with the sale or in preparing the property for sale; or, if retained, the amount at which the material recoverable is chargeable to Account 131, Materials and Supplies, or other appropriate account.**

101.02-38 Service value. "Service value" means the difference between original cost and net salvage value of electric plant.*†

101.02-39 State. "State" means a State admitted to the Union, the District Columbia, and any organized Territory of the United States.** "Structures." (See Electric plant instruc

101.02-40 Structures. "Structures." tion 10, § 101.3-10.)*+

101.02-41 Transmission system. "Transmission system." (See Electric plant instruction 16, § 101.3–16.) *†

101.02-42 Units of property. "Units of property" means those items of electric plant which when retired, with or without replacement, are accounted for by crediting the book cost thereof to the electric plant account in which included.**

101.02-43 Utility. "Utility", as used herein and when not otherwise indicated in the context, means any public utility or licensee to which this system of accounts is applicable.**

INSTRUCTIONS, GENERAL

101.03-1 Classification of utilities. (a) For the purpose of applying the system of accounts prescribed herein, public utilities and those licensees that are engaged in the generation and sale of electric energy for ultimate distribution to the public are divided into four classes as follows:

Class A. Utilities having either (1) annual electric operating revenues of $750,000 or more, or (2) the original cost of whose electric plant amounts to $4,000,000 or more. Such utilities shall keep all of the accounts applicable to their operations which are prescribed in the main body of this system of accounts.

Class B. Utilities having annual electric operating revenues of more than $250,000 but less than $750,000 and the original cost of whose electric plant amounts to less than $4,000,000. Such utilities shall keep all of the accounts applicable to their operations which are prescribed in the main body of this system of accounts except those operating expense accounts in which the letter B does not appear in the prefix.

Class C. Utilities having annual electric operating revenues of more than $100,000 but not more than $250,000. Such utilities shall keep the accounts applicable to their operations which are prescribed in § 104.1.

Class D. Utilities having annual electric operating revenues of more than $25,000 but not more than $100,000. Such utilities shall keep the accounts applicable to their operations which are prescribed in § 104.1.

(b) The class to which any utility belongs shall be determined by the average of its annual electric operating revenues for the last three consecutive years; Provided, however, That if the original cost

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*For statutory citation, see note to § 101.00-1.

of electric plant amounts to $4,000,000 at the end of any year, such utility shall be classified as a class A utility for the succeeding year. (c) Any utility may at its option adopt the system of accounts prescribed herein for any larger class of utilities.**

†In 88 101.03-1 to 101.03-13, inclusive, the numbers to the right of the dash correspond with the respective instruction numbers in Uniform system of accounts prescribed for public utilities and licensees, Federal Power Commission, effective Jan. 1, 1937, pp. 8-11. Cross references to accounts are made by citing the account number, e. g., Account 538, instead of the corresponding section number (§ 101.538).

101.03-2 Records. (a) Each utility shall so keep its books of account, and all other books, records, and memoranda which support in any way the entries in such books of account, as to be able to furnish readily full information as to any item included in any account. Each entry shall be supported by such detailed information as will permit a ready identification, analysis, and verification of all of the facts relevant thereto.

(b) The books and records referred to herein include not only accounting records in a limited technical sense, but all other records, such as minute books, stock books, reports, correspondence, memoranda, etc., which may be useful in developing the history of, or facts regarding, any transaction.

(c) No utility shall destroy any books or records which support entries to its accounts unless the destruction thereof is permitted by rules and regulations of the Commission. Until rules and regulations have been issued by the Commission, each utility may continue its existing practice with respect to the retention or destruction of records. Each utility, however, shall file with the Commission within 60 days after the effective date of this system of accounts a statement of its existing practice with reference to the destruction or other disposition of records; the Commission reserves the right to require the utility to make any change in its practice which is deemed necessary for the preservation of adequate information.

(d) Subdivisions of any account in the system of accounts prescribed herein may be kept, provided that such subdivisions do not impair the integrity of the prescribed accounts. The titles of all such subdivisions or subaccounts shall refer by number or title to the account or accounts of which they are subdivisions.

(e) Clearing accounts, in addition to those prescribed, and temporary or experimental accounts may be kept, provided, such additional accounts do not impair the integrity of the prescribed accounts.

(f) All charges to the accounts prescribed in this system for electric plant, income, operating revenues, and operating expenses shall be just and reasonable, and any payments by the utility in excess of just and reasonable charges shall be included in Account 538, Miscellaneous Income Deductions.

(g) The numbers prefixed to account titles are to be considered as part of the titles. Each utility may, however, adopt a different system of account numbers provided that the numbers herein prescribed shall appear in the descriptive headings of the ledger accounts.*+

101.03-3 Accounting period. Each utility shall keep its books on a monthly basis, so that for each month all transactions applicable

*For statutory citation, see note to § 101.00-1. For source citation, see note to § 101.03-1.

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[89]

thereto, as nearly as may be ascertained, shall be entered in the books of the utility. Unless otherwise authorized by the Commission, each utility shall close its books at the end of each calendar year.*†

101.03-4 Submission of questions. To maintain uniformity of accounting, utilities shall submit questions of doubtful interpretation to the Commission for consideration and decision.**

101.03-5 Items list, interpretation of. Lists of "items" appearing in the texts of the accounts or elsewhere herein are for the purpose of more clearly indicating the application of the prescribed accounting. The lists are intended to be representative, but not exhaustive. The appearance of an item in a list warrants the inclusion of the item in the account mentioned only when the text of the account also indicates inclusion, inasmuch as the same item frequently appears in more than one list. The proper entry in each instance must be determined by the texts of the accounts.**

101.03-6 Delayed items. (a) The term "delayed items" means items relating to transactions which occurred prior to the current calendar year but which were not recorded in the books of account in the prior year.

(b) Delayed items shall be charged or credited to the same accounts which would have been charged or credited if the items had not been delayed; Provided, That when the amount of a delayed item is relatively so large that its inclusion in the accounts for a single month would seriously distort the accounts, it may be distributed in equal amounts to the accounts for the current and remaining months of the calendar year; And provided further, That if the amount of any delayed item is relatively so large that its inclusion in the accounts for a single year would seriously distort the accounts, the utility shall distribute the amount to the appropriate surplus account.*+

101.03-7 Unaudited items. When, at the end of any year or at such other time as a financial statement may be required by the Commission, it is known that a transaction has occurred which affects the accounts, but the amount involved in the transaction and its effect upon the accounts cannot be determined with absolute accuracy, then the amount shall be estimated and such estimated amount included in the proper accounts. The utility is not required to anticipate minor items which would not appreciably affect the accounts.*+

101.03-8 Transactions with associated companies. Each utility shall so keep its accounts and records as to be able to furnish accurately and expeditiously statements of all transactions with associated companies. The statements may be required to show the general nature of the transactions, the amounts involved therein and the amounts included in each account prescribed herein with respect to such transactions. Transactions with associated companies shall be recorded in the appropriate accounts for transactions of the same nature, provided, however, that charges by associated companies shall first be entered, if necessary, in Account 901, Charges by Associated Companies-Clearing. Nothing herein contained, however, shall be

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*For statutory citation, see note to § 101.00-1.

construed as restraining the utility from subdividing accounts for the purpose of recording separately transactions separately transactions with associated companies.*+

101.03-9 Separate accounts or records for each licensed project. The accounts or records of each licensee shall be so kept as to show for each project under license:

(a) the actual legitimate investment in the project, including therein the actual legitimate cost (or fair value as determined under section 23 of the Federal Power Act, 49 Stat. 846; 16 U.S.C., Sup., 816) of the original project and of additions thereto and betterments thereof and credits for property retired from service as determined under the rules and regulations of the Commission applicable to the project;

(b) the charges for operation and maintenance of the project property directly assignable to the project;

(c) the credits and debits to the depreciation reserve account, and the balance in such account;

(d) the credits and debits to operating revenue, income, and surplus accounts that can be identified with and directly assigned to the project.*+

NOTE: The purpose of this instruction is to insure that accounts or records are currently maintained by each licensee from which reports may be made to the Commission for use in determining the net investment in each licensed project. The instruction covers only the debit and credit items appearing in the licensee's accounts which may be identified with and assigned directly to any licensed project. In the determination of the net investment as defined in section 3 of the Federal Power Act, allocations of items affecting the net investment may be required where direct assignment is not practicable.

101.03-10 Depreciation accounting. Each utility shall record as at the end of each month the estimated amount of depreciation accrued during that month on depreciable electric plant. (See Account 503, Depreciation, and Account 250, Reserve for Depreciation of Electric Plant.)*+

NOTE A: Depreciation expense applicable to property included in Account 100: 2 Electric Plant Leased to Others, shall be charged to Account 508, Income from Electric Plant Leased to Others.

NOTE B: Depreciation applicable to transportation equipment shall be charged to Account 903, Transportation Expenses-Clearing, and depreciation on general tools and work equipment used in construction work shall be charged to the work or job benefited. The utility may, at its option, distribute depreciation on the latter items through a clearing account and it may also, at its option, charge to clearing accounts, so far as applicable, depreciation on structures and equipment. (See, however, Electric plant instruction 5, item 5, § 101.3-5 (5).)

101.03-11 Distribution of pay and expenses of employees. The charges to electric plant, operating expense, and other accounts for services and expenses of employees engaged in activities chargeable to various accounts, such as construction and operations, shall be based upon the actual time engaged in the respective classes of work or, in case that method is impracticable, upon the basis of a study of the time actually engaged during a representative period.*+ 101.03-12 Records for each plant. Separate records shall be maintained by electric plant accounts of the book cost of each plant

*For statutory citation, see note to § 101.00-1.

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owned or operated and of the cost of operating and maintaining each plant. The term "plant", as here used, means each generating station and each transmission line.*†

NOTE: If a utility operates many transmission lines, it may, with the approval of the Commission, group certain of them for the purpose of complying with this instruction.

101.03-13 Accounting for other departments. This system of accounts is designed for use by electric utilities and licensees. If the utility, in addition to its electric operations, operates other departments, it shall keep such accounts for the other departments as may be prescribed by proper authority, and in the absence of prescribed accounts, it shall keep such accounts as are proper or necessary to reflect the results of operating each such other department. It is not intended that proprietary and similar accounts which apply to the utility as a whole shall be departmentalized.*†

INSTRUCTIONS, BALANCE SHEET ACCOUNTS

101.1-1 Purpose of balance sheet accounts. The balance sheet accounts are intended to disclose the financial condition of the utility as of a given date by showing its assets and other debits, and liabilities, capital stock, surplus (or deficit), and other credits.*tt

††In 88 101.1-1 to 101.1-9, inclusive, the numbers to the right of the dash correspond with the respective instruction numbers in Uniform system of accounts prescribed for public utilities and licensees, Federal Power Commission, effective Jan. 1, 1937, pp. 12-15. Cross references to accounts are made by citing the account number, e.g., Account 538, instead of the corresponding section number (§ 101.538).

101.1-2 Current and accrued assets. (a) Current and accrued assets are cash, those assets which are readily convertible into cash or are held for current use in operations or construction, current claims against others, payment of which is reasonably assured, and amounts accruing to the utility which are subject to current settlement, except such items for which accounts other than those designated as Current and Accrued Assets are provided.

(b) There shall not be included in the group of accounts designated as Current and Accrued Assets any item the amount or collectibility of which is not reasonably assured unless an adequate reserve has been provided therefor. Items of current character but of doubtful value may be written down and for record purposes carried in these accounts at nominal value.*tt

101.1-3 Current and accrued liabilities. (a) Current and accrued liabilities are those obligations which have either matured at the date of the balance sheet or which become due within 1 year from the date thereof, except, however, bonds, receivers' certificates, and similar obligations which shall be classified as long-term debt until date of maturity; accrued taxes, such as income taxes, which shall be classified in the balance sheet as accrued liabilities even though payable more than 1 year from the balance sheet date; compensation awards, which shall be classified as current liabilities regardless of date due; and minor amounts payable in installments which may be classified as current liabilities.

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*For statutory citation, see note to § 101.00-1. For source citation, see note to § 101.03-1.