Financial Accounting, Reporting and Records Retention Requirements Under Public Utility Holding Company Act Of 2005, 101906 FERC, RM06-11-000

Docket Nº:RM06-11-000
Party Name:Financial Accounting, Reporting and Records Retention Requirements Under the Public Utility Holding Company Act of 2005 18 CFR Parts 366, 18 CFR Parts 367, 18 CFR Parts 368, 18 CFR Parts 369, 18 CFR Parts 375
Judge Panel:Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G. Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff. Magalie R. Salas, Secretary.
Case Date:October 19, 2006
Court:Federal Energy Regulatory Commission
 
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Financial Accounting, Reporting and Records Retention Requirements Under the Public Utility Holding Company Act of 2005

No. RM06-11-000

18 CFR Parts 366, 18 CFR Parts 367, 18 CFR Parts 368, 18 CFR Parts 369, 18 CFR Parts 375

United States of America, Federal Energy Regulatory Commission

October 19, 2006

Order No. 684

AGENCY: Federal Energy Regulatory Commission.

ACTION: Final Rule.

SUMMARY: In this Final Rule, the Federal Energy Regulatory Commission (Commission) is amending its regulations to further implement the Public Utility Holding Company Act of 2005 (PUHCA 2005). Specifically, the Commission is adding a Uniform System of Accounts (USofA) for Centralized Service Companies, adding preservation of records requirements for holding companies and service companies, revising FERC Form No. 60, Annual Report of Centralized Service Companies, to provide for financial reporting consistent with the new USofA and providing for electronic filing of the revised FERC Form No. 60. The Final Rule will provide for greater accounting transparency for centralized service company operations, and uniform records retention by holding companies and service companies subject to PUHCA 2005. This transparency will protect ratepayers from pass-through of improper service company costs.

EFFECTIVE DATE: The rule will become effective [insert date 60 days after publication in the FEDERAL REGISTER].

Table of Contents

Page Number

I. Introduction ........................................................................................................ - 1 -

II. Background ......................................................................................................... - 2 -

III. Overview of Final Rule ...................................................................................... - 5 -

IV. Discussion ........................................................................................................... - 9 -

1. Adoption of the Proposed Uniform System of Accounts ................................... - 9 -

2. Implementation Date ........................................................................................ - 17 -

3. FERC Form No. 60 Filing Deadline ................................................................. - 19 -

4. Definitions ........................................................................................................ - 20 -

(a) “Direct cost” and “Indirect cost” ................................................................ - 20 -

(b) “Work order system” .................................................................................. - 22 -

5. Instructions ....................................................................................................... - 26 -

(a) Section 367.2 – Companies for which this system of accounts is prescribed ..... - 27 -

(b) Section 367.8 – Extraordinary items .......................................................... - 31 -

(c) Section 367.10 – Unaudited Items .............................................................. - 32 -

(d) Section 367.20(b) – Depreciation accounting ............................................ - 33 -

(e) Section 367.23 – Transactions with non-associate companies ................... - 34 -

(f) Section 367.24 – Construction and service contracts for other companies .... - 36 -

(g) Section 367.25 – Determination of service cost ......................................... - 38 -

(h) Section 367.27 – Billing procedures .......................................................... - 39 -

(j) Section 367.53 – Service company property purchased or sold ................ - 42 -

(i) Section 367.51(a)(17) – Allowance for funds used during construction ... - 41 -

(k) Section 367.54 – Expenditures on leased property .................................... - 45 -

(l) Section 367.59 – Additions and retirements of property ............................ - 46 -

(m) Sections 367.103 – .104 – Current & Deferred Income Taxes .................. - 47 -

(n) Section 367.23 – Transactions with non-associate companies; § 367.25 – Determination of service cost; § 367.27 – Billing procedures; § 367.28 – Methods of allocation; § 367.29 – Compensation for use of capital ................ - 48 -

6. Balance Sheet Accounts ................................................................................... - 51 -

7. Income Statement Accounts ............................................................................. - 56 -

(a) Sections 367.4570 – .4594 – Revenue accounts for services rendered ...... - 56 -

(b) Sections 367.5000 and 367.8000 – Operation and maintenance expense accounts ........... - 59 -

(c) Sections 367.9220 and 367.4171 – Account 922, Administrative expenses transferred--Credit, and Account 417.1, Expenses of non-utility company ........................................................................................... - 65 -

(d) Section 367.4160 – Costs and expenses of merchandising, jobbing and contract work; § 367.9120 – Demonstrating and selling expenses; § 367.9130 – Advertising expenses; § 367.9301 – General advertising expenses ........... - 67 -

(e) Sections 367.4263, 367.4117, 367.4180 – Miscellaneous Income Statement Issues ................ - 70 -

8. Records Retention Requirements ..................................................................... - 70 -

9. FERC Form No. 60 ........................................................................................... - 73 -

(a) Use of GAAP Financial Statement instead of Structured FERC Form No. 60 .................... - 73 -

(b) FERC Form No. 60 Schedules ................................................................... - 76 -

(1) Schedule II, Service Company Property ............................................ - 76 -

(2) Schedule III-A, Summary of Service Company Property and Accumulated Provisions for Depreciation and Amortization ............ - 77 -

(3)Schedule IV, Investments and Schedule XII, Long-Term Debt ........ - 78 -

(4)Schedule V, Accounts Receivable from Associate Companies ......... - 79 -

(5)Schedule VI, Fuel Stock Expenses Undistributed .............................. - 80 -

(6)Schedule X, Research, Development or Demonstration Expenses.... - 81 -

(7)Schedule XI, Proprietary Capital ........................................................ - 82 -

(8)Schedule XIV, Notes to Financial Statements ................................... - 83 -

(9)Schedule XV, Comparative Income Statement .................................. - 85 -

(10) Schedule XV-A, Schedule of Utility Operating Expenses; Schedule XVI, Analysis of Charges for Service; Schedule XVII, Schedule of Expense Distribution by Department or Service Function ................. - 86 -

(11) Analysis of Billing Schedules ............................................................ - 90 -

(12) Departmental Analysis of Salaries Schedule; Methods of Allocation Schedule; and Organizational Chart Schedule ................. - 92 -

(13) Annual Statement of Compensation for Use of Capital Billed .......... - 94 -

(14) Miscellaneous General Expenses Schedule (Account 930.2) ............ - 95 -

(c) General Instruction IX ................................................................................ - 96 -

(d) Raising the Threshold for Individually Itemized Items .............................. - 98 -

(e) Reporting in Whole Dollars or Alternatively in Thousands ...................... - 99 -

(f) Comparative Information ......................................................................... - 100 -

(g) Request to Expand Data Collection in FERC Form No. 60 ..................... - 101 -

(h) Schedule Numbering ................................................................................ - 103 -

(i) Chief Accountant’s delegated authority ................................................... - 104 -

V. Information Collection Statement .................................................................. - 106 -

VI. Environmental Analysis ................................................................................. - 111 -

VII. Regulatory Flexibility Act .............................................................................. - 112 -

VIII. Document Availability ................................................................................... - 113 -

IX. Effective Date and Congressional Notification .............................................. - 114 -

Before Commissioners: Joseph T. Kelliher, Chairman; Suedeen G. Kelly, Marc Spitzer, Philip D. Moeller, and Jon Wellinghoff.

FINAL RULE

I. Introduction

1. On April 24, 2006, the Commission issued a notice of proposed rulemaking (NOPR) that proposed to add a new Uniform System of Accounts (USofA) for centralized service companies, i.e., service companies that are not special purpose companies, and new preservation of records requirements for holding companies and service companies as new Parts 367 and 368 of Title 18 of the Code of Federal Regulations.1The NOPR also proposed to revise FERC Form No. 60, Annual Report of Centralized Service Companies, to be codified in new Part 369, to provide for financial reporting by centralized service companies consistent with the new USofA; to provide for electronic filing of Form No. 60; and to make conforming changes to the Commission’s regulations in Part 366 and...

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