Federal Register: November 19, 2002 (Volume 67, Number 223)
DOCID: FR Doc 02-28294
DEPARTMENT OF ENERGY
Veterans Affairs Department
CFR Citation: 18 CFR Parts 35, 101, 154, 201, 346, and 352
Docket ID: [Docket No. RM02-7-000]
NOTICE: Part II
DOCUMENT ACTION: Notice of proposed rulemaking.
SUBJECT CATEGORY:
Accounting, Financial Reporting, and Rate Filing Requirements for Asset Retirement Obligations
DATES: Comments on the proposed rulemaking are due on or before January 3, 2003.
DOCUMENT SUMMARY:
The Federal Energy Regulatory Commission (Commission) proposes to revise its regulations to update the accounting and reporting requirements for liabilities for asset retirement obligations under its Uniform Systems of Accounts for public utilities, licensees, natural gas companies, and oil pipeline companies.
The Commission proposes to establish uniform accounting and financial reporting for the recognition and measurement of liabilities arising from retirement and decommissioning obligations of tangible longlived assets and the related capitalized costs. The Commission also proposes to add new income statement accounts to the Uniform Systems of Accounts to record the accretion of the liability and the depreciation of the related capitalized costs. The Commission proposes to add or revise as necessary the definitions, general and plant instructions, and balance sheet and income statement accounts contained in the Uniform Systems of Accounts. Additionally, the Commission proposes to revise its rate filing requirements to incorporate the above mentioned changes.
Finally, the Commission proposes to revise the following Annual Reports: FERC Form No. 1, Annual Report of Major Public Utilities, Licensees and Others (Form 1); FERC Form No. 1F, Annual Report of Nonmajor Public Utilities and Licensees (Form 1F); FERC Form No. 2, Annual Report of Major Natural Gas Companies (Form 2); FERC Form No. 2 A, Annual Report of Nonmajor Natural Gas Companies (Form 2A); and Form No. 6, Annual Report of Oil Pipeline Companies (Form 6) to include the new accounts and revised schedules proposed by this rulemaking.
An important objective of the proposed rule is to provide sound and uniform accounting and financial reporting for the above types of transactions and events. The new instructions and accounts will result in improved, consistent and complete accounting and reporting of liabilities for obligations associated with the retirement of tangible longlived assets and the related asset retirement costs capitalized. The additions of new accounts and changes to the FERC Forms noted above will add visibility, completeness and consistency of the accounting and reporting of liabilities for asset retirement obligations and the related asset retirement costs capitalized.
SUMMARY:
Energy Department, Federal Energy Regulatory Commission,
DOCUMENT BODY 2:
Issued: October 30, 2002.
SUPPLEMENTAL INFORMATION
I. Introduction
II. Background
III. Discussion of Proposed Revisions to Regulations for Public Utilities, Licensees, and Natural Gas Companies
A. General
B. Proposed New Accounts for Asset Retirement Obligations
C. Proposed New Accounts for Capitalized Asset Retirement Costs
D. Proposed New General Instructions for Accounting for Asset Retirement Obligations
E. Other Revisions to the Uniform Systems of Accounts
1. Proposed Revisions to the Cost of Removal Definition
2. Proposed Revisions to Electric and Gas General Instruction 20, Accounting for Leases
3. Proposed Revisions to Electric and Gas Plant Instructions
4. Proposed Revision to Account 121, Nonutility Property
5. Proposed Revisions to Electric and Gas Utility Operating Income Accounts
F. Proposed Accounting for Transition Adjustments
G. Proposed Revisions to Tariff Filing Requirements under 18 CFR part 35 and 18 CFR part 154
IV. Discussion of Proposed Revisions to Regulations for Oil Pipeline Companies
A. General
B. Proposed New Accounts for Asset Retirement Obligations
C. Proposed New Accounts for Capitalized Asset Retirement Costs
D. Proposed New General Instruction for Accounting for Asset Retirement Obligations
E. Other Revisions to the Uniform System of Accounts
1. Proposed Revisions to the Cost of Removal Definition
2. Proposed Revisions to Instructions for Carrier Property Accounts
3. Proposed Revisions to Account 34, Noncarrier Property
4. Proposed New Account for Operating Expenses
F. Proposed Accounting for Transition Adjustments
G. Proposed Revisions to Tariff Filing Requirements under 18 CFR part 346
V. Proposed Effective Date
VI. Proposed Changes to the FERC Annual Report Forms
VII. Regulatory Flexibility Act Statement
VIII. Environmental Impact Statement
IX. Information Collection Statement and Public Reporting Burden X. Public Comment Procedures
XI. Document Availability
Regulatory Text
Appendix ASummary of Proposed Changes to Schedules for Forms 1, 1 F, 2, 2A, and 6
I. Introduction
1. In this Notice of Proposed Rulemaking (NOPR), the Federal Energy
Regulatory Commission (Commission) proposes to revise its Uniform
Systems of Accounts \1\ for public utilities and licensees,\2\ natural gas companies \3\ and
[[Page 69817]]
oil pipeline companies \4\ for the recognition of liabilities for legal
obligations associated with the retirement of tangible longlived
assets and the associated capitalization of these amounts as part of the cost of the asset giving rise to the obligation.
\1\ Section 301(a) of the Federal Power Act (FPA), 16 U.S.C.
825(a), section 8 of the Natural Gas Act (NGA), 15 U.S.C. 717g and
section 20 of the Interstate Commerce Act (ICA) 49 App. U.S.C. 20
(1988), authorize the Commission to prescribe rules and regulations
concerning accounts, records and memoranda as necessary or
appropriate for the purposes of administering the FPA, NGA and the
ICA. The Commission may prescribe a system of accounts for
jurisdictional entities and, after notice and opportunity for
hearing, may determine the accounts in which particular outlays and receipts will be entered, charged or credited.
\2\ Part 101 Uniform System of Accounts Prescribed for Public
Utilities and Licensees Subject to the Provisions of the Federal Power Act. See 18 CFR part 101 (2002).
\3\ Part 201 Uniform System of Accounts Prescribed for Natural
Gas Companies Subject to the Provisions of the Natural Gas Act. See 18 CFR part 201 (2002).
\4\ Part 352 Uniform System of Accounts Prescribed for Oil
Pipeline Companies Subject to the Provisions of the Interstate Commerce Act. See 18 CFR part 352 (2002).
2. The purpose of the NOPR is to improve the usefulness of financial information provided to the Commission and other users of the FERC Forms by establishing uniform accounting and reporting requirements for legal obligations associated with the retirement of tangible longlived assets. The Commission proposes to add or revise as necessary the definitions, general and plant instructions, and balance sheet and income statement accounts contained in the Uniform Systems of Accounts to incorporate the proposed changes for the accounting for asset retirement obligations. The Commission is of the view that such requirements are needed because these types of transactions and events are not clearly or consistently reported. This NOPR is part of the Commission's ongoing effort to address emerging accounting developments within the context of the Uniform Systems of Accounts.
3. The proposed accounting for asset retirement obligations is consistent with the accounting and reporting requirements that jurisdictional entities will use in their general purpose financial statements provided to shareholders and the Securities Exchange Commission (e.g., companies will separately account and report the liability for the asset retirement obligations, capitalize the asset costs, and charge earnings for depreciation of the asset and operating expense for the accretion of the liability).
4. An asset retirement obligation is a liability resulting from a legal obligation to retire or decommission a plant asset. The types of work activities typically include removing or dismantling the asset. For example, public utilities have a legal liability to decommission nuclear plants under certain Nuclear Regulatory Commission (NRC) regulations. The activities would include the dismantlement and removal of the reactor vessel and the related contaminated facilities. Natural gas pipeline companies may have legal liabilities to remove compressor stations and related piping under state regulations, local ordinances or agreements entered into with the landowners. Offshore pipelines may have legal obligations that arise under federal and state site clearance requirements to remove the offshore platforms, wells, pilings and other appurtenances resulting from the retirement of such facilities. However, certain assets may not have legal obligations if no law, statute, ordinance, or contract exists to remove or dismantle the facilities.
5. Business entities have accounted for legal obligations in various ways. Some business entities recognize these asset retirement obligations gradually over the life of the asset as part of depreciation expense while others have not recognized any liability for the legal obligations for the asset to be retired. Under the proposed accounting all entities must record the present value of the legal obligation at the time it is incurred.
6. To illustrate, the owner of a nuclear plant estimates that the cost to decommission the facilities as required by law is $400,000 ten years from today. Under the current practice the owner records $40,000 ($400,000/10 years) of additional depreciation expense each year for the cost of removing the plant. This simplified example ignores interest earnings, etc. on amounts placed in an external fund.
7. The new accounting standard requires that the owner record a liability for the present value of the $400,000. Assuming a $100,000 present value, the owner initially records a liability of $100,0000 and capitalizes a corresponding amount as part of the asset costs. The liability recorded will increase or grow over time (time value of money) until the actual retirement activity commences and the liability is settled (paid). Both approaches recognize the same total expenses of $400,000 over the asset's useful life. Under the new accounting standard, the total expenses are made up of $100,000 in depreciation on the capitalized asset costs plus $300,000 for the time value of money, while under the current practice the decommissioning liability is recognized on a pro rata basis over the life of the plant as depreciation expense of $400,000.
8. In summary, the new accounting standard requires the present value of the liability to be recorded for all assets. Additionally, the entity capitalizes this amount as part of the cost of the plant and depreciates it over the useful life of the related asset.
9. Finally, a gain or loss may be recognized for any difference between the estimated liability and the actual amount paid to settle the asset retirement obligation. In the example above, if the owner paid a contractor $380,000 to remove the plant and thereby settle the obligation, a gain of $20,000 will be recognized for the difference between the $400,000 liability recorded on its books and the $380,000 paid to the contractor for the work performed.
10. The Commission also proposes to revise its rate filing requirements to accommodate the above mentioned changes. In that regard, we specifically note that the proposed accounting will not affect jurisdictional entities' ability to recover costs arising from asset retirement obligations in rates. However, public utilities, licensees, natural gas and oil pipeline companies with formula rate tariffs must seek approval with the Commission prior to implementing the accounting changes, if doing so would affect tariff billings.
11. Finally, the Commission proposes to revise the following Annual
Reports: FERC Form No. 1, Annual Report of Major Public Utilities,
Licensees and Others (Form 1); FERC Form No. 1F, Annual Report of
Nonmajor Public Utilities and Licensees (Form 1F); FERC Form No. 2,
Annual Report of Major Natural Gas Companies (Form 2); FERC Form No. 2
A, Annual Report of Nonmajor Natural Gas Companies (Form 2A); and FERC
Form No. 6, Annual Report of Oil Pipeline Companies (Form 6) to include
the new accounts and the revised schedules proposed in this rulemaking.\5\
\5\ The FERC Annual Reports bear the following OMB approval
control numbers: Form 1 has OMB approval number 19020021; Form 1F
has OMB approval number 19020029; Form 2 has OMB approval number
19020028; Form 2A has OMB approval number 19020030; and Form 6 has OMB approval number 1902002.
II. Background
12. The recognition and measurement of legal liabilities associated
with the retirement and decommissioning of longlived assets by various
entities, including Commission jurisdictional entities, has been
inconsistent over the years. The usefulness of consistently recognizing
and measuring asset retirement obligations in the financial statements
resulted in the Financial Accounting Standards Board (FASB) issuing a
new accounting pronouncement affecting the manner in which legal
obligations are measured and reported in the financial statements applicable to entities in general.\6\ The
[[Page 69818]]
major objective of this change in accounting by FASB is to provide
standards for the recognition and measurement of liabilities for asset
retirement obligations associated with the retirement of tangible long
lived assets. When an entity acquires or constructs an asset, it may
incur certain legal obligations associated with the future retirement
of that asset. These obligations are generally referred to as asset
retirement obligations. An asset retirement obligation is a legal
obligation associated with the retirement of a tangible longlived
asset that an entity is required to settle as a result of an existing
enacted law, statute, ordinance, or written or oral contract or by
legal construction of a contract under the doctrine of promissory estoppel.\7\
\6\ The accounting pronouncement issued by FASB was Financial
Accounting Standards (FAS) No. 143, Accounting for Asset Retirement
Obligations, issued in June 2001. The accounting may be obtained
from FASB at http://accounting.rutgers.edu/raw/fasb//.
\7\ See FAS 143, Appendix A, paragraphs A2 through A5, for a
discussion of the scope of the legal obligations covered under the pronouncement.
13. An entity essentially recognizes a liability for the fair value
of an asset retirement obligation at the time the asset is constructed,
acquired, or when a change in the law creates a legal obligation to
perform the retirement activities. Upon initial recognition of that
liability, an entity also increases the cost of the related asset that
gives rise to the legal obligation by the same amount.\8\ The liability
is increased over time until the actual retirement activity
commences.\9\ Additionally, the asset retirement cost capitalized is
depreciated over the same life of the related asset giving rise to the
obligation. An entity is required to remeasure the liability due to the
passage of time and certain other changes in the estimate of the liability.\10\
\8\ See FAS 143, paragraphs 11, for a discussion of the recognition and allocation of an asset retirement cost.
\9\ See FAS 143, paragraphs 8 and 9, for a discussion of the
``credit adjusted risk free rate'' used to measure the fair value of the asset retirement obligation.
\10\ See FAS 143, paragraphs 13 through 16, for a discussion of
the discussion of the subsequent recognition and measurement of the asset retirement obligation.
14. Business entities are required to apply the standards for
accounting for asset retirement obligations to all existing assets as
if the accounting requirements had always been in existence for such
assets, as well as those under construction that have associated legal obligations for their disposal or retirement.\11\
\11\ See FAS 143, paragraphs 24 and 25, for a detailed of the
accounting for the cumulative effect of a change in accounting principle.
15. The accounting standards for asset retirement obligations rely
on the general standards of accounting for the effects of regulation
for regulated entities in accordance with FASB Statement No. 71,
Accounting for the Effects of Certain Types of Regulation, (FAS
71).\12\ Therefore, an entity must recognize a regulatory asset or
regulatory liability if the requirements of FAS 71 are met. The
Commission established regulatory assets and liabilities which apply to public utilities, licensees and natural gas companies.\13\
\12\ See FAS 143, paragraphs 19 through 21 for a discussion of
the subsequent recognition and measurement of the asset retirement obligation.
\13\ See Order No. 552, 58 FR 17,982 (Apr. 7, 1993), FERC Stats.
& Regs., Regulations Preambles January 1991June 1996 ] 30,967, at
pp. 30,82326 (Mar. 31, 1993) for guidance on the recognition of
regulatory assets and regulatory liabilities when certain criteria conditions are met.
16. The Commission considers it desirable for its accounting requirements and those used by jurisdictional entities for general purpose financial reporting to be consistent. Currently, some jurisdictional entities do not recognize asset retirement obligations in the Uniform Systems of Accounts while other jurisdictional entities only recognize the amounts included in the rate setting process as a component of accumulated depreciation. The Commission is of the view that the accounting for asset retirement obligations to be an improvement in financial accounting and reporting practices. The Commission notes that the proposed rule will improve consistency in accounting and reporting of legal obligations to retire tangible long lived assets which under current accounting practices are accounted and reported in an inconsistent manner. The Commission also notes that the proposed rule will provide the Commission's stakeholders with more transparent financial statement disclosure of the costs related to the legal obligation in the FERC Annual Reports. The proposed rule is consistent with the enhanced disclosure initiatives announced by the Security Exchange Commission to ensure more important transparent and comprehensive accounting and reporting information will be provided by business entities to their stakeholders.
17. In an effort to eliminate the inconsistencies in accounting practices by jurisdictional entities for asset retirement obligations, the Commission proposes to provide in the Uniform Systems of Accounts accounting requirements for the recognition and measurement of liabilities for obligations associated with the retirement and decommissioning of tangible longlived assets. The Commission considers that the proposed rule for asset retirement obligations will provide consistent accounting and reporting requirements for the recognition and measurement of liabilities for legal obligations associated with the retirement of longlived assets and the capitalization of the related asset retirement costs. The proposed rule, if adopted, will initially result in a minimal increase in burden as a result of standardizing the accounting and reporting for asset retirement obligations for regulatory purposes. The proposed rule will eliminate the need by jurisdictional entities to maintain duplicate sets of books.
18. Finally, on May 7, 2002, Commission staff held an informal
technical conference to discuss the financial accounting, reporting and
ratemaking implications related to obligations associated with the
retirement of tangible longlived assets.\14\ The main purpose for
convening this technical conference was to afford an opportunity for
the electric, natural gas and oil pipeline industries and other
interested parties to discuss the financial and reporting implications
related to asset retirement obligations on the Commission's existing
accounting and rate regulations. The Commission staff received
suggestions from the participants at the technical conference which
have been incorporated into the NOPR, to the maximum extent possible.
\14\ See 67 FR 16,071 (April 4, 2002) and 67 FR 20,922 (April 29, 2002).
III. Discussion of Proposed Revisions to Regulation for Public Utilities, Licensees, and Natural Gas Companies
A. General
19. The Commission's existing Uniform Systems of Accounts and Annual Report Forms for public utilities, licensees, and natural gas companies do not contain adequate instructions and accounts to provide for the recording of liabilities for asset retirement obligations and the associated asset retirement costs. Therefore, the following changes are proposed to our existing accounting and reporting regulations to provide transparent accounting and reporting to this Commission and other users of the FERC Forms 1, 1F, 2 and 2A any legal liabilities related to the future retirement or decommissioning of utility and nonutility plant.
B. Proposed New Accounts for Asset Retirement Obligations
20. The Commission proposes to create a new noncurrent liability account entitled account 230, Asset
[[Page 69819]]
retirement obligations, to record legal liabilities related to the
future retirement or decommissioning of utility and nonutility plant
for public utilities and licensees in part 101 (part 101) of the
Commission's regulations and for natural gas companies in part 201
(part 201) of the Commission's regulations. The new proposed account
230, Asset retirement obligations, will record the fair value of the
liability based upon a present value calculation. These amounts will
increase or grow over time until the liability is settled. The process
of increasing the liabilities recorded in account 230, Asset retirement
obligations, is referred to as an ``accretion'' to record the increase
or growth in the liability due to the passage of time. The Commission
proposes to create a new income statement account entitled account
411.10, Accretion expense, in parts 101 and 201 of the Commission's
regulations to record the increase or growth in the liability due to
the passage of time. The proposed account 411.10 will provide for the
accretion expense of asset retirement obligations due to the passage of time.
C. Proposed New Accounts for Capitalized Asset Retirement Costs
21. Under the new accounting requirements, when an entity records a liability for an asset retirement obligation, it concurrently capitalizes that amount as part of the asset's cost. Effectively, the fair value of the obligation becomes part of the overall cost of the asset, similar to other amounts that are capitalized as part of the asset's construction or acquisition cost to separately identify these in the electric and gas utility plant records. The Commission proposes to create the following new primary plant accounts for each plant functions within account 101, Electric plant in service (Major only), for public utilities and licensees in part 101 of the Commission's regulations, and account 101, Gas plant in service, for natural gas companies in part 201 of the Commission's regulation, to record separately these amounts across the life of the asset.
22. For account 101, Electric plant in service (Major only), the new proposed primary plant accounts are shown in the following table: Public utilities and Proposed new primary licensees plant accounts 1........................... Steam Production 317, Asset Plant. retirement costs for steam production plant. 2........................... Nuclear Production 326, Asset Plant. retirement costs for nuclear production plant. 3........................... Hydraulic Production 337, Asset Plant. retirement costs for hydraulic production plant. 4........................... Other Production 347, Asset Plant. retirement costs for other production plant. 5........................... Transmission Plant.. 359.1, Asset retirement costs for transmission plant. 6........................... Distribution Plant.. 374, Asset retirement costs for distribution plant. 7........................... General Plant....... 399.1, Asset retirement costs for general plant.
23. For account 101, Gas plant in service, the new proposed primary plant accounts are shown in the following table below:
Natural gas Proposed new primary
companies plant accounts
1........................... Manufactured Gas 321, Asset
Production Plant. retirement costs
for manufactured
gas production
plant.
2........................... Natural Gas 339, Asset
Production Plant. retirement costs
for natural gas
production and
gathering plant.
3........................... Products Extraction 348, Asset
Plant. retirement costs
for products
extraction plant.
4........................... Underground Storage 358, Asset
Plant. retirement costs
for underground
storage plant.
5........................... Other Storage Plant. 363.6, Asset
retirement costs
for other storage
plant.
6........................... Base Load Liquefied 364.9, Asset
Natural Gas retirement costs
Terminaling and for base load
Processing Plant. liquefied natural
gas terminaling
plant.
7........................... Transmission Plant.. 372, Asset
retirement costs
for transmission
plant.
8........................... Distribution Plant.. 388, Asset
retirement costs
for distribution
plant.
9........................... General Plant....... 399.1, Asset
retirement costs
for general plant.
24. The Commission proposes that the amounts in the above primary
plant accounts be depreciated over the life of the electric and gas
utility plant giving rise to the asset retirement obligations. In order
to separately identify the depreciation expense recorded on capitalized
asset retirement costs related to electric and gas utility plant, the
Commission proposes to create a new depreciation expense account
entitled account 403.1, Depreciation expense for asset retirement
costs, in parts 101 and 201 of the Commission's regulations to record these amounts on the income statement.
D. Proposed New General Instructions for Accounting for Asset Retirement Obligations
25. In addition to the above mentioned new accounts, the Commission also proposes to create a new General Instruction 25, Accounting for asset retirement obligations, for public utilities and licensees in part 101 and a new General Instruction 24, Accounting for asset retirement obligations, for natural gas companies in part 201 of the Commission's regulations to provide additional direction for the accounting for the recognition of asset retirement costs and related obligations. These proposed General Instructions provide for the capitalization of the asset retirement costs in electric and gas utility plant and nonutility plant accounts as appropriate. It also provides for the liability to be recorded in the new proposed noncurrent liability account 230, Asset retirement obligations, in parts 101 and 201 of the Commission's regulations.
26. Under proposed General Instruction 25 in part 101 and General
Instruction 24 in part 201 of the Commission's regulations, the
Commission proposes that the accretion of the liability be debited to
the new proposed account 411.10, Accretion expense, for electric and
gas utility plant, and the existing account 413, Expenses of electric
plant leased to others, and account 413, Expenses of gas plant leased to others, for utility plant
[[Page 69820]]
leased to others and account 421, Miscellaneous nonoperating income, for nonutility plant.
27. Finally, when an asset retirement obligation is settled by a
jurisdictional entity, a gain or loss can result from the difference
between the estimated amount of the asset retirement obligation
liability included in proposed account 230, Asset retirement
obligations, and the actual amount paid to settle the obligation. For
example, an entity may settle its asset retirement obligation by either
using its internal workforce or paying a third party to perform the
work to retire the electric or gas utility plant. If the amount of the
liability included in account 230, Asset retirement obligations, is
greater or less than the actual amount paid to settle the obligation, a
gain or loss will be incurred. The Commission proposes to record gains
or losses resulting from the settlement of asset retirement obligations
for electric and gas utility plant in account 411.6, Gains from
disposition of utility plant, and the account 411.7, Losses from
disposition of utility plant, respectively.\15\ The Commission proposes
to revise the text of accounts 411.6 and 411.7 in Parts 101 and 201 of
the Commission's regulations to record gains in account 411.6 and
losses in account 411.7 resulting from the settlement of asset retirement obligations related to utility property.
\15\ See Order No. 552, supra note 13 for guidance on the
recognition of regulatory assets and regulatory liabilities when certain criteria conditions are met.
28. The Commission proposes that any gains or losses relating to the settlement of asset retirement obligations for nonutility plant must be recorded directly in account 421, Miscellaneous nonoperating income, and account 426.5, Other deductions, respectively. The Commission proposes to revise the text of accounts 421 and 426.5 in parts 101 and 201 of the Commission's regulations to record gains in account 421 and losses in account 426.5 resulting from the settlement of asset retirement obligations related to nonutility property.
29. Finally, the Commission proposes that jurisdictional entities keep subsidiary records and supporting documentation for each asset retirement obligation in order to be able to furnish accurately and expeditiously the full details of the identity and nature of the legal obligation, the year incurred, the identity of the plant giving rise to the obligation, the full particulars relating of each component and supporting computations related to the measurement of the asset retirement obligation.
E. Other Revisions to the Uniform Systems of Accounts
30. The Commission also proposes to revise the following additional existing definitions and general instructions, and revise the text of certain balance sheet and income statement accounts to the Uniform Systems of Accounts in parts 101 and 201 of the Commission's regulations to incorporate the accounting for asset retirement obligations as discussed above.
1. Proposed Revisions to the Cost of Removal Definition
31. Under the Uniform Systems of Accounts in parts 101 and 201 of
the Commission's regulations, jurisdictional entities record cost of
removal related to the disposition and retirement of longlived assets
as a component of depreciation expense. The definition of cost of
removal as presently contained in the Uniform Systems of Accounts
includes the costs of demolishing, dismantling, tearing down or
otherwise removing the electric or gas plant.\16\ Certain cost of
removal activities falling within this definition may relate to a legal
obligation associated with the retirement of a longlived asset while
others may not relate to a legal obligation to retire a longlived
asset. Under the proposed rule, retirement activities which constitute
legal obligations must be removed from cost of removal and accounted
for separately as liabilities for legal obligations that are
capitalized as part of the tangible longlived assets that give rise to
the obligation. The Commission proposes to amend the definition of cost
of removal to exclude legal obligations related to the retirement of
longlived assets at the end of their service life because the asset
retirement costs and related obligations will be separately recognized on the balance sheet and income statement.
\16\ See Definition 10 in 18 CFR part 101 (Public Utilities and
Licensees), and Definition 10 in 18 CFR part 201 (Natural Gas Companies).
2. Proposed Revisions to Electric and Gas General Instruction 20, Accounting for Leases
32. Under the Uniform Systems of Accounts in parts 101 and 201 for public utilities, licensees, and natural gas companies, there are no provisions under General Instruction 20, Accounting for leases, for the recognition of a liability for an asset retirement obligation and the related asset retirement costs that are not recognized as part of the liability related to minimum lease payments for a capital lease. The Commission proposes to add a new instruction to General Instruction 20, Accounting for leases, that provides when an entity incurs an asset retirement obligation through assumption of a capital lease, the entity must recognize the liability in account 230, Asset retirement obligations, and record the related asset retirement costs in account 101.1, Property under capital leases, account 120.6, Nuclear fuel under capital leases, or account 121, Nonutility property, as appropriate. 3. Proposed Revisions to Electric and Gas Plant Instructions
33. For public utilities, licensees, and natural gas companies, there are no specific provisions under the Uniform Systems of Accounts to allow for the capitalization of asset retirement costs related to legal obligations that were incurred during the construction of tangible longlived assets. The Commission proposes to revise Electric and Gas Plant Instructions 3, Components of construction cost, in parts 101 and 201 of the Commission's regulations by adding asset retirement costs to the item list as a new construction cost component that is capitalized if incurred during the construction phase of a longlived asset that gives rise to a legal obligation. However, since there will be no immediate cash expenditure during the construction phase for this cost, the Commission proposes to exclude this cost from the construction work in progress base for calculating the allowance for funds used during construction (AFUDC).
4. Proposed Revision to Account 121, Nonutility Property
34. The Commission proposes to revise the instructions to account
121, Nonutility property, contained in parts 101 and 201 of the
Commission's regulations to require the asset retirement costs
associated with the nonutility plant to be recorded in account 121. The
Commission also proposes that the depreciation expense on the asset
retirement costs included in account 121 must be recorded in account
421, Miscellaneous nonoperating income, in parts 101 and 201 of the Commission's regulations.
5. Proposed Revisions to Electric and Gas Utility Operating Income Accounts
35. The Commission proposes to add a new instruction to account
411.6, Gains from disposition of utility plant, and account 411.7, Losses from disposition of utility plant, to record
[[Page 69821]]
gains and losses, respectively, resulting from the settlement of asset
retirement obligations in accordance with the accounting prescribed in
the new proposed General Instruction 25 in part 101 of the Commission's
regulations. The Commission also proposes to add a similar instruction
in accounts 411.6 and 411.7 to record gains or losses in accordance
with the accounting prescribed for natural gas companies in the new
proposed General Instruction 24 in part 201 of the Commission's regulations.
F. Proposed Accounting for Transition Adjustments
36. The Commission proposes that at the adoption of the final rule, jurisdictional entities must apply the proposed requirements of the rule to all existing longlived assets at January 1, 2003, with legal obligations associated with the future retirement or disposal of those assets.
37. The Commission proposes at the initial date of the adoption of the accounting for asset retirement obligations rule, jurisdictional entities recognize a transition adjustment for a liability for any existing asset retirement obligation adjusted for the cumulative accretion on the liability and capitalize the associated asset retirement costs and the related accumulated depreciation on the capitalized costs. The Commission proposes that jurisdictional entities measure the transitional adjustment for the asset retirement cost and related liability for the retirement obligations for existing long lived asset as of the date that the retirement obligation was incurred and would have been recognized through January 1, 2003. The transitional adjustment recognized for the existing longlived asset represents the cumulative accretion of the liability and the accumulated depreciation on the related capitalized asset retirement cost from the date the obligation would have been incurred through January 1, 2003.
38. The Commission proposes that when the amount of any previously
recognized asset retirement obligation recorded in account 108 and
account 110 for major and nonmajor public utilities and licensees,
respectively, and account 108 for natural gas companies is greater than
the amount recognized under the proposed rule, the excess must be
credited to account 254, Other regulatory liabilities. However, when
the amount of any previously recognized asset retirement obligation in
account 108 and account 110 for major and nonmajor public utilities
and licensees, respectively, and account 108 for natural gas companies
is less than the amount recognized under the proposed rule, the
Commission proposes that the difference must be charged to income in
account 435, Extraordinary deductions, and the related income taxes
recorded in account 409.3, Income taxes, extraordinary items, and reported as a cumulative effect of a change in accounting
principle.\17\ The Commission notes that jurisdictional entities must
record a regulatory asset for part, or all of the cumulative effect of
a change in accounting principle in account 182.3, Other regulatory
assets, if the requirements for recording a regulatory asset under Order No. 552 are met.\18\
\17\ When authorized by the Commission, amounts related to a
cumulative effect of a change in accounting principles have been
reported in account 435. The effect on net income for amounts
charged to account 435 must be reported on the income statement on
the lines designated for extraordinary deductions in FERC Forms 1,
1F, 2, and 2A. Public utilities, licensees and natural gas
companies must disclose in a footnote in the FERC Forms 1, 1F, 2,
and 2A the full particulars of the amounts reported as a cumulative effect of a change in accounting principle.
\18\ See Order No. 552, supra note 13, for guidance on the
recognition of regulatory assets and regulatory liabilities when certain criteria conditions are met.
39. For public utilities, licensees and natural gas companies, the
instructions to account 108 and account 110 for major and nonmajor
public utilities and licensees, respectively, in part 101 of the
Commission's regulations \19\ and account 108 for natural gas companies
in part 201 of the Commission's regulations \20\ requires the
Commission's approval to remove amounts from these accounts. For any
excess amounts removed from account 108 and 110, the Commission
proposes that the final rule issued in this proceeding will constitute
the requisite authority for jurisdictional entities to remove amounts from account 108 and 110 to account 254.
\19\ See paragraph E to account 108, Accumulated provision for
depreciation of electric utility plant (Major only), and paragraph E
to account 110, Accumulated provision for depreciation and
amortization of electric utility plant (Nonmajor only), in 18 CFR part 101 (Public Utilities and Licensees).
\20\ See paragraph E to account 108, Accumulated provision for
depreciation of gas utility plant, in 18 CFR part 201 (Natural Gas Companies).
40. The Commission proposes that jurisdictional entities must
charge the cumulative accretion expense on the liability for existing
legal obligations to account 435, Extraordinary deductions, and the
related income taxes in account 409.3, Income taxes, extraordinary
items, under parts 101 and 201 of the Commission's regulations and
report such amounts in net income as a cumulative effect of a change in
accounting principle.\21\ The Commission also proposes that the
cumulative accretion expense related to the liabilities for the asset
retirement obligations may be included in account 182.3, if the
requirements for recording a regulatory asset under Order No. 552 are met.\22\
\21\ See supra note 17.
\22\ See Order No. 552, supra note 13, for guidance on the
recognition of regulatory assets and regulatory liabilities when certain criteria conditions are met.
41. In summary, the Commission proposes at the date of adoption of the final rule, jurisdictional entities must record the liability for asset retirement obligation associated with those longlived asset existing at January 1, 2003, in the new proposed account 230, Asset retirement obligations. The jurisdictional entities must capitalize the related asset retirement costs in the proposed primary plant accounts within the plant functions applicable to the utility plant that gives rise to the obligations. The Commission also proposes that jurisdictional entities must record any cumulative transition adjustments associated with the asset retirement obligations for existing long lived assets at the date of the adoption of the final rule in the appropriate accounts in the manner as prescribed above. G. Proposed Revisions to Tariff Filing Requirements Under 18 CFR Part 35 and 18 CFR Part 154
42. The Commission's proposed rule will require public utilities, licensees or natural gas companies for accounting purposes to recognize asset retirement obligations. The Commission is not requiring jurisdictional entities with stated rate tariffs to make any tariff filings with the Commission due to this rulemaking at this time. However, public utilities, licensees and natural gas companies with formula rate tariffs must not include any cost components related to asset retirement obligations in their formula rate billing determinations for automatic recovery prior to obtaining Commission approval.
43. The Commission proposes that to the extent, if any, a particular asset retirement cost should be allowed recovery through jurisdictional rates, it shall be addressed on a case by case basis in the individual rate change proposals filed by public utilities, licensees, and natural gas companies. Although the proposed accounting rules require the recording of an asset retirement cost, the Commission recognizes that no actual cash expenditures are made or required until [[Page 69822]]
the longlived assets are retired from service.
44. Therefore, it would be inappropriate for public utilities, licensees, and natural gas companies to include these asset retirement costs in rate base and collect a rate of return allowance and related income taxes on these amounts in jurisdictional rates. To ensure that all rate base amounts related to these assets can be identified and excluded from the rate base calculation in a rate change filing, the Commission is proposing to add new Sec. Sec. 35.18 and 154.315 to its rate change filing requirements. These new regulations require that public utilities, licensees, and natural gas companies which have recorded an asset retirement obligation on their books in accordance with this proposed rule must, as part of any initial rate filing or general rate change filing, provide a schedule identifying all cost components related to the asset retirement obligation that are included in the book balances of all accounts reflected in the cost of service computation supporting the proposed rates. In addition, the proposed regulations require that all rate base items related to asset retirement obligations be removed from the rate base computation through an adjustment. If the public utility, licensee or natural gas company is seeking recovery of an asset retirement obligation in rates, it must also provide a detailed study supporting the amounts proposed to be collected in rates. If the public utility, licensee or natural gas company is not seeking recovery of the asset retirement obligation in rates, then it must remove all cost components related to asset retirement obligations from its cost of service.
45. The Commission is aware that a number of natural gas companies
are currently collecting an allowance in jurisdictional rates to cover
the future cost of retiring and removing facilities. This allowance is
referred to as a negative salvage allowance. The Commission believes
that these negative salvage allowances do not necessarily reflect the
existence of a legal asset retirement obligation. Therefore, the
Commission will require that negative salvage allowances that are not
established due to an asset retirement obligation be identified for
rate making purposes separately from asset retirement obligation
allowances. The current rate change filing requirements for natural gas
companies at Sec. 154.312(d), Statement D, requires that any
authorized negative salvage must be maintained in a separate subaccount
of account 108, Accumulated provision for depreciation of gas utility
plant. The Commission proposes to amend this section to ensure that
this subaccount must not include any amounts related to asset retirement obligations.
IV. Discussion of Proposed Revisions to Regulations for Oil Pipeline Companies
A. General
46. Similar to the accounting changes for public utilities, licensees and natural gas companies, the Commission proposes to provide accounting requirements for asset retirement obligations in the Uniform Systems of Accounts for oil pipeline companies in part 352 of the Commission's regulations. Therefore, the following changes are proposed to the Commission's existing accounting regulations to provide transparent accounting and reporting of these amounts to this Commission and other users of the FERC Form 6.
B. Proposed New Accounts for Asset Retirement Obligations
47. The Commission proposes to create a new noncurrent liability
account entitled account 67, Asset retirement obligations, in part 352
of the Commission's regulations to record legal liabilities related to
the future decommissioning or retirement of carrier and noncarrier
property. The Commission also proposes to create a new income statement
account entitled account 591, Accretion expense, to record the increase in the liability due to the passage of time.
C. Proposed New Accounts for Capitalized Asset Retirement Costs
48. Under the new accounting requirements, when an oil pipeline
records a liability for its asset retirement obligation, it
concurrently capitalizes that amount in the carrier property accounts.
In order to separately identify this cost in the carrier property
records, the Commission proposes to create new carrier primary property
accounts within existing account 30, Carrier property, for oil
pipelines in part 352 of the Commission's regulations to separately
identify these amounts throughout the life of the asset. The new
proposed carrier primary property accounts are shown on the following table below:
Proposed new primary property
Oil pipeline companies accounts
1 Gathering Lines..................... 117, Asset retirement costs
for gathering lines.
2 Trunk Lines......................... 167, Asset retirement costs
for trunk lines.
3 General Property.................... 186.7, Asset retirement costs for general.
49. The Commission proposes the amounts in the above carrier
primary property accounts be depreciated over the life of the carrier
property that gives rise to the asset retirement obligations. In order
to identify the depreciation expense recorded on capitalized asset
retirement costs, the Commission proposes to create a new depreciation
expense account entitled account 541, Depreciation expense for asset
retirement costs, to separately record these amounts on the income statement.
D. Proposed New General Instruction for Accounting for Asset Retirement Obligations
50. The Commission also proposes to create a new General Instruction 119, Accounting for asset retirement obligations, to provide the accounting for the recognition of asset retirement costs and obligations, in part 352 of the Commission's regulations. The new proposed General Instruction 119 will provide for the liability to be recorded in the new proposed noncurrent liability account entitled account 67, Asset retirement obligations, and the capitalization of the asset retirement costs in carrier and noncarrier property accounts.
51. Under proposed General Instruction 119, the Commission proposes to provide for recording the accretion of the liability for carrier property in the new proposed account 591, Accretion expense, and for noncarrier property in the existing account 620, Income (net) for noncarrier property.
52. Under proposed General Instruction 119, the Commission
proposes that gains or losses resulting from the difference between the
amount of the liability for the asset retirement obligation in account 67, Asset
[[Page 69823]]
retirement obligations, and the actual amount of the settlement of the
obligation for carrier property be recorded directly in the new
proposed account 592, Gains or losses on asset retirement obligations,
and for noncarrier property in the existing account 620, Income (net)
from noncarrier property. The Commission proposes to add a new account
592, Gains or losses on asset retirement obligations, in part 352 of
the Commission's regulations to include gains and losses resulting from the settlement of asset retirement obligations.
53. The Commission also proposes in General Instruction 119 that oil pipeline companies maintain for purposes of analyses subsidiary records and supporting documentation for each asset retirement obligation to be able to furnish accurately and expeditiously the full details of the nature of the legal obligations and full particulars of the components and computations relating to the recognition and measurement of the asset retirement obligation.
E. Other Revisions to the Uniform Systems of Accounts
54. The Commission also proposes to revise certain existing definitions, certain existing general instructions, and the text of certain balance sheet accounts in the Uniform Systems of Accounts for oil pipeline companies in part 352 of the Commission's regulations to incorporate the accounting for asset retirement obligations. 1. Proposed Revisions to the Cost of Removal Definition
55. Under the Uniform Systems of Accounts under part 352 of the
Commission's regulations, certain oil pipelines record cost of removal
related to the disposition and retirement of longlived assets as a
component of depreciation expense. The Uniform Systems of Accounts
definition of cost of removal as presently written includes the cost of
demolishing, dismantling, tearing down or otherwise removing the
property.\23\ Certain cost of removal activities falling within this
definition may relate to a legal obligation associated with the
retirement of a longlived asset while others may not relate to the
legal obligation to retire the longlived asset. The Commission
proposes to amend the definition of cost of removal to exclude legal
obligations related to the retirement of longlived assets at the end
of their service life because the asset retirement costs and related
obligations will be separately recognized on the balance sheet and income statement.
\23\ See Definition 12 in 18 CFR part 352 (Oil Pipeline Companies) (2002).
2. Proposed Revisions to Instructions for Carrier Property Accounts
56. Under the Uniform Systems of Accounts in part 352 of the Commission's regulations for oil pipelines, there are no specific provisions to allow for the capitalization of an asset retirement cost related to a legal obligation that was incurred during the construction of tangible longlived assets. The Commission proposes to revise the instructions for carrier property accounts, Instruction 33, Cost of property constructed, to add a new item for asset retirement costs incurred during the construction that will constitute a component of construction costs. The Commission proposes to exclude this cost from the construction work in progress base for calculating interest during construction because there will be no immediate cash expenditure during the construction phase for this cost.
3. Proposed Revisions to Account 34, Noncarrier Property
57. The Commission proposes to include the asset retirement costs associated with noncarrier property that gives rise to the obligation in account 34, Noncarrier property, in part 352 of the Commission's regulations. The Commission also proposes that depreciation expense related to the capitalized retirement costs included in account 34, Noncarrier property, must be recorded in account 620, Income (net) from noncarrier property.
4. Proposed New Account for Operating Expenses
58. As discussed above under the new proposed General Instruction 119, the Commission proposes to add a new account 592, Gains or losses on asset retirement obligations, in part 352 of the Commission's regulations to include gains and losses resulting from the settlement of asset retirement obligations for carrier property.
F. Proposed Accounting for Transition Adjustments
59. The Commission proposes that at the adoption of the final rule, oil pipeline companies recognize the liability for existing asset retirement obligation and recognize the cumulative accretion of the liability, associated asset retirement costs and the related accumulated depreciation for the capitalized costs. The transition adjustment for the cumulative effect of the accretion of the liability and the accumulated depreciation on the related capitalized asset retirement costs is measured from the date the obligation would have been incurred and recognized through January 1, 2003, the initial date of adoption of the final rule.
60. The Uniform Systems of Accounts for oil pipeline companies in
part 352 of the Commission's regulations provides that any change in
accounting principle must be referred to this Commission for
approval.\24\ For oil pipeline companies the cumulative effect of a
change in accounting principle is ordinarily reflected in account 697,
Cumulative effect of changes in accounting principles, in the year of
adoption. The Commission proposes that the final rule in this
proceeding will constitute the requisite authorization for oil pipeline
companies to reflect the change as a cumulative effect of a change in accounting principles in account 697.
\24\ See General Instruction 16, Extraordinary, unusual or
infrequent items, prior period adjustments, discontinued operations
and accounting changes, paragraphs (e) and (g) and the instructions
to account 697, Cumulative effect of changes in accounting
principles. See 18 CFR part 352 (Oil Pipeline Companies) (2002).
61. The Commission proposes that the difference of any amount previously recognized for the asset retirement obligation recorded in account 31, Accrued depreciationcarrier property, and the amount recognized under the proposed rule, must be charged to account 697. The Commission also proposes that oil pipeline companies must charge the cumulative accretion expense on the liability for existing legal obligations to account 697 as a cumulative effect of a change in accounting principle.
62. In summary, the Commission proposes that oil pipeline companies
must record the liabilities associated with asset retirement
obligations for those existing assets that would be incurred at the
initial date of adoption of the final rule in the new proposed account
67, Asset retirement obligations, and capitalize the related asset
retirement costs in the new proposed primary carrier property accounts
within the carrier property class related to the carrier property that
gives rise to the legal obligations. The Commission proposes that oil
pipeline companies must include the cumulative accretion of the
liability for the legal obligations in account 67, Asset retirement
obligations, from the date incurred through the initial date of
adoption of the final rule by charging account 697. The Commission also proposes that oil pipeline companies
[[Page 69824]]
must adjust the accrued depreciation in account 31, Accrued
depreciationcarrier property, for the cumulative depreciation from
the date incurred through the initial date of adoption of the final rule with the offsetting adjustment to account 697.
G. Proposed Revisions to Tariff Filing Requirements Under 18 CFR Part 346
63. The Commission's proposed rule will require oil pipeline companies to recognize for accounting purposes asset retirement obligations. The Commission is not requiring oil pipeline companies with stated rate tariffs to make any tariff filings with the Commission due to this rulemaking at this time. However, oil pipeline companies with formula rate tariffs must not include any cost components related to asset retirement obligations in their formula rate tariffs for automatic recovery in their billing determinations prior to obtaining Commission approval.
64. For the same reasons discussed above for public utilities, licensees and natural gas companies, the Commission proposes that to the extent, if any, a particular asset retirement cost should be allowed recovery through oil pipeline companies rates, it shall be addressed on a case by case basis in the individual rate change proposals filed by oil pipeline companies. The Commission proposes to add a new Sec. 346.3 to costofservice filing requirements for oil pipelines. These new regulations require that oil pipelines who have recorded an asset retirement obligation on their books in accordance with this proposed rule must, as part of any initial rate filing or general rate change filing, provide a schedule identifying all cost components related to the asset retirement obligation that are included in the book balances of all accounts reflected in the cost of service computation supporting the proposed rates. In addition, the proposed regulations require that all rate base items related to asset retirement obligations be removed from the rate base computation through an adjustment. Oil pipeline companies seeking recovery of an asset retirement obligation in rates must also provide a detailed study supporting the amounts proposed to be collected in rates. If the oil pipeline is not seeking recovery of the asset retirement obligation in rates, then it must remove all asset retirement obligation related cost components from its cost of service.
65. The Commission is aware that a number of oil pipelines are currently collecting an allowance in jurisdictional rates to cover the future cost of retiring and removing facilities referred to as a dismantling, removal and restoration (DR&R) allowance. The Commission believes that these DR&R allowances do not necessarily reflect the existence of a legal obligation for the retirement of longlived assets. Therefore, the Commission will require that DR&R allowances that are not established due to an asset retirement obligation be identified for rate making purposes separately from asset retirement obligation allowances.
V. Proposed Effective Date
66. The Commission proposes the rule for accounting and reporting
purposes be effective January 1, 2003, for public utilities, licensees,
natural gas companies and oil pipeline companies. This is the date
jurisdictional entities that file FERC Forms 1, 1F, 2, 2A and 6, will
record the transitional adjustment to recognize asset retirement
obligations in their books and records.\25\ The proposed reporting will
be effective for the FERC Forms 1, 1F, 2 and 2A and 6 annual reports for the reporting year 2003.\26\
\25\ On February 20, 2002, the Commission's Chief Accountant
issued interim guidance stating that jurisdictional entities may not
early adopt this accounting standard for financial accounting and
reporting to the Commission pending the Commission action on this
matter. See All Jurisdictional Public Utilities, Licensees, Natural
Gas Companies, and Oil Pipeline Companies, 98 FERC ] 62,222 (2002).
\26\ The FERC Forms 1F and 2A and 6 annual reports for the
year 2003 are due on or before March 31, 2004. The FERC Forms 1 and
2 annual reports for the year 2003 are due on or before April 30, 2004.
VI. Proposed Changes to the FERC Annual Report Forms
67. The proposed changes, if adopted, will require revising the existing schedules in the FERC Forms 1, 1F, 2, 2A, and 6 filed with the Commission. A table summarizing the changes to the various schedules is shown in Appendix A. As a result of the Commission proposed accounting changes referred to above for public utilities, licensees, natural gas and oil pipeline companies, the Commission proposes to report in the Forms 1, 1F, 2, 2A and 6 the new noncurrent liability account for asset retirement obligations in the comparative balance sheet schedules, the new depreciation expense accounts and new accretion expense accounts in the income statement schedules.
68. The Commission also proposes to report in the Forms 1, 1F, 2, 2A and 6 the new primary plant accounts for asset retirement costs for each function for electric and gas utility plant and oil pipeline carrier property. The Commission proposes to report in the Forms 1, 1 F, 2, 2A and 6 the depreciation expense related to the asset retirement costs separately in the accumulated provision for depreciation schedules for electric and gas utility plant and the accrued depreciation schedules for carrier property. In addition, the Commission proposes for public utilities and licensees to change the plant statistical schedules to include the asset retirement costs related to electric utility plant.
69. The Commission is proposing to revise the reporting requirements in the Forms 1, 1F, 2, 2A and 6 financial reports consistent with the changes in the proposed rule to promote consistent reporting practices for asset retirement obligations to the Commission by jurisdictional entities. The Commission believes that asset retirement obligations must be identified and reported in the Forms 1, 1F, 2, 2A and 6 separately in the financial statements and supporting schedules because of the longterm nature of the obligations to retire longlived assets. Furthermore, the Commission believes separate reporting of the accounts for asset retirement obligations on the balance sheet, income statement and certain other schedules in the Forms 1, 1F, 2, 2A and 6 provides more transparent reporting of the asset retirement obligations to meet the Commission's information needs.
70. The reporting would include certain disclosure for asset
retirement obligations in the ``Notes to Financial Statements'' in the
FERC Forms 1, 1F, 2, 2A and 6.\27\ The Commission expects that
financial statement disclosures provided by jurisdictional entities in
the FERC Forms 1, 1F, 2, 2A and 6 must be no less than that provided
in their general purpose financial statements that are provided to shareholders and the Securities and Exchange Commission.
\27\ See the instructions to the Notes to Financial Statements schedule for FERC Forms 1, 1F, 2, 2A and 6 that requires
respondents to report important notes and information related to the financial statements.
71. The Commission proposes that jurisdictional entities that
report a liability for asset retirement obligations must disclose the
following: (1) A general description of the asset retirement
obligations and the associated longlived assets; (2) the fair value of
assets that legally are restricted for purposes of settling the asset
retirement obligations; (3) a reconciliation of the beginning and
ending aggregate carrying amount of asset retirement obligations showing separately the changes attributable to (i)
[[Page 69825]]
liabilities incurred in the current period, (ii) liabilities settled in
the current period, (iii) accretion expense, and (iv) revisions in
estimated cash flows, whenever there is a significant change in one or
more of those four components during the reporting period. If the fair
value of an asset retirement obligation cannot be reasonably estimate
FOR FURTHER INFORMATION CONTACT
Mark Klose (Project Manager), Office of the Executive Director, Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 5028283.
Raymond Reid (Technical Information), Office of the Executive Director,
Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 5026125.
Robert T. Catlin (Technical Information), Office of Markets, Tariffs,
and Rates, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 5028754.
Julia A. Lake (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 5028370.