N.M. Admin. Code § 17.3.340.10

Current through Register Vol. 35, No. 23, December 10, 2024

Section 17.3.340.10 - REQUIREMENTS FOR RECORDS, STUDIES, REVIEWS, AND REPORTS

A. General: All Class A, B, C, and D electric, gas and water utilities and Class A, B and C sewer utilities in New Mexico shall maintain adequate accounts and records related to depreciation practices. Annual depreciation accruals by account shall be reported for each account. A separate reserve for each plant account shall be maintained. The cost of depreciable plant adjusted for net salvage will thus be distributed over the estimated useful life of such plant in a systematic manner. The accounting entries must be made in a manner consistent with applicable Uniform Systems of Accounts.

B. Depreciation Rates: Each public utility company has the primary responsibility for determining the depreciation rates that may be used for each account. Any public utility may make application to the Commission and present justification for a depreciation method to be approved by the Commission for the accounts as contained in the utility's application as evidenced by order of the Commission. If no such application is made, a straight-line method or unit of production method shall be used. Class A and Class B utilities will determine service lives in accordance with NMPSC Rule 340.10 through 340.15 [17.3.340.11 NMAC].

C. Periodic Studies and Annual Reviews:

(1) Class A and Class B utilities shall annually make an internal review of all depreciation rates and other pertinent depreciation factors by accounts to determine whether the current depreciation rates are appropriate for the ensuing accounting year. As a result of each utility's annual review and subject to Commission approval, depreciation rates may be adjusted to reflect known factors which may affect depreciation rates.

(2) Subject to the Commission requiring or a utility requesting a different analysis period, each Class A and Class B utility shall, not less often than every five (5) years, conduct a detailed study of all accounts as to the property of service lives, survivor curves, recorded net salvage, and other pertinent factors affecting depreciation.

(3) Class C and Class D water, gas and electric utilities and Class C sewer utilities shall maintain depreciation records for each plant account but may determine average service lives either in accordance with NMPSC Rules 340.10 through 340.15 [17.3.340.11 NMAC] or by estimates based upon knowledge of local conditions, company policy with regard to retirement, other factors influencing service life, and the experience of other New Mexico utilities. When in the judgment of the Commission and after hearings, Class C and Class D water, gas and electric utilities and Class C sewer utilities may be required to use actuarial or simulated plant record methods for specified depreciation accounts.

(4) Class C and Class D gas, water and electric utilities and Class C sewer utilities shall annually review all depreciation rates by accounts. When required after hearings, studies shall be made so that within a five-year period or such other period as the Commission shall require all accounts shall have been analyzed. As a result of the annual review depreciation rates may be adjusted to reflect known factors which may tend to lengthen or shorten average service lives.

(5) Nothing in NMPSC Rule 340 [17.3.340 NMAC] shall prohibit the use of subaccounts for plant in separate geographic areas or where an account is large to separate and distinguish between certain classes of property. Where such subaccounts have been established, they shall be carried separately on the books of the utility and may be treated as separate accounts for depreciation purposes.

(6) The Commission may, after hearing, require Class A utilities to maintain certain subdivision of primary accounts for depreciation purposes.

D. Report to Commission: In all rate case filings all utilities shall provide reports to the Commission setting forth the depreciation rates. Class A and B utilities shall also file the results of the detailed depreciation study required by NMPSC Rule 340.7(b) [Paragraph 2 of Subsection C of 17.3.340.10 NMAC] with their next rate case following the completion of this study. In addition the utilities shall indicate on which accounts detailed studies have been undertaken during the previous year, summarized on a form containing all of the data which is contained on the sample enclosed in Appendix B and any other applicable sample appendices. The utility shall show proposed changes to depreciation rates it intends to use in the future and shall provide a justification for each change.

E. Commission Action: In the event the Commission should fail to issue an order approving or disapproving such proposed rates within sixty (60) days after the filing of the report, the utility may use the depreciation rates set forth in its report for the ensuing year.

N.M. Admin. Code § 17.3.340.10

Recompiled 12/30/01