Electric Competition Moves On
The recent months have brought a flurry of activity in a number of states:
ARIZONA: The Arizona Corporation Commission approved rules opening...
liability treatment can be illustrated by an obligation maturing in 40 years with 5-percent annual cost escalation and a 6.5-percent discount rate. The liability amount would be only about one-half of the current cost required to satisfy the obligation. By the 40th year, the annual increase in the liability amount recorded as an expense would be nearly 12 times the amount recorded during year one. Of course, cash treatment is even more severely backloaded. This backloading is much different from the typical constant or decreasing pattern of usage of utility assets.
Utilities have long been confronted with proposals for backloading the recording of the usage of high-cost facilities, such as power plants. To their credit, regulators have usually denied such proposals, because of the resulting deferral in recording the costs until the facilities are old and unlikely to be productive. Now sanctioning this backloading for some of these costs for financial reporting can be expected to expand the extent of backloading for regulatory accounting, and proposals to do so have already begun. t
John S. Ferguson is a former principal of Deloitte & Touche LLP, and a frequent contributor to
PUBLIC UTILITIES FORTNIGHTLY.
Utilities: American Electric Power Service Corp.; Ameritech Corp.; Arizona Public Service Co.; Arkansas Public Service Co.; Baltimore Gas and Electric Co.; Basin Electric Power Co-op.; Brooklyn Union; Carolina Power and Light Co.; Cilcorp Inc.; Commonwealth Edison Co.; Consolidated Edison Co. of New York, Inc.; Consumers Power Co.; Detroit Edison Co.; Duke Power Co.; Entergy Corp.; FPL Group Inc.; Kentucky Utilities Co.; Long Island Lighting Co.; Lower Colorado River Authority; New England Electric System; New York Power Authority; New York State Electric & Gas Corp.; Niagara Mohawk Power Corp.; Northeast Utilities System; Ohio Edison Co.; Ontario Hydro; PacifiCorp; PanEnergy Corp; PECO Energy Co.; Piedmont Municipal Power Agency; Public Service Enterprise Group Inc.; Salt River Project; Sonat Inc.; South Carolina Company Services; Southern Company Services Inc.; Texas Utilities Co.; TransCanada PipeLines Ltd.; Virginia Electric and Power Co.; Williams Companies Inc. (Associations include: American Gas Asso.; Edison Electric Institute; National Rural Electric Co-op. Asso.; Interstate Natural Gas Asso. of America; United States Telephone Asso.)
Regulators: Colorado Pub. Utils. Comm'n; Florida Pub. Serv. Comm'n; Kansas Corp. Comm'n; Missouri Pub. Serv. Comm'n; Montana Pub. Serv. Comm'n; New York State Dept. of Pub. Serv.; Ohio Pub. Utils. Comm'n; South Carolina Pub. Serv. Comm'n; West Va. Pub. Serv. Comm'n; Wisconsin Pub. Serv. Comm'n; Wyoming Pub. Serv. Comm'n.
Industrials: Mostly extractive-type industries. Some of the larger respondents include: Chevron Corp.; Ciba-Geigy Corp.; Exxon Corp.; General Electric Co.; Mobil Corp.; Shell Oil Co.; USX Corp; and 3M.
Accountants: Arthur Anderson LLP; Coopers & Lybrand LLP; Deloitte & Touche LLP; Ernst & Young LLP; Price Waterhouse LLP. (Associations include: American Accounting Asso.; Maryland Asso. of CPAs; New York State Society of CPAs.)
Others: Individuals, lenders and associations of financial executives and security analysts, including, for example, Chase Manhattan Corp. and National Westminster Bank..R2
1Exposure Draft, Proposed Statement of Financial Accounting Standards, Accounting for Certain Liabilities Related to Closure or Removal of Long-Lived Assets, No. 158-B,