GENERIC ACCOUNTING AND REGULATORY SURVEY NARUC Subcommittee on Accounts Phoenix, Arizona May 6, 2009

Twenty of fifty-one jurisdictions responded to the survey: ArizonaMassachusettsOhio ArkansasMinnesotaOklahoma ColoradoMissouriSouth Carolina District of ColumbiaMontanaVirginia FloridaNevadaWisconsin IllinoisNew HampshireWyoming IndianaNorth Carolina

Question 1 Does your agency use a historic or forward- looking test year?

Question 2 Does your agency have a statute or rule requiring that a utility file a rate case on a specified schedule?

Question 3 What type or level of regulation does your agency have over the following utilities? Electric and Gas Companies

Question 3 Con’t. Water and/or Sewer, Electric Co-Ops, Municipals and Other

Question 4 What type or level of regulation does your agency have over the following telecommunications providers – large ILECs, small ILECs, and CLECs?

Question 4 Con’t. What type or level of regulation does your agency have over the following telecommunications providers – cable TV, cellular, VoIP, and other types of providers?

Question 5 Does your agency have pre-approval authority over any of the following? Affiliate Agreements Stock Issuances Mergers and Acquisitions Construction Projects Formation of Holding Companies and Other Reorganizations Long-Term Debt Issuances Management Contracts Note that in many instances the answers do not apply to telecommunications providers

Question 5 Con’t. Pre-Approval Authority

Question 6 What is your agency’s policy and practice for adopting new generally accepted accounting principles? Jurisdictions either adopt GAAP as a rule or consider pronouncements on a case-by-case basis

Question 7 What is your agency’s policy and practice for recovery in rates of Executive Compensation and Incentive Compensation? Amounts are reviewed for reasonableness Recovery of incentives based solely on financial goals is limited by four jurisdictions

Question 7 Con’t. Policy for Recovery of Wage increases for management, union employees, and non-union, non-supervisory employees? Reviewed for reasonableness Three jurisdictions allow union increases as a matter of policy or statute Oklahoma allows increases if in line with salary for like positions in Towers/Perrins salary surveys

Question 8 What is your agency’s policy and practice for recovery in rates of plant acquisition adjustments?

Question 9 What is your agency’s policy and practice regarding the accounting for OCI related to Derivatives and Defined Benefit Pension and Other Postretirement Plans? Derivatives: Most jurisdictions have no stated policy or have not addressed this issue Four indicated that the practice is to follow GAAP Two jurisdictions flow gains or losses through the fuel clause One jurisdiction indicated that use of derivatives is not allowed

Question 9 Con’t. Pensions and OPEBs: Most jurisdictions have no stated policy or have not addressed the issue Three jurisdictions follow GAAP Three jurisdictions do not allow for ratemaking purpose One jurisdiction has allowed the major electric and gas utilities to set up regulatory assets

Question 10 What is your agency’s policy and practice for recovery in rates of pension and other postretirement costs? All jurisdictions responded that they were on an accrual basis for pensions except Missouri which has no stated policy – Massachusetts has a reconciliation mechanism OPEB – two jurisdictions require external funding for amounts allowed in rates

Question 11 What is your agency’s policy and practice regarding the accounting for and recovery in rates of spending on energy efficiency and demand response programs?

Question 12 What is your agency’s policy and practice regarding recovery in rates of spending on economic development activities? Most jurisdictions may allow recovery after a review Four jurisdictions do not allow recovery Three jurisdictions have no stated policy One jurisdiction allows recovery up to cap limitations

Question 13 Does your agency allow utilities under your jurisdiction to include advertising expense as an operating expense? Most jurisdictions allow informational advertising and disallow image advertising One jurisdiction said it has no policy One jurisdiction did not respond

Question 14 What is your agency’s policy and practice regarding the accounting for emission allowances? Utilities in all jurisdictions follow the FERC USOA for electric utilities 3 jurisdictions have trackers for gains and losses In 2 jurisdictions the cost of emission allowances is recovered through the fuel clause

Question 15 What uniform system of accounts (NARUC, FERC, FCC, hybrid, other) does your agency use? All jurisdictions use the FERC USOA for private electric utilities – Massachusetts uses the FERC USOA with several modifications 19 jurisdictions use the FERC USOA for private gas utilities – New Hampshire uses a hybrid USOA

Question 15 Con’t. 16 jurisdictions use the FCC USOA for telephone utilities – 3 jurisdictions have no authority to prescribe a USOA – Nevada uses NARUC USOA 15 jurisdictions use the NARUC USOA for private water utilities – 2 jurisdictions do not regulate private water utilities – New Hampshire uses a hybrid USOA for private water utilities Arizona and Oklahoma did not indicate which USOA they use 7 jurisdictions prescribe the FCC USOA for CLECS 2 jurisdictions prescribe GAAP for CLECS Nevada uses NARUC USOA 10 jurisdictions do not prescribe a USOA for CLECs

Question 15 Con’t. 15 jurisdictions have no prescribed USOA for municipal utilities – Florida uses FERC – Nevada and Wisconsin use NARUC – Oklahoma and Wyoming did not answer the question Arizona, Arkansas, and Wyoming prescribe the RUS USOA for electric co-ops – No other jurisdiction had any other prescribed USOAs

Question 16 Does your Agency employ the use of Trackers?

Question 17 What mechanisms have been approved by your agency to promote conservation?

Question 17 Con’t. What mechanisms have been approved by your agency to promote conservation?

Question 18 Does your agency allow any recovery, such as AFUDC, of generation or transmission preconstruction or construction costs in current base rates? In most jurisdictions, AFUDC is recovered in current rates once the plant is placed in service In a few jurisdictions, AFUDC is recovered through a tracker while the plant is under construction – mostly for large base-load plants

Question 19 Has your agency adopted any Renewable Portfolio Standards?

Question 20 Does your agency charge a fee based on a utility’s gross revenues? All jurisdictions receive fees based on gross receipts, however, the procedure used to calculate the assessment varies by jurisdiction

Question 20 Con’t. Does your agency require fees for utility filings?