N.M. Admin. Code § 17.12.720.18

Current through Register Vol. 35, No. 21, November 5, 2024

Section 17.12.720.18 - INCOME ACCOUNTS

A. Utility Operating Income:

(1) 400 - Operating Revenues: There shall be shown under this caption the total amount included in the operating revenue accounts provided herein and in similar accounts for other utility department. Separate subaccounts shall be maintained for each utility department.

(2) 401 - Operation and Maintenance Expense: There shall be shown under this caption the total amount included in the expense accounts provided herein.

(3) 403 - Depreciation Expense:

(a) This account shall include the amount of depreciation expense for all classes of depreciable utility plant in service.

(b) The utility shall keep such records of property and property retirements as will reflect the service life of property which has been retired and also such records as will reflect the percentage of salvage and cost of removal for property retired.

(c) Note A: Depreciation expense applicable to property included in account 104, Utility Plant Leased to Others, shall be charged to account 413, Income from Utility Plant Leased to Others.

(4) 408 - Taxes Other Than Income Taxes:

(a) This account shall include the amount of ad valorem, gross revenue or gross receipts taxes, regulatory agency general assessments for purposes of public utility regulation, 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) This account shall be charged in each accounting period with the amount of taxes applicable thereto, with concurrent credits to account 236, Taxes Accrued, or account 166, Prepayments, as appropriate. When it is not possible to determine the exact amount of taxes, the amount shall be estimated and adjustments made in current accruals as the actual tax levies become known.

(c) The charges to this account 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 a number of utility services, taxes includable in this account 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.

(5) 409 - Income Taxes:

(a) This account shall include the amount of state and federal income taxes properly accruable during the period covered by the income statement to meet the actual liability for such taxes. Concurrent credits for the tax accruals shall be made to account 236, Taxes Accrued, and as the exact amount of taxes becomes known, the current tax accruals shall be adjusted by a charge or credit to this account, unless such adjustment is properly includable in account 439, Adjustments to Retained Earnings, so that this account as nearly as can be ascertained shall include the actual taxes payable by the utility. (See General Instruction 9 for prior period adjustment.)

(b) The accruals for state and federal income taxes shall be apportioned to Utility Operating Income (by department), Other Income and Deductions, and Extraordinary Items so that, as nearly as practicable, each tax shall be included in the expenses of the utility department, Other Income and Deductions, or Extraordinary Items, the income from which gave rise to the tax. The income tax effect of amounts recorded in account 439, Adjustments to Retained Earnings, shall be recorded in that account. The tax effects relating to interest charges, other than interest specifically applicable to indebtedness on property in accounts 121 and 124, shall be included in account 409, Income Taxes, Utility Operating Income.

(c) Note A: Taxes assumed by the utility on interest shall be charged to account 431, Other Interest Expense.

(d) Note B: Interest on tax refunds or deficiencies shall not be included in this account but in account 419, Interest and Dividend Income, or account 431, Other Interest Expense, as appropriate.

(6) 410 - Provision for Deferred Income Taxes: This account shall be debited, and Accumulated Deferred Income Taxes shall be credited with an amount equal to any deferral of taxes on income as provided by the texts of account 283.

(7) 412 - Investment Tax Credits:

(a) This account shall be debited with the total amount of investment tax credits used in calculating the reported current year's income taxes, except to the extent that such investment tax credits are to be passed on to customers currently, as approved or directed by the Commission.

(i) Where the investment tax credits are passed on to customers currently, they are to be treated solely as a reduction in income taxes for the year and no entries would be necessary.

(ii) When a company is using deferral accounting for the investment tax credits allowed for the current year, account 255, Accumulated Deferred Investment Tax Credits, shall be credited with an equal amount of the investment tax credits debited to this account.

(b) A company which has deferred its investment tax credits will amortize these deferred tax amounts by crediting this account and debiting account 255. Such annual amortization shall be allocated proportionately over the average useful life of the property to which the tax credits relate or such lesser period as may be adopted and consistently used by the company.

(c) This account shall be kept so that the debits and credits relating to the utility and to each nonutility operation may be readily identified.

(8) 413 - Income from Utility Plant Leased to Others:

(a) This account shall include revenues from utility property leased by the utility to others, and which property is properly includable in account 104, Utility Plant Leased to Others, and the expenses attributable to such property. Records shall show separately revenues and expenses.

(b) Note: Related operating taxes shall be recorded in account 408, Taxes Other than Income Taxes, Utility Operating Income, and income taxes shall be recorded in account 409, Income Taxes, Utility Operating Income, identified separately.

(9) 414 - Gains (Losses) from Disposition of Utility Property:

(a) This account shall include, when authorized or required by the Commission, gains and losses from the sale, conveyance, exchange, or transfer of utility property to another. (See Utility Plant Instructions 4, 6, and 9 and account 422, Gains (Losses) from Disposition of Property.) The income tax effect attributable to gains and losses recorded in this account shall be recorded in account 409, Income Taxes, Utility Operating Income.

(b) This account shall be maintained so that the transactions and details underlying each gain or loss will be readily identifiable.

B. Other Income and Deductions: Other Income:

(1) 415 - Revenues from Merchandising, Jobbing, and Contract Work:

(2) 416 - Costs and Expenses of Merchandising, Jobbing, and Contract Work:

(a) This account shall include, respectively, all revenues derived from the sale of merchandise and jobbing or contract work, including any profit or commission accruing to the utility on jobbing work performed by it as agent under contracts whereby it does jobbing work for another for a stipulated profit or commission, and all expenses incurred in such activities.

(b) Records in support of this account shall be kept as to permit ready summarization of revenues, costs, and expenses by such major items as are feasible.

(3) 417 - Income from Nonutility Operations:

(a) This account shall include revenues and expenses applicable to operations which are nonutility in character but nevertheless constitute activity of the enterprise as a whole, such as performing work for and customer's facilities, providing sewage disposal service where applicable statutes do not define such operation as a utility, or the operation of any organization for furnishing services to others.

(b) Items: Revenues:

(i) Charges for installing meters owned by customers.

(ii) Charges for tapping mains and installing services when not includable in account 345, Services.

(iii) Revenues from sales of meters to customers or others for installation on customers' premises.

(iv) Revenues from sale of water appliances and from piping and other jobbing or contract work.

(v) Discounts and allowances made in settlement of bills for merchandise and jobbing work.

(c) Expenses:

(i) Cost of merchandise sold and materials used for jobbing work, including transportation, storage, and handling.

(ii) Payroll and related labor costs and expenses of employees engaged in selling, delivery, and installation of appliances or of jobbing or contract work.

(iii) Clerical labor and expenses in merchandise and jobbing activities.

(iv) Inventory adjustments applicable to merchandise and jobbing stock.

(v) Light, heat, and power.

(vi) Losses from uncollectible accounts.

(vii) Shop expense.

(viii) Tool expenses.

(ix) Supervision of merchandise and jobbing activities.

(4) 418 - Nonoperating Rental Income:

(a) This account shall include all rent revenues and related expenses of land, buildings, or other property included in account 121, Nonutility Property, which is not used in operations covered by account 417.

(b) The expenses shall include all elements of costs incurred in the ownership and rental of the property and the accounts shall be maintained so as to permit ready summarization as follows: Operation, Maintenance, Rents, Depreciation, Amortization.

(c) Note: Related operating taxes shall be recorded in account 408.2, Taxes Other Than Income Taxes, Other Income and Deductions, and income taxes shall be recorded in account 409.2, Income Taxes, Other Income and Deductions.

(5) 419 - Interest and Dividend Income:

(a) This account shall include interest revenues on securities, loans, notes, advances, special deposits, tax refunds, and all other interest-bearing assets and dividends on stocks of other companies whether the securities on which the interest and dividends are received are carried as investments or included in sinking or other special fund accounts.

(b) All expenses, excluding operating taxes and income taxes, applicable to security investments and to interest and dividend revenues thereon, shall be charged hereto.

(c) Note A: Related operating taxes shall be recorded in account 408, Taxes Other Than Income Taxes, Other Income and Deductions, and income taxes shall be recorded in account 409, Income Taxes, Other Income and Deductions.

(d) Note B: Interest accrued, the payment of which is not reasonably assured, dividends receivable which have not been declared or guaranteed, and interest or dividends upon reacquired securities issued or assumed by the utility shall not be recorded.

(6) 421 - Miscellaneous Nonoperating Income:

(a) This account shall include all revenue and expense items, except taxes, properly includable in the income account and not provided elsewhere. Related operating taxes shall be recorded in account 408, Taxes Other Than Income Taxes, Other Income and Deductions, and income taxes shall be recorded in account 409, Income Taxes, Other Income and Deductions.

(b) Items:

(i) Profit on sale of timer. (See Utility Plant Instruction 6.)

(ii) Profits from operations of others realized by the utility under contracts.

(iii) Gain on disposition of investments and reacquisition and resale or retirement of utility's debt securities and investment.

(7) 422 - Gains (Losses) from Disposition of Property:

(a) This account shall include gains and losses on the sale, conveyance, exchange, or transfer of utility or other property to another unless otherwise authorized or required by the Commission. (See Utility Plant Instructions 4, 6 and 9, and account 414, Gains (Losses) from Disposition of Utility Property.) The income tax effect attributable to gains and losses shall be recorded in account 409, Income Taxes, Other Income and Deductions.

(b) This account shall be maintained so that the transactions and details underlying each gain or loss will be readily identifiable.

(8) Other Income Deductions: 425 - Miscellaneous Amortizations:

(a) This account shall include amortization charges not includable in other accounts which are properly deductible in determining the income of the utility before interest charges.

(b) Items:

(i) Amortization of utility plant acquisition adjustments or of intangibles included in utility plant in service when not authorized to be included in utility operating expenses by the Commission.

(ii) Amortization of amounts in account 182, Extraordinary Property Losses, when not authorized to be included in utility operating expenses by the Commission.

(9) 426 - Miscellaneous Income Deductions:

(a) This account shall include miscellaneous expense items which are nonoperating in nature but which are properly deductible before determining total income before interest charges. Separate subaccounts shall be maintained for each category of expense as indicated by the following item list.

(b) Items:

(i) Donations for charitable, social, or community welfare purposes.

(ii) Life insurance of officers and employees where utility is beneficiary (net premiums less increase in such surrender value of policies).

(iii) Penalties or fines for violation of statutes pertaining to regulation.

(iv) Expenditures for the purpose of:

a) Influencing public opinion with respect to the election or appointment of public officials, or the adoption, repeal, revocation, or modification of referenda, legislation, or ordinances.

b) Influencing public opinion with respect to obtaining approval, modification, or revocation of franchises.

c) Influencing the decisions of public officials not including such expenditures which are directly related to appearances before regulatory or other governmental bodies in connection with the utility's existing or proposed operations.

(v) Loss relating to investments in securities written off or written down.

(vi) Loss on sale of investments.

(vii) Loss on reacquisition, resale, or retirement of utility's debt securities.

(viii) Preliminary survey and investigation expenses related to abandoned projects when not written off to the appropriate operating expense account.

(ix) Golf club dues, social club dues, and service club dues (Kiwanis, Rotary, etc.), house charges, and items of a similar nature whether such expenditures are made directly by the utility or indirectly by payment or reimbursement to associated companies, officers, or other employees, or by any other employees, or by any other direct or indirect means.

C. Interest Charges:

(1) 427 - Interest on Long Term Debt:

(a) This account shall include in each accounting period the amount of interest applicable thereto on outstanding long term debt issued or assumed by the utility, the liability for which is included in account 224, Long Term Debt.

(b) This account shall be so kept or supported as to show the interest accruals on each item of long term debt.

(2) 431 - Other Interest Expense:

(a) This account shall include in each accounting period all interest charges not provided for elsewhere.

(b) Items:

(i) Interest on notes payable on demand or maturing one (1) year or less from date and on open accounts, except notes and accounts with associated companies.

(ii) Interest on customers' deposits.

(iii) Interest on claims and judgments, tax assessments, and assessments for public improvements past due.

(iv) Income and other taxes levied upon bondholders of utility and assumed by it.

(v) Interest on debt to associated companies.

D. Extraordinary Items:

(1) 433 - Extraordinary Income: Upon approval of the Commission, this account shall be credited with nontypical, noncustomary, infrequently recurring gains which would significantly distort the current year's income computed before extraordinary items, if reported other than as extraordinary items. The applicable income tax effects of this account shall be recorded in account 409, Income Taxes, identified separately.

(2) 434 - Extraordinary Deductions: Upon approval of the Commission, this account shall be debited with nontypical, noncustomary, infrequently recurring losses which would significantly distort the current year's income computed before extraordinary items. The applicable income tax effects of this account shall be recorded in account 409, Income Taxes, identified separately.

N.M. Admin. Code § 17.12.720.18

Recompiled 12/30/01