirement, holiday, sick and vacation pay, etc.) shall be accumulated 
in an appropriate clearing account and allocated monthly on the basis 
of payroll. Vacation costs shall be accrued monthly by appropriate 
credits to an accrual account. These monthly accruals shall be 
allocated on the basis of direct payroll costs to construction, 
retirement, and the applicable operations, maintenance, and 
administrative expense accounts.
    Sick leave costs are not normally accrued unless the employee is 
entitled to be paid for accumulated sick leave at the termination of 
employment. Salary payments and the associated employee pensions and 
benefits and social security and other payroll taxes for an employee 
who is actually sick shall be charged to the same account or accounts 
to which his or her salary is normally charged.
602  Compensated Absences
    Statement of Financial Accounting Standards No. 43, Accounting for 
Compensated Absences (Statement No. 43), requires employers to accrue a 
liability as an employee earns the right to be paid for future 
absences. Four criteria were established for this accrual:
    1. The employer's obligation for payment for future absences is 
attributable to employees' services already performed.
    2. The obligation relates to employee rights which vest or 
accumulate. Vested rights are considered those for which the employer 
is obligated to make payment even if the employee terminates. Rights 
which accumulate are those earned, but unused rights to compensated 
absences which may be carried forward to one or more periods subsequent 
to the period in which they are earned.
    3. Payment of the compensation is probable.
    4. The amount can be reasonably estimated.
    A company's liability shall be estimated based upon payments it 
expects to make as a result of employees' work already performed. If a 
reasonable estimate cannot be made, the company shall disclose that 
fact in the financial statements.
    Statement No. 43 does not apply to severance or termination pay, 
postretirement benefits, deferred compensation, stock or stock options, 
group insurance, or other long-term fringe benefits.
    The entries required to account for the accrual of compensated 
absences are as follows:

Dr. 435.1, Cumulative Effect on Prior Years of a Change in 
Accounting Principle
Cr. 242.3, Accrued Employees' Vacation and Holidays
To record the liability for benefits earned in prior years.

Dr. 107, Construction Work in Progress
Dr. 108.8, Retirement Work in Progress
Dr. Various Operations, Maintenance, and Administrative Expense 
Accounts
Cr. 242.3, Accrued Employees Vacation and Holidays
To record the liability for benefits earned in the current period.

[[Page 23327]]

603  Employee Retirement and Group Insurance
    Some borrowers have group insurance or retirement plans or both for 
their employees. As a general rule the cost of these programs is borne 
partially by the cooperative and partially by its employees. The 
cooperative may pay the full cost in advance and recover the employee's 
share through payroll deductions. The accounting for these transactions 
is as follows:
    1. The cooperative's advanced payment of premiums on insurance and 
retirement agreements shall be charged to Account 165, Prepayments, for 
the employers portion, and Account 143, Other Accounts Receivable, for 
the employee's portion.
    2. The cost of the employer's portion of a retirement and group 
insurance program shall be charged to construction and retirement 
activities and the applicable operations, maintenance, and 
administrative expense accounts based upon direct labor hours.
604  Deferred Compensation
    Many utilities participate in the NRECA Deferred Compensation 
Program. Based upon the provisions of the program, the following 
accounting entries shall be made:

Dr. 186.XX, Miscellaneous Deferred Debits--Deferred Compensation
    Cr. 228.3, Accumulated Provision for Pensions and Benefits
To increase the deferred compensation provision by the amount of the 
annual deposit to NRECA's Deferred Compensation Fund.

Dr. 128, Other Special Funds--Deferred Compensation
Cr. 131.1, Cash--General
To record the annual deposit to NRECA's Deferred Compensation Fund.

Dr. Construction Work in Progress, Retirement Work in Progress, or 
the Various Operations, Maintenance, and Administrative Expense 
Accounts, as appropriate.
Cr. 186.XX, Miscellaneous Deferred Debits--Deferred Compensation
To record monthly accrual of deferred compensation.

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

    NRECA provides borrowers that participate in the deferred 
compensation program with an annual account statement disclosing the 
activity for each Homestead Fund investment including the number of 
shares owned, interest income, dividend income, capital gains/losses, 
and the value of the shares owned at statement date. Funds may be 
invested in the Short-term Bond Fund, the Value Fund, the Short-term 
Government Securities Fund, and the Daily Income Fund. Depending upon 
the Homestead Fund selected, invested funds may earn interest and 
dividend income and may experience unrealized holding gains or losses. 
Based upon the information provided on the annual statement, the 
following journal entries shall be recorded to recognize the increase 
or decrease in the fund assets:

Dr. 128, Other Special Funds--Deferred Compensation
    Cr. 419, Interest and Dividend Income
    Cr. 421, Miscellaneous Nonoperating Income
To record an increase in the fund value as of December 31, 19xx, 
resulting from interest and dividend income and from unrecognized 
holding gains on trading securities.

Dr. Various Operations, Maintenance, and Administrative Expense 
Accounts
    Cr. 228.3, Accumulated Provision for Pensions and Benefits
To record an increase in the liability to the employee resulting 
from an increase in the investment account.

Dr. 426.5, Other Deductions
Cr. 128, Other Special Funds--Deferred Compensation
To record a decrease in fund value as of December 31, 19xx, 
resulting from unrecognized holding losses on trading securities.

Dr. 228.3, Accumulated Provision for Pensions and Benefits
    Cr. Various Operations, Maintenance, and Administrative Expense 
Accounts
To record a decrease in the liability to the employee resulting from 
a decrease in the investment account.

    Payments made to participating employees because of retirement or 
separation for other reasons shall be recorded using the following 
entries:

Dr. 131.1, Cash--General
    Cr. 128, Other Special Funds--Deferred Compensation
To record the receipt of funds from NRECA.

        and

Dr. 228.3, Accumulated Provision for Pensions and Benefits
    Cr. 131.1, Cash--General
To record payment to employee for deferred compensation.

    If the borrower has elected to bear the market risk of the funds 
which guarantee that the amount of money an employee receives will not 
be less than the amount of salary deferred, the following entry shall 
be recorded if total payment(s) from NRECA are less than the amount of 
salary deferred:

Dr. Various Operations, Maintenance, and Administrative Expense 
Accounts
    Cr. 131.1, Cash--General
To record payment to employee for deferred compensation. Payment was 
made because amount returned did not equal salary deferred.

    Appropriate disclosure of the terms of the program shall be made in 
the notes to the financial statements.
* * * * *
606  Pension Costs
    With the issuance of Statement of Financial Accounting Standards 
No. 87, Employers' Accounting for Pensions (Statement No. 87), there 
have been significant changes in the accounting and reporting 
requirements relating to pension costs. This section will highlight the 
accounting and reporting requirements for the major types of pension 
plans. It should be noted, however, that the definitions and accounting 
procedures outlined in this section relate to financial accounting and 
they may differ from those used for tax accounting.

Defined Benefit Pension Plans

    A defined benefit pension plan is a plan that defines an amount of 
pension benefit to be provided, usually as a function of one or more 
factors such as age, years of service, or compensation. In a defined 
benefit plan, the employer promises to provide, in addition to current 
wages, retirement income payments in future years after the employee 
retires or terminates service. Generally, the amount of benefit to be 
paid depends upon a number of future events that are incorporated into 
the plan's benefit formula, after including how long the employee and 
any survivors live, how many years of service the employee renders, and 
the employee's compensation in the years immediately before retirement 
or termination.
    Under a defined benefit plan, the determination of pension costs, 
assets, liabilities, and the disclosures in the financial statements 
require many calculations and assumptions to be made. This section 
provides a general overview of the accounting and reporting 
requirements associated with a defined benefit pension plan. Consult 
Statement No. 87 for guidance in making the necessary calculations and 
assumption.
    The accounting and reporting requirements related to a defined 
benefit pension plan are as follows:
    1. The following components shall be included in the periodic 
recognition of

[[Page 23328]]

net pension cost by an employer sponsoring a defined benefit pension 
plan:
    a. The service cost component recognized in a period shall be 
determined as the actuarial present value of benefits attributed by the 
pension plan formula to employee service during that period. The 
measurement of the service cost component requires use of an 
attribution method and assumptions.
    b. The interest cost component recognized in a period shall be 
determined as the increase in the projected benefit obligation due to 
the passage of time. Measuring the projected benefit obligation as a 
present value requires accrual of an interest cost at rates equal to 
the assumed discount rates.
    c. For a funded plan, the actual return on plan assets, if any, 
shall be determined based upon the fair value of plan assets at the 
beginning and the end of the period, adjusted for contributions and 
benefit payments.
    d. Plan amendments (including initiation of a plan) often include 
provisions that grant increased benefits based upon services rendered 
in prior period. Because plan amendments are granted with the 
expectation that the employer will realize economic benefits in future 
period, Statement No. 87 does not require the cost of providing such 
retroactive benefits (prior service cost) to be included in net 
periodic pension cost entirely in the year of the amendment but 
provides for recognition during the future service periods of those 
employees active at the date of the amendment who are expected to 
receive benefits under the plan.
    The cost of retroactive benefits (including benefits that are 
granted to retirees) is the increase in the projected benefit 
obligation at the date of the amendment. Except as noted below, prior 
service cost shall be amortized by assigning an equal amount to each 
future period of service of each employee active at the date of the 
amendments who is expected to receive benefits under the plan. If all 
or almost all of the plan's participants are inactive, the cost of 
retroactive plan amendments affecting benefits of inactive participants 
shall be amortized based upon the remaining life expectancy of those 
participants rather than the remaining service period.
    To reduce the complexity and detail of the computations require, 
consistent use of an alternative amortization approach that more 
rapidly reduces the unrecognized cost of retroactive amendments is 
acceptable. For example, a straight-line amortization of the cost over 
the average remaining service period of employees expected to receive 
benefits under the plan is acceptable. The alternative method used 
shall be disclosed.
    In some situations, a history of regular plan amendments and other 
evidence may indicate that the period during which the employee expects 
to realize economic benefits from an amendment granting retroactive 
benefits is shorter than the entire remaining service period of the 
active employees. Identification of such situations requires an 
assessment of the individual circumstances and the substance of the 
particular plan situation. In those circumstances, the amortization of 
prior service cost shall be accelerated to reflect the more rapid 
expiration of the employer's economic benefits and to recognize the 
cost in the periods benefited.
    A plan amendment can reduce rather than increase the projected 
benefit obligation. Such a reduction shall be used to reduce an 
existing unrecognized prior service cost, and the excess, if any, shall 
be amortized on the same basis as the cost of benefit increases.
    e. Gains and losses are changes in the amount of either the 
projected benefit obligation or plan assets resulting from experience 
different from that assumed and changes in assumptions. Gains and 
losses include amounts that have been realized. Because gains and 
losses may reflect refinements in estimates as well as real changes in 
economic values and because some gains in one period may be offset by 
losses in another or vice versa, the recognition of gains and losses as 
components of net pension cost of the period in which they arise, is 
not required.
    The expected return on plan assets shall be determined based upon 
the expected long-term rate of return on plan assets and the market-
related value of plan assets. The market-related value of plan assets 
shall be either fair value or a calculated value that recognizes 
changes in fair value in a systematic and rational manner over not more 
than 5 years. Different ways of calculating market-related value may be 
used for different classes of assets but the manner of determining 
market-related value shall be applied consistently from year to year 
for each asset class.
    Asset gains and losses are the differences between the actual 
return on assets during a period and the expected return on assets for 
that period. Assets gains and losses include both changes reflected in 
the market-related value of assets and changes not yet reflected in the 
market-related value (that is, the difference between the fair value of 
assets and the market-related value). Asset gains and losses not yet 
reflected in market-related values are not required to be amortized.
    As a minimum, amortization of an unrecognized gain or loss 
(excluding asset gains and losses not yet reflected in market-related 
value) shall be included as a component of net pension cost for a year 
if, as of the beginning of the year, that unrecognized net gain or loss 
exceeds 10 percent of the greater of the projected benefit obligation 
or the market-related value of plan assets. If amortization is 
required, the minimum amortization shall be that excess divided by the 
average remaining service period of active employees expected to 
receive benefits under the plan. If all or almost all of a plan's 
participants are inactive, the average remaining life expectancy of the 
inactive participants shall be used instead of average remaining 
service life.
    Any systematic method of amortization of gains and losses may be 
used in lieu of the minimum specified in the previous paragraph 
provided that the minimum is used in any period in which the minimum is 
greater (reduces the net balance by more), the method is applied 
consistently, the method is applied similarly to both gains and losses, 
and the method is disclosed.
    The gain or loss component of net periodic pension cost shall 
consist of the difference between the actual return on plan assets and 
the expected return on plan assets and amortization of the unrecognized 
net gain or loss from previous periods.
    2. A liability (unfunded accrued pension cost) shall be recognized 
if net periodic pension cost recognized pursuant to Statement No. 87 
exceeds amounts the employer has contributed to the plan. An asset 
(prepaid pension cost) shall be recognized if net periodic pension cost 
is less than amounts the employer has contributed to the plan.
    If the accumulated benefit obligation exceeds the fair value of 
plan assets, the employer shall recognize a liability (including 
unfunded accrued pension cost) that is at least equal to the unfunded 
accumulated benefit obligation. Recognition of an additional minimum 
liability is required if an unfunded accumulated benefit obligation 
exists and an asset has been recognized as a prepaid pension cost, the 
liability already recognized as unfunded accrued pension cost is less 
than the unfunded accumulated benefit obligation, or no accrued or 
prepaid pension cost has been recognized.
    If an additional minimum liability is recognized, an equal amount 
shall be

[[Page 23329]]

recognized as an intangible asset, provided that the asset does not 
exceed the amount of unrecognized prior service cost. If an additional 
liability required to be recognized exceeds unrecognized prior service 
cost, the excess (which represents a net loss not yet recognized as a 
net periodic pension cost) shall be reported as a separate component 
(reduction) of equity.
    When a new determination of the amount of additional liability is 
made to prepare a balance sheet, the related intangible asset and 
separate component of equity shall be eliminated or adjusted, as 
necessary.
    3. An employer sponsoring a defined benefit pension plan shall 
disclose the following information:
    a. A description of the plan including employee groups covered, 
type of benefit formula, funding policy, types of assets held and 
significant nonbenefit liabilities, if any, and the nature and effect 
of significant matters affecting comparability of information for all 
period presented.
    b. The amount of net periodic pension cost for the period showing 
separately the service cost component, the interest cost component, the 
actual return on assets for the period, and the net total of other 
components.
    c. A schedule reconciling the funded status of the plan with 
amounts reported in the employer's balance sheet, showing separately, 
the fair value of plan assets, the projected benefit obligation 
identifying the accumulated benefit obligation and the vested benefit 
obligation, the amount of unrecognized prior service cost, the amount 
of unrecognized net gain or loss including asset gains and losses not 
yet reflected in market-related value), the amount of any remaining 
unrecognized net obligation or net asset existing at the date of 
initial application of Statement No. 87, the amount of any additional 
liability recognized, and the amount of net pension asset or liability 
recognized in the balance sheet (which is the net result of combining 
the previous six items).
    d. The weighted-average assumed discount rate and rate of 
compensation increase (if applicable) used to measure the projected 
benefit obligation and the weighted-average expected long-term rate of 
return on plan assets.
    e. If applicable, the amount and type of securities of the employer 
and related parties included in plan assets, and the approximate amount 
of annual benefits of employees and retirees covered by annuity 
contracts issued by the employer and related parties. Also, if 
applicable, the alternative amortization periods used.
    f. An employer that sponsors two or more separate defined benefit 
pension plans shall determine net periodic pension cost, liabilities, 
and assets by separately applying the provisions of Statement No. 87 to 
each plan. In particular, unless an employer clearly has a right to use 
the assets of one plan to pay benefits of another, a liability required 
to be recognized for one plan shall not be reduced or eliminated 
because another plan has assets in excess of its accumulated benefit 
obligation or because the employer has prepaid pension cost related to 
another plan.
    The required disclosures may be aggregated for all of an employer's 
single-employer defined benefit plans, or plans may be disaggregated 
into groups so as to provide the most useful information. Plans with 
assets in excess of the accumulated benefit obligation, however, shall 
not be aggregated with plans that have accumulated benefit obligations 
that exceed plan assets.

Annuity Contracts

    An annuity contract is a contract in which an insurance company 
unconditionally undertakes a legal obligation to provide specified 
benefits to specific individuals in return for a fixed consideration or 
premium. An annuity contract is irrevocable and involves the transfer 
of significant risk from the employer to the insurance company. Some 
annuity contracts (participating annuity contracts) provide that the 
purchaser (either the plan or the employer) may participate in the 
experience of the insurance company. Under these contracts, the 
insurance company ordinarily pays dividends to the purchaser. If the 
substance of a participating contract is such that the employer remains 
subject to all or most of the risks and rewards associated with the 
benefit obligation covered and the assets transferred to the insurance 
company, that contract is not an annuity contract for purposes of 
Statement No. 87.
    To the extent that benefits currently earned are covered by annuity 
contracts, the cost of these benefits shall be the cost of purchasing 
the contracts, except as noted below. That is, if all benefits 
attributed by the plan's benefits formula to service in the current 
period are covered by nonparticipating annuity contracts, the cost of 
the contracts determines the service cost component of net pension cost 
for that period.
    Benefits provided by the pension benefit formula beyond benefits 
provided by annuity contracts (for example, benefits related to future 
compensation levels) shall be accounted for according to the provisions 
applicable to plans not involving insurance contracts.
    Benefits covered by annuity contracts shall be excluded from the 
projected benefit obligation and the accumulated benefit obligation. 
Except as noted below, annuity contracts shall be excluded from plan 
assets.
    Some annuity contracts provide that the purchaser (either the plan 
or the employer) may participate in the experience of the insurance 
company. Under these contracts, the insurance company ordinarily pays 
dividends to the purchaser, the effect of which is to reduce the cost 
of the plan. The purchase price of a participating annuity contract 
ordinarily is higher than the price of an equivalent contract without 
participation rights. The cost of the participation right shall be 
recognized, at the date of purchase, as an asset. In subsequent 
periods, the participation right shall be measured at its fair value if 
the contract is such that the fair value is reasonably estimable. 
Otherwise, the participation right shall be measured at its amortized 
cost (not in excess of its net realizable value), and the cost shall be 
amortized systematically over the expected dividend period under the 
contract.

Other Contracts With Insurance Companies

    Insurance contracts that are, in substance, equivalent to the 
purchase of annuities shall be accounted for as such. Other contracts 
with insurance companies shall be accounted for as investments and 
measured at fair value. For some contracts, the best available evidence 
of fair value may be contract value. If a contract has a determinable 
cash surrender value or conversion value, that is presumed to be its 
fair value.

Defined Contribution Plans

    A defined contribution pension plan is a plan that provides pension 
benefits in return for services rendered, provides an individual 
account for each participant, and has terms that specify how 
contributions to the individual's accounts are to be determined rather 
than the amount of pension benefits the individual is to receive. Under 
a defined contribution plan, the pension benefits a participant will 
receive depend only upon the amount contributed to the participant's 
account, the returns earned on investments of those contributions, and 
forfeitures of other participants' benefits that may be allocated to 
the participant's account.
    To the extent that a plan's defined contributions to an 
individual's account

[[Page 23330]]

are to be made for periods in which that individual renders services, 
the net pension cost for a period shall be the contribution called for 
in that period. If a plan calls for contributions for periods after an 
individual retires or terminates, the estimated cost shall be accrued 
during the employee's service period.
    An employer that sponsors one or more defined contribution plans 
shall disclose the following separately from its defined benefit plan 
disclosures:
    1. A description of the plan(s) including employee groups covered, 
the basis for determining contributions, and the nature and effect of 
significant matters affecting comparability of information for all 
periods presented.
    2. The amount of cost recognized during the period.
    A pension plan having characteristics of both a defined benefit 
plan and a defined contribution plan requires careful analysis. If the 
substance of the plan is to provide a defined benefit, as may be the 
case with some ``target benefit'' plans, the accounting and disclosure 
requirements shall be determined in accordance with the provisions 
applicable to a defined benefit plan.

Multiemployer Plans

    A multiemployer plan is a pension plan to which two or more 
unrelated employers contribute, usually pursuant to one or more 
collective-bargaining agreements. A characteristic of multiemployer 
plans is that assets contributed by one participating employer may be 
used to provide benefits to employees of other participating employers 
since assets contributed by an employer are not segregated in a 
separate account or restricted to provide benefits only to employees of 
that employer.
    An employer participating in a multiemployer plan shall recognize 
as net pension cost, the required contribution for the period and shall 
recognize as a liability, any contributions due and unpaid. The 
required contribution includes both current costs and prior service 
costs. If an employer elects to fund prior service cost in full at the 
inception of the plan, the total payment becomes the employer's 
required contribution, and accordingly, its pension cost for the 
period.
    The following provisions are applicable to RUS borrowers 
participating in a multiemployer pension plan:
    1. An electric utility participating in a multiemployer plan may 
defer current period pension expenses if the provisions of Statement of 
Financial Accounting Standards No. 71 (Statement No. 71), Accounting 
for the Effects of Certain Types of Regulation, are applied.
    Under the provisions of Statement No. 71, pension costs may be 
deferred provided such costs are recovered through future rates.
    2. An electric utility instituting an amendment to the NRECA 
Retirement and Security plan enters into a contractual agreement to pay 
the costs incurred (prior service pension costs) for the amendment. In 
such cases, the agreement is noncancelable and payable regardless of 
continued participation in the plan.
    Since the utility is unconditionally committed to making these 
payments and such payments are not contingent upon the utility's 
continued participation in the plan, the recognition of that liability 
is appropriate. The costs associated with this liability shall be 
expensed, in their entirety, when the liability is recognized.
    The accounting journal entries required to record the transactions 
associated with a multiemployer pension plan are as follows:

SAMPLE 1--CURRENT PENSION EXPENSE

    The journal entry required to record the normal costs associated 
with the NRECA Retirement and Security Program is as follows:
Dr. Various Operations, Maintenance, and Administrative Expense 
Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
    Cr. 131.1, Cash--General
To record the payment of pension costs to NRECA.

    Note: This entry shall not be recorded during the moratorium.

SAMPLE 2--PRIOR SERVICE PENSION EXPENSE

    The journal entries required to record the prior service costs 
associated with the NRECA Retirement and Security Program are as 
follows:
    1. If the RUS borrower elects to pay the prior service pension 
costs in full, and there is no deferral of costs under the provision 
of Statement No. 71, the following entry shall be recorded:
Dr. Various Operations, Maintenance, and Administrative Expense 
Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
    Cr. 131.1, Cash--General
To record the payment of prior service pension costs to NRECA.

    2. If the RUS borrower elects to finance prior service pension 
costs over a period of years and there is no deferral of costs under 
the provisions of Statement No. 71, the following entries shall be 
recorded:
Dr. Various Operations, Maintenance, and Administrative Expense 
Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
    Cr. 224, Other Long-Term Debt
To record the liability to NRECA for prior service pension costs.

Dr. 224, Other Long-Term Debt
Dr. 427, Interest on Long-Term Debt
    Cr. 131.1, Cash--General
To record the annual payment to NRECA for prior service pension 
costs.

    3. If the RUS borrower elects to finance prior service pension 
costs over a period of years and such costs are being deferred and 
amortized in accordance with the provisions of Statement No. 71, the 
following entries shall be recorded:
Dr. 182.3, Other Regulatory Assets
    Cr. 224, Other Long-Term Debt
To record the liability to NRECA for prior service pension costs.

Dr. Various Operations, Maintenance, and Administrative Expense 
Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
    Cr. 182.3, Other Regulatory Assets
To record the amortization of deferred prior service pension costs.

Dr. 224, Other Long-Term Debt
Dr. 427, Interest on Long-Term Debt
    Cr. 131.1, Cash--General
To record the annual payment to NRECA for prior service pension 
costs.

    4. If the RUS borrower elects to pay the prior service pension 
costs in full and such costs are being deferred and amortized in 
accordance with the provisions of Statement No. 71, the following 
entries shall be recorded:
Dr. 182.3, Other Regulatory Assets
    Cr. 131.1, Cash--General
To record the payment to NRECA for prior service pension costs.

Dr. Various Operations, Maintenance, and Administrative Expense 
Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
    Cr. 182.3, Other Regulatory Assets
To record the amortization of deferred prior service pension costs.

    It should be noted that although the above entries relate 
specifically to the NRECA Retirement and Security Program, they are 
applicable to all multiemployer pension plans.
    An employer that participates in one or more multiemployer plans 
shall disclose the following separately from disclosures for a single-
employer plan:
    1. A description of the multiemployer plan(s) including the 
employee groups covered, the type of benefits provided (defined benefit 
or defined contribution), and the nature and effect of significant 
matters affecting comparability of information for all periods 
presented.
    2. The amount of cost recognized during the period.

[[Page 23331]]

Multiple-Employer Plans

    A multiple-employer plan is, in substance, aggregations of single-
employer plans combined to pool their assets for investment purposes to 
reduce the cost of plan administration. Under a multiple-employer plan, 
assets are segregated and specifically identified to an employer. In 
addition, such plans may have features that allow participating 
employers to have different benefit formulas. Such plans shall be 
considered single-employer plans for financial accounting purposes and 
each employer's accounting shall be based upon its respective interest 
in the plan.
* * * * *
608  Training Costs, Attendance at Meetings, Etc.
    Utilities engage in many types of training programs. Seminars are 
conducted for directors, managers, office managers, attorneys, 
engineers, and others. Bookkeepers and office managers attend 
accountants' meetings. Safety engineers attend safety schools and 
subsequently conduct regular safety meetings at the cooperative. Costs 
incurred for the various types of training activities shall be 
accounted for as follows:
    1. Managers' and directors' expenses to attend the NRECA national 
and state conventions shall be charged to Account 930.2, Miscellaneous 
General Expenses.
    2. Management or engineering seminar fees, salary time attending 
such seminars including the associated pensions and benefits expense 
and payroll taxes, and the related per diem and expenses shall be 
charged to the functional expense accounts. Salaries paid to employees 
shall also be charged to the appropriate functional expense account. 
Fees and expenses for directors' attendance shall be charged to Account 
930.2, Miscellaneous General Expenses.
    3. When the office manager, bookkeeper, or work order clerk attends 
a state or regional accounting meeting, their salary time and the 
associated employee pensions and benefits and social security and other 
payroll taxes shall be charged to the account to which the employees' 
time is ordinarily charged.
    4. Employees' salary time employee and the associated pensions and 
benefits and social security and other payroll taxes spent attending 
regular safety meetings conducted by the cooperative shall be charged 
to the account to which the employees' time is ordinarily charged.
    5. A safety engineer's salary time and the associated employee 
pensions and benefits and social security and other payroll taxes spent 
attending a statewide safety school shall be charged to Account 925, 
Injuries and Damages.
    6. The salary time and the associated employee pensions and 
benefits and social security and other payroll taxes spent by a manager 
or line foreman conducting weekly safely meetings shall be charged to 
the appropriate functional expense accounts including Account 590, 
Maintenance, Supervision and Engineering, and Account 920, 
Administrative and General Services.
* * * * *
618  Theft Losses Not Covered by Insurance 
    Utilities may suffer losses as a result of thefts of cash, 
materials and supplies, equipment, or electric plant-in-service that is 
not covered by insurance. The charges for nominal uninsured losses 
shall be recorded in the following accounts:
    1. Cash--Account 924, Property Insurance, shall be charged.
    2. Plant materials and operating supplies--Account 163, Stores 
Expense Undistributed, shall be charged.
    3. Equipment--Account 163, Stores Expense Undistributed, shall be 
charged for stores equipment; and Account 184, Transportation Expense--
Clearing, for transportation and garage equipment. The appropriate 
miscellaneous operations or administrative expense account (Account 
506, 524, 539, 549, 566, 588, 905, 910, 916, or 930.2, as appropriate) 
shall be charged for all other equipment.
    4. Electric Plant-in-Service--A retirement work order shall be 
prepared for electric plant constituting a unit of property. The loss 
due to retirement shall be charged to Account 108.6, Accumulated 
Provision for Depreciation of Distribution Plant. If the plant does not 
constitute a retirement unit, the loss shall be charged to the 
appropriate maintenance expense account.
* * * * *
627  Postretirement Benefits 
    Statement of Financial Accounting Standards No. 106, Employers' 
Accounting for Postretirement Benefits Other than Pensions (Statement 
No. 106), requires reporting entities to accrue the expected cost of 
postretirement benefits during the years the employee provides service 
to the entity. For purposes of applying the provisions of Statement No. 
106, members of the board of directors are considered to be employees 
of the cooperative. Prior to the issuance of Statement No. 106, most 
reporting entities accounted for postretirement benefit costs on a 
``pay-as-you-go'' basis; that is, costs were recognized when paid, not 
when the employee provided service to the entity in exchange for the 
benefits.
    As defined in Statement No. 106, a postretirement benefit plan is a 
deferred compensation arrangement in which an employer promises to 
exchange future benefits for an employee's current services. 
Postretirement benefit plans may be funded or unfunded. Postretirement 
benefits include, but are not limited to, health care, life insurance, 
tuition assistance, day care, legal services, and housing subsidies 
provided outside of a pension plan.
    This statement applies to both written plans and to plans whose 
existence is implied from a practice of paying postretirement benefits. 
An employer's practice of providing postretirement benefits to selected 
employees under individual contracts with specified terms determined on 
an employee-by-employee basis does not, however, constitute a 
postretirement benefit plan under the provisions of this statement.
    Postretirement benefit plans generally fall into three categories: 
single-employer defined benefit plans, multi-employer plans, and 
multiple-employer plans.
    The accounting requirements set forth in this interpretation focus 
on single-and multiple-employer plans. The accounting requirements set 
forth in Statement No. 106 for multiemployer plans or defined 
contribution plans shall be adopted for borrowers electing those types 
of plans.
    Under the provisions of Statement No. 106, there are two components 
of the postretirement benefit cost: the current period cost and the 
transition obligation. The transition obligation is a one-time accrual 
of the costs resulting from services already provided. Statement No. 
106 allows the transition obligation to be deferred and amortized on a 
straight-line basis over the average remaining service period of the 
active employees. If the average remaining service life of the 
employees is less than 20 years, a 20-year amortization period may be 
used.

Accounting Requirements

    All RUS borrowers must adopt the accrual accounting provisions and 
reporting requirements set forth in Statement No. 106. The transition 
obligation and accrual of the current period cost must be based upon an 
actuarial study. This study must be updated to allow the borrower to

[[Page 23332]]

comply with the measurement date requirements of Statement No. 106; 
however, the study must, at a minimum, be updated every five years. RUS 
will not allow electric borrowers to account for postretirement 
benefits on a ``pay-as-you-go'' basis.
    The deferral and amortization of the transition obligation does not 
require RUS approval provided that it complies with the provisions of 
Statement No. 106. If, however, a borrower elects to expense the 
transition obligation in the current period and subsequently defer this 
expense in accordance with Statement of Financial Accounting Standards 
No. 71, Accounting for the Effects of Certain Types of Regulation, the 
deferral must be approved by RUS. In those states in which the 
commission will not allow the recovery of the transition obligation 
through future rates, the transition obligation must be expensed, in 
its entirety, in the year in which Statement No. 106 is adopted. A 
portion of the transition obligation may be charged to construction and 
retirement activities provided such charges are properly supported.

Effective Date and Implementation

    For plans outside the United States and for defined benefit plans 
of employers that (a) are nonpublic enterprises and (b) sponsor defined 
benefit postretirement plans with no more than 500 plan participants in 
the aggregate, Statement No. 106 is effective for fiscal years 
beginning after December 15, 1994. For all other plans, Statement No. 
106 is effective for fiscal years beginning after December 15, 1992.
    RUS borrowers must comply with the implementation dates set forth 
in Statement No. 106. At the time of the adoption of Statement No. 106, 
rates must be in place sufficient to recover the current period expense 
and any amortization of the transition obligation. A copy of a board 
resolution or commission order, as appropriate, indicating that the 
transition obligation and current period expense have been included in 
the borrower's rates must be submitted to RUS.

Accounting Journal Entries--Transition Obligation

    The journal entries required to record the transition obligation 
are as follows:
    1. If the borrower elects to expense the transition obligation in 
the current period and there is no deferral of costs, the following 
entry shall be recorded:

Dr. 435.1, Cumulative Effect on Prior Years of a Change in 
Accounting Principle
           or
Dr. 926, Employee Pensions and Benefits
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
    Cr. 228.3, Accumulated Provision for Pensions and Benefits
To record the current period recognition of the transition 
obligation for postretirement benefits.

    Note: A portion of the transition obligation may be charged to 
construction and retirement activities provided such charges are 
properly supported.

    2. If the borrower elects to defer and amortize the transition 
obligation in accordance with the provisions of Statement No. 71, the 
following entry shall be recorded:

Dr. 182.3, Other Regulatory Assets
    Cr. 228.3, Accumulated Provision for Pensions and Benefits
To record the deferral of the transition obligation under the 
provisions of Statement No. 71.

Dr. Various Operations, Maintenance, and Administrative Expense 
Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
    Cr. 182.3, Other Regulatory Assets
To record the amortization of postretirement benefits expenses as 
they are recovered through rates in accordance with Statement No. 
71.

    3. The deferral and amortization of the transition obligation under 
the provisions of Statement No. 106 is considered to be an off balance 
sheet item. If, therefore, the borrower elects to defer and amortize 
the transition obligation on a straight-line basis over the average 
remaining service period of the active employees or 20 years in 
accordance with Statement No. 106, no entry is required. Instead, the 
transition obligation is recognized as a component of postretirement 
benefit cost as it is amortized. It should be noted, however, that the 
amount of the unamortized transition obligation must be disclosed in 
the notes to the financial statements.

Accounting Journal Entries--Current Period Expense

    The current period postretirement expense should be recorded by the 
following entry:

Dr. Various Operations, Maintenance, and Administrative Expense 
Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
    Cr. 228.3, Accumulated Provision for Pensions and Benefits
To record current period postretirement benefit expense.

Dr. 228.3X, Accumulated Provision for Pensions and Benefits--Funded
    Cr. 131.1, Cash--General
To record cash payments on a ``pay-as-you-go'' basis for 
postretirement benefits.

Accounting Journal Entry--Funding

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

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

    If a borrower elects to voluntarily fund its postretirement 
benefits obligation in an investment vehicle other than an external, 
irrevocable trust, the following entry shall be recorded:

Dr. 128, Other Special Funds
    Cr. 131.1, Cash--General
To record the funding of postretirement benefits expense into an 
investment vehicle other than an external, irrevocable trust.
628  Postemployment Benefits
    Statement of Financial Accounting Standards No. 112, Employers' 
Accounting for Postemployment Benefits (Statement No. 112) establishes 
the standards of financial accounting and reporting for employers who 
provide benefits to former or inactive employees after employment but 
before retirement. Inactive employees are those who are not currently 
rendering service to the employer but who have not been terminated, 
including employees who are on disability leave, regardless of whether 
they are expected to return to active service. For purposes of applying 
the provisions of Statement No. 112, former members of the board of 
directors are considered to be employees of the cooperative.
    Postemployment benefits include benefits provided to former or 
inactive employees, their beneficiaries, and covered dependents. They 
include, but are not limited to, salary continuation, supplemental 
benefits (including workmen's compensation), health care, job training 
and counseling, and life insurance coverage. Benefits may be provided 
in cash or in kind and may be paid upon cessation of active employment 
or over a specified period of time.
    The cost of providing postemployment benefits is considered to be a 
part of the compensation provided to an employee in exchange for 
current service and should, therefore, be accrued as the employee earns 
the right to be paid for future postemployment benefits. Applying the

[[Page 23333]]

criteria set forth in Statement of Financial Accounting Standards No. 
43, Accounting for Compensated Absences, a postemployment benefit 
obligation is accrued when all of the following conditions are met:
    1. The employer's obligation for payment for future absences is 
attributable to employees' services already performed;
    2. The obligation relates to employee rights that vest or 
accumulate. Vested rights are considered those rights for which the 
employer is obligated to make payment even if the employee terminates. 
Rights that accumulate are those earned, but unused rights to 
compensated absences that may be carried forward to one or more periods 
subsequent to the period in which they are earned;
    3. Payment of the compensation is probable; and
    4. The amount can be reasonably estimated.
    If all of these conditions are not met, the employer must account 
for its postemployment benefit obligation in accordance with Statement 
of Financial Accounting Standards No. 5, Accounting for Contingencies 
(Statement No. 5) when it becomes probable that a liability has been 
incurred and the amount of that liability can be reasonably estimated.
    If an obligation for postemployment benefits is not accrued in 
accordance with the provisions of Statement No. 5 or Statement No. 43 
only because the amount cannot be reasonable estimated, the financial 
statements should disclose that fact.

Accounting Requirements

    All RUS borrowers must adopt the accrual accounting provisions and 
reporting requirements set forth in Statement No. 112 as of the 
statement's implementation date. A portion of the cumulative effect may 
be charged to construction and retirement activities provided such 
charges are properly supported. If a borrower elects to defer the 
cumulative effect of implementing Statement No. 112 in accordance with 
the provisions of Statement of Financial Accounting Standards No. 71, 
Accounting for the Effects of Certain Types of Regulation, the deferral 
must be approved by RUS.

Effective Date and Implementation

    Statement No. 112 is effective for fiscal years beginning after 
December 15, 1993. Previously issued financial statements should not be 
restated.
    RUS borrowers must comply with the implementation date set forth in 
Statement No. 112. At the time of the adoption of Statement No. 112, 
rates must be in place sufficient to recover the current period 
expense.

Accounting Journal Entries

    The journal entries required to account for postemployment benefits 
are as follows:

Dr. 435.1, Cumulative Effect on Prior Years of a Change in 
Accounting Principle
Dr. 107, Construction Work in Progress
Dr. 108.8, Retirement Work in Progress
    Cr. 228.3, Accumulated Provision for Pensions and Benefits
To record the cumulative effect of implementing Statement No. 112.

    Note: A portion of the cumulative effect may be charged to 
construction and retirement activities provided such charges are 
properly supported. Account 435.1 is closed to Account 219.2, 
Nonoperating Margins.

    If the borrower elects to defer and amortize the cumulative effect 
in accordance with the provisions of Statement No. 71, the following 
entry shall be recorded:

Dr. 182.3, Other Regulatory Assets
    Cr. 228.3, Accumulated Provision for Pensions and Benefits
To record the deferral of the cumulative effect of implementing 
Statement No. 112 in accordance with the provisions of Statement No. 
71.

Dr. Various Operations, Maintenance, and Administrative Expense 
Accounts
Dr. 107, Construction Work in Progress
Dr. 108.8, Retirement Work in Progress
    Cr. 182.3, Other Regulatory Assets
To record the amortization of the cumulative effect of implementing 
Statement No. 112 as it is recovered through rates in accordance 
with Statement No. 71.

Dr. Various Operations, Maintenance, and Administrative Expense 
Accounts
Dr. 107, Construction Work in Progress
Dr. 108.8, Retirement Work in Progress
    Cr. 228.3, Accumulated Provision for Pensions and Benefits
To record current period postemployment benefit expense.

    Note: If postemployment benefits are accrued under the criteria 
set forth in Statement No. 43, this journal entry is made on a 
monthly basis. If, however, the accrual is based upon the provisions 
of Statement No. 5, this is a one-time entry unless the liability is 
reevaluated and subsequently adjusted.

    23. In Sec. 1767.41, Interpretation Nos. 630 and 631 are proposed 
to be added to read as follows:
* * * * *
630  Split Dollar Life Insurance
    The National Rural Electric Cooperative Association Split Dollar 
Life Insurance provides life insurance benefits to cooperative 
employees. The benefits provided under this policy consist of two 
components, the face value of the insurance policy and the accumulated 
cash surrender value. While the employee is the owner of the policy, 
the employee must sign a collateral assignment giving the cooperative 
absolute right to the cash surrender value of the policy. Under the 
terms of this collateral assignment, the employee must reimburse the 
cooperative for the premiums paid upon the employee's termination of 
employment or attainment of the age of 62 if the employee wishes to 
maintain the insurance coverage. If death occurs prior to either of 
these events, the premiums paid to date by the cooperative are deducted 
from the death benefits payable to the policy beneficiary.

Accounting Requirements

    Financial Accounting Standards Board Technical Bulletin 85-4, 
Accounting for Purchase of Life Insurance (Bulletin 85-4), states that 
the amount that could be realized under an insurance contract as of the 
date of the financial statements should be reported as an asset. The 
change in the cash surrender or contract value of that asset during the 
period should be reported as an adjustment to the premiums paid in 
determining the expense or income to be recognized for the period. The 
cooperative shall, therefore, record the cash surrender value of the 
policy as an asset in Account 124, Other Investments, because of its 
absolute right to receive that value based upon the employee's 
collateral assignment. Any receivable that may occur as a result of the 
employee reimbursement for the premiums paid is contingent upon the 
employee electing to maintain the insurance coverage after termination 
of employment or reaching the age of 62 and is not recorded as an asset 
on the cooperative's records.
631  Special Early Retirement Plan
    The Special Early Retirement Plan (SERP) being offered through the 
National Rural Electric Cooperative Association (NRECA) constitutes an 
amendment to its Retirement and Security (R&S) program. The SERP is 
often chosen as a vehicle through which the cooperative may reduce the 
size of its workforce or replace more highly paid employees with lower 
paid entry level employees. If an employee covered by an NRECA 
retirement plan chose to retire before his/her normal retirement date, 
that employee would receive an actuarially reduced benefit. However, 
when a cooperative elects to offer a SERP, no such reduction is 
required. The cooperative selects the criteria under which an employee 
will be

[[Page 23334]]

eligible to participate such as age, years of service, or a combination 
of age and benefit service requirements. As with other amendments to 
the R&S program, NRECA calculates the cost of the plan based upon the 
criteria selected by the cooperative and allows the cooperative to pay 
the cost immediately or on an installment basis.
    Under this plan, the employee receives full retirement benefits in 
the form of either an immediate lump-sum settlement or annuity 
payments. It is not unusual for the cooperative to add an incentive to 
encourage participation such as medical or life insurance, either in 
whole or in part, until age 65. The actuarial analysis provided by 
NRECA includes the cost of the SERP and the estimated reduction and/or 
increase in costs associated with Statement of Financial Accounting 
Standards No. 106, Employer's Accounting for Postretirement Benefits 
Other Than Pensions (Statement No. 106).

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

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

Accounting Journal Entries

    The journal entry required to record the additional pension costs 
associated with the SERP is as follows:

Dr. Various Operations, Maintenance, and Administrative Expense 
Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
Cr. 131.1, Cash--General or
    Cr. 224, Other Long-Term Debt
To record the prior service pension costs incurred as a result of 
adopting the SERP.

    If the borrower elects to defer and amortize the cost in accordance 
with Statement No. 71, the following entries shall be recorded:

Dr. 182.3 Other Regulatory Assets
    Cr. 131.1, Cash--General, or
    Cr. 224, Other Long-Term Debt
To record, under the provisions of Statement No. 71, the deferral of 
the prior service pension costs incurred as a result of adopting the 
SERP.

Dr. Various Operations, Maintenance, and Administrative Expense 
Accounts
Dr. 107, Construction Work-in-Progress
Dr. 108.8, Retirement Work-in-Progress
    Cr. 182.3, Other Regulatory Assets
To record the amortization of deferred prior service pension costs 
as they are recovered through rates in accordance with Statement No. 
71.

Statement No. 106

    In the event that net reductions in postretirement benefits result 
from this plan amendment, the reductions are recognized as follows:
    1. The amount of the reduction shall first reduce any existing 
unrecognized prior service cost;
    2. Any remaining reductions shall next reduce any unrecognized 
transition obligation; and
    3. Any remaining reduction shall be recognized in a manner 
consistent with the accounting for prior service postretirement benefit 
costs.
    In accordance with Statement No. 106, prior service postretirement 
benefit costs are recognized in equal amounts in each remaining year of 
service for active plan participants. Because it is an off-balance 
sheet item, only a memorandum entry is required to reduce the amount of 
unrecognized prior service cost.
    At adoption, Statement No. 106 permitted the recognition of the 
transition obligation in one of two ways. The transition obligation was 
recognized over the longer of the average remaining service period of 
current plan participants or 20 years, or it may have been recognized 
immediately. If the delayed recognition option was chosen under 
Statement No. 106, this, too, was an off-balance sheet item that 
requires only a memorandum entry to reduce the amount of unrecognized 
transition obligation. However, if the immediate recognition option was 
chosen, the cooperative either recorded the expense in that year or, 
with RUS approval, deferred the expense under the provisions of 
Statement No. 71. If the expense were recorded, in total, in the year 
of adoption, no unrecognized transition obligation remains to reduce. 
If, however, the transition obligation was deferred in accordance with 
Statement No. 71, the journal entry required to effect the reduction in 
Statement No. 106 expense is as follows:

Dr. 228.3, Accumulated Provision for Pensions and Benefits
    Cr. 182.3, Other Regulatory Assets
To record a reduction in the deferred Statement No. 106 transition 
obligation resulting from the adoption of the SERP.

    Note: The dollar value of this entry must not exceed the 
deferral shown on the balance sheet.

    If, after the two previous reductions have been made, any net 
credit remains, it shall be recognized in a manner consistent with 
prior service costs; that is, as an off balance sheet item that is 
amortized over the remaining service lives (to full eligibility) of the 
active plan participants. The annual amortization reduces amounts 
normally charged to the various operations, maintenance, and 
administrative expense accounts and Account 228.3 as postretirement 
benefit expenses.

    Dated: April 8, 1997.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 97-10104 Filed 4-28-97; 8:45 am]
BILLING CODE 3410-15-P