N.Y. Comp. Codes R. & Regs. tit. 16 § 463.4

Current through Register Vol. 46, No. 53, December 31, 2024

Section 463.4 - Components of construction cost

(a) The cost of construction properly includible in the steam plant accounts shall include, when applicable and when actually incurred, the direct and overhead costs as listed and defined hereunder:

(1) Contract work includes amounts paid for work performed under contract by other companies, firms, or individuals, costs incident to the award of such contracts, and the inspection of such work. It does not include the cost of work performed by the utility on projects when part of the work is performed by the utility itself and part is performed by others under contract.

(2) Labor includes the pay and expenses of employees of the utility engaged on construction work, and also workmen's compensation insurance, pay roll taxes and similar items of expense. It does not include the pay and expenses of employees which are distributed to construction through clearing accounts nor the pay and expenses included in other items hereunder.

(3) Materials and supplies includes the purchase price at the point of free delivery plus customs duties, excise taxes, the cost of inspection, loading and transportation, the related stores expenses and the cost of fabricated materials from the utility's shop. In determining the cost of materials and supplies used for construction, proper credit shall be made for unused materials and supplies, for materials recovered from temporary structures used in performing the work involved, and for discounts allowed and realized in the purchase of materials and supplies.

Note:The cost of individual items of equipment of small value (for example, $200 or less) or of short life, including small portable tools and implements, shall not be charged to steam plant accounts unless the correctness of the accounting therefor is verified by current inventories. The costs shall be charged to the appropriate operating expense or clearing accounts, according to the use of such items, or, if such items are consumed directly in construction work, the cost shall be included as part of the cost of the construction.

(4) Transportation includes the cost of transporting employees, materials and supplies, tools, purchased equipment, and other work equipment (when not under own power) to and from points of construction. It includes amounts paid to others as well as the cost of operating the utility's own transportation equipment. (See paragraph [5] of this subdivision.)

(5) Special machine service includes the cost of labor, optional materials and supplies, depreciation, and other expenses incurred in the maintenance, operation and use of special machines, such as steam shovels, pile drivers, derricks, ditchers, scrapers, trenching machines, material unloaders, and other labor-saving machines; also expenditures for rental, maintenance and operation of machines of others. It does not include the cost of small tools and other individual items of small value or short life which are included in the cost of materials and supplies. (See paragraph [3] of this subdivision.) When a particular construction job requires the use for an extended period of time of special machines, transportation or other equipment, the net cost thereof, less the appraised or salvage value at time of release from the job, shall be included in the cost of construction.

(6) Shop service includes the proportion of the expense of the utility's shop department assignable to construction work, except that the cost of fabricated materials from the utility's shop shall be included in "materials and supplies".

(7) Protection includes the cost of protecting the utility's property from fire or other casualties and the cost of preventing damages to others, or to the property of others, including payments for discovery or extinguishment of fires, cost of apprehending and prosecuting incendiaries, witness fees in relation thereto, amounts paid to municipalities and others for fire protection, and other analogous items of expenditures in connection with construction work.

(8) Injuries and damages includes expenditures or losses in connection with construction work on account of injuries to persons and damages to the property of others; also the cost of investigation of and defense against actions for such injuries and damages. Insurance recovered or recoverable on account of compensation paid for injuries incident to construction shall be credited to the account or accounts to which such compensation is charged. Insurance recovered or recoverable on account of property damages incident to construction shall be credited to the account or accounts charged with the cost of damages.

(9) Privileges and permits includes payments for and expenses incurred in securing temporary privileges, permits or rights in connection with construction work, such as for the use of private or public property, streets, or highways, but it does not include rents, or amounts chargeable as franchises and consents for which see account 302, Franchises and Consents.

(10) Rents includes amounts paid for the use of property during the construction period, such as construction quarters and office space occupied by construction forces and amounts properly includible in construction costs for such facilities jointly used.

(11) Engineering and supervision includes the portion of the pay and expenses of engineers, surveyors, draftsmen, inspectors, superintendents, and their assistants applicable to construction work.

(12) General administration includes the portion of the pay and expenses of the general officers and administrative and general expenses applicable to construction work.

(13) Employee pensions and benefits includes the portion of the cost of employee pensions and benefits which is applicable to construction work.

(14) Engineering services includes amounts paid to other companies, firms or individuals engaged by the utility to plan, design, prepare estimates, supervise, inspect, or give general advice and assistance in connection with construction work. A copy of the agreement or arrangement under which such services are rendered shall be preserved.

(15) Insurance includes premiums paid or amounts provided or reserved as self-insurance for the protection against loss and damages in connection with construction, by fire or other casualty, injury to or death of persons other than employees, damages to property of others, defalcation of employees and agents, and the nonperformance of contractual obligations of others. It does not include workers' compensation or similar insurance on employees included as "labor" in subdivision (b) of this section.

(16) Law expenditures includes the general law expenditures incurred in connection with construction and the court and legal cost directly related thereto, other than law expenses included in protection, paragraph (7) of this subdivision, and in injuries and damages, paragraph (8) of this subdivision.

(17) Taxes includes taxes on physical property (including land) during the period of construction and other taxes properly includible in construction costs before the facilities become available for service. The period of construction shall extend from the date of commencement of construction to the time when property is ready for service and shall also include any reasonable and necessary period during which the property is held for future service; but shall not include, except upon order of the commission, any period in excess of one year during which construction is suspended.

(18) Interest during construction includes the net cost of borrowed funds used for construction purposes and a reasonable rate upon the utility's own funds when so used. Interest during construction shall be charged to the individual job upon which the funds are expended and shall be credited to account 536, Interest Charged to Construction--Credit. The period for which interest may be capitalized shall be limited to the period of construction. No interest charges shall be included in these accounts upon expenditures for construction projects which have been abandoned. (See paragraph [17] of this subdivision.)

Note:When a part only of a plant or project is placed in operation but the construction work as a whole is incomplete, that part of the cost of the property placed in operation shall be treated as "steam plant in service" and interest thereon as a charge to construction shall cease.

(19) Earnings and expenses during construction. The earnings and expenses during construction shall constitute a component of construction costs.

(i) The earnings shall include revenues received or earned for steam produced by generating stations during the construction period and sold or used by the utility. When such steam is sold to an independent purchaser before intermingling with steam generated by other plants, the credit shall consist of the selling price of the steam. When the steam generated by a plant under construction is delivered to the utility's steam system for distribution and sale, or is delivered to an associated company, or is delivered to and used by the utility for purposes other than distribution and sale (for manufacturing or industrial use, for example), the credit shall be the fair value of the steam so delivered. The revenues shall also include rentals for lands, buildings, etc., and miscellaneous receipts not properly includible in other accounts.

(ii) The expenses shall consist of the cost of operating the steam generating station and other cost incident to the generation and delivery of the steam for which construction is credited under subparagraph (i) of this paragraph, including the cost of repairs and other expenses (but not taxes) of operating and maintaining lands, buildings and other property, and other miscellaneous and like expenses not properly includible in other accounts.

N.Y. Comp. Codes R. & Regs. Tit. 16 § 463.4