77-3-31 - Accounts and depreciation reports of utilities.
§ 77-3-31. Accounts and depreciation reports of utilities.
The commission, by rules and regulations, after notice and hearing shall establish a system of accounts to be kept by the public utilities, the rates of which are subject to regulation by the provisions of this chapter, or the commission may classify said public utilities and establish a system of accounts for each class, and prescribe the manner in which such accounts shall be kept. Every such public utility shall keep and render to the commission in the manner and form prescribed by the commission uniform accounts of all its public utility operations. In the case of any public utility subject to regulation by a federal regulatory agency, compliance with the system of accounts prescribed for the particular class of utilities by such federal regulatory agency may be deemed sufficient compliance with the system prescribed by the commission; provided, however, that the commission may prescribe forms of books, accounts, records and memoranda covering information in addition to that required by such federal regulatory agency, where such do not conflict with those prescribed by such federal regulatory agency.
The commission shall, after hearing held upon reasonable notice, from time to time ascertain, determine and by order fix the proper and adequate rates and methods of depreciation, amortization or depletion of the several classes of property of each such public utility or class of public utilities which is subject to regulation by the provisions of this chapter. The commission shall, after hearing had upon reasonable notice, by order in writing require every such public utility or class of public utilities, the rates of which are subject to regulation by the provisions of this chapter, to carry a reasonable and adequate depreciation account in accordance with such rates and methods and with such rules, regulations, orders and forms of accounts as the commission shall prescribe to the extent allowed by the Internal Revenue Code and the rules and regulations promulgated thereunder. Such public utility shall conform its depreciation accounts to the rates and methods so ascertained, determined and fixed. Such rates, methods and accounts shall be utilized uniformly and consistently throughout the rate setting and appeal proceedings.
In determining the allocation of tax savings derived from application of such methods as liberalized depreciation and amortization and the investment tax credit, the commission shall equitably balance the interests of present and future customers and shall apportion such benefits between consumers and the public utilities accordingly, to the extent allowed by the Internal Revenue Code and the rules and regulations promulgated thereunder. Where any portion of the investment tax credit has been retained by a public utility, that same amount shall be deducted from the original cost of the facilities or other addition to the rate base to which the credit applied, to the extent allowed by the Internal Revenue Code and the rules and regulations promulgated thereunder.
If the public utility is a member of an affiliated group that is eligible to file a consolidated income tax return, and if it is advantageous to the public utility to do so, income taxes shall be computed as though a consolidated return had been so filed and the utility had realized its fair share of the savings resulting from the consolidated return, unless it is shown to the satisfaction of the commission that it was reasonable to choose not to consolidate returns. The amount of income taxes saved by a consolidated group of which a public utility is a member by reason of the elimination in the consolidated return of the intercompany profit on purchases by the public utility from an affiliate shall be applied to reduce the cost of the property or services so purchased.
The commission shall require such public utilities to maintain a reasonably close relationship between their reserve for depreciation and the actual accumulated depreciation, and if such reasonably close relationship is not present, the commission may and should review and make appropriate changes in the annual charge to operating expenses on account of depreciation.
The commission, in determining the allowance for materials, equipment or services to be included in costs of operations for rate-making purposes, shall disallow any unreasonable profit made in the sale of materials, equipment or services supplied for any such public utility by any firm or corporation owned or controlled directly or indirectly by such utility or any affiliate, subsidiary, parent or holding company, associate or any corporation whose controlling stockholders are also controlling stockholders of such utility. The burden of proof shall be on the public utility to prove that no unreasonable profit is involved.
Sources: Codes, 1942, § 7716-07; Laws, 1956, ch. 372, § 7; Laws, 1983, ch. 467, § 13, eff from and after passage (approved April 6, 1983).