65- 407 C.M.R. ch. 820, § 4

Current through 2024-51, December 18, 2024

Section 407-820-4 - VALUE OF UTILITY GOODS, SERVICES AND INTANGIBLES

A. Valuing Utility Equipment, Facilities, Services, or Personnel used by an Affiliate or for de minimis Service. Any utility equipment, facility, service or personnel used by an affiliate or used by a utility to provide de minimis service shall be charged to the affiliate at the tariffed rate, if available, or in the absence of a tariffed rate at the market price, if available, or otherwise at fully distributed cost. The amount charged in accordance with this subsection shall be recorded as income on the books of the utility.

1 Fully Distributed Cost Methodology. To the extent a utility must assign and apportion costs between its core utility service and non-core activities using the fully distributed cost methodology, it shall do so in accordance with the principles set forth in the Federal Communication Commission's rules regarding cost allocations to regulated and non regulated activities, 47 C.F.R. §64.901(b) (1-4), attached hereto as appendix A.

B. Valuing Utility Assets Transferred to Affiliate. A utility asset transferred to an affiliate shall be recorded at the market price of the asset.

C. Value of Good Will. The value of the utility's good will used by an affiliate must be determined as follows:

1 The value of good will to be paid annually by an affiliate must be determined on an annual basis for an initial 3-year period beginning on the date that the affiliated transaction is approved or upon the date that the affiliate will commence use of the good will, whichever is later.

2 At the end of the initial 3-year period, the Commission shall reexamine the value of good will to be paid by the affiliate for the use of good will for the next 3-years;

3 The value of good will shall be presumed to be, and calculated as, 1% of the total capitalization of the affiliate, or 2% of the gross revenues of the affiliate, whichever is less, and shall be paid annually by the affiliate. Where the name of the utility has been used in Maine by the utility for less than 3 years, the value of good will shall be presumed to be zero. At the end of six years from the date the affiliated transaction is approved or upon the date that the affiliate commences use of the good will, whichever is later, the value of good will is zero.

4 Any party may present evidence that the value of good will is greater than, or less than, the presumptions stated in paragraph 3.

5 The value of good will and the payments for its use are calculated on a going-forward basis. An affiliate is not required to pay for good will used before the effective date of this rule.

6 This subsection applies only to affiliates created on or after September 19, 1997.

D. Value of Utility Intangibles Transferred to an Affiliate or Used by an Affiliate. The value of any utility intangible, other than good will, transferred to or used by an affiliate is the market value of the intangible.

E. Valuing Use by a Utility of an Affiliate's Equipment Facilities, Services or Personnel. Equipment, facilities, services or personnel of an affiliate used by a utility shall be priced at the same price charged non-affiliates. If no such price is available, the service, facility or personnel shall be priced at the market price of the use of the equipment, facility, service or personnel.

F. Value of Affiliate Asset Transferred to a Utility. An affiliate asset transferred to a utility shall be recorded at the market price of the asset.

G. Cost Manual. A utility shall maintain a cost manual or other written material documenting its cost allocation methodology.

H. Charges to Affiliate; Reports. The utility shall charge its affiliate an appropriate amount determined pursuant to subsections A through F. Any extension of payment terms beyond the terms offered in the course of normal business requires Commission approval. As part of its annual report, filed pursuant to 35-A M.R.S.A. §504, the utility shall indicate the amount received from its affiliates for the use of the utility's equipment, facilities, services, personnel and intangibles. The utility's outside auditors must check for compliance with this chapter and applicable Commission orders.

65- 407 C.M.R. ch. 820, § 4