65-407 C.M.R. ch. 68
SUMMARY: This rule governs the essential information and procedures for estimating the depreciation rates for the plant of water utilities.
1. Definitions.
A. Service Life - The average length of time a unit of equipment will remain in service taking into account factors such as the effect of normal wear and tear, economic and technological obsolescence and public requirements.
B. Net Salvage Price - The price that the sale of a unit of equipment will bring upon the end of its useful service life to a utility, less the estimated cost of removal involved in retiring such property.
C. Depreciation Rate - This rate is derived by using the following formula:
$$\text{Annual Depreciation Rate} = \frac{100\% - \text{Net Salvage Price as percent of original cost}}{\text{Service life (in years)}}$$
2. Except as provided in Section 3 the following are the maximum depreciation rates which will be allowed by the Commission for ratemaking and accounting purposes.
MAXIMUM DEPRECIATION RATES WATER UTILITIES
| % | |
|---|---|
| STRUCTURES | |
| Brick, Concrete | 2 |
| Frame | 3 |
| IMPOUNDING DAMS & RESERVOIRS | 1.3 |
| SPRINGS & WELLS | 2 |
| INTAKES & SUCTION MAINS | 1.5 |
| PURIFICATION SYSTEM | |
| Filters (Mfg. in Place) | 3 |
| Filters (Package Plant) | 3 |
| Chlorinators | 10 |
| Chemical Feeders | 10 |
| Test Equipment | 10 |
|---|---|
| Other Related Equip. | 5 |
| PUMPING EQUIPMENT | |
| Electric | 5 |
| Gas & Oil | 5 |
| Hydraulic | 5 |
| TRANSMISSION MAINS | 1.3 |
| SUBMARINE MAINS | 5 |
| DISTRIBUTION MAINS | |
| 6" & Larger | 1.3 |
| 4" & Smaller (Buried & Surface) | 3 |
| DISTRIBUTION RESERVOIRS | 1 |
| Floating Covers | 2 |
| STANDPIPES & TANKS | |
| Above Ground (Conc. & Steel) | 1.7 |
| Below Ground (Conc.) | 1.3 |
| SERVICES | |
| Copper | 3 |
| C.I. & D.I. (Large) | 1.3 |
| Plastic | 3 |
| METERS | 4 |
| Remote Readers | 7.5 |
| HYDRANTS | 2 |
| FOUNTAINS & TROUGHS | 1 |
| GENERAL EQUIPMENT | |
| Office-Electronic | 12 |
| Office Furniture | 5 |
| Shop | 7 |
| Stores | 5 |
| TRANSPORTATION | |
| Trucks | 10 |
| Cars & Pickups | 20 |
| Telephone | 10 |
| Radio | 10 |
| Laboratory | 10 |
| Misc. Construction | 10 |
| Garage | 7 |
Utilities may continue to use rates previously allowed by the Commission until their next rate case after the effective date of this rule.
3. The Commission may allow a utility to use alternative depreciation rates which may be justified using on e or more of the methods described in two manuals published by the National Association of Regulatory Utility Commissioners, Public Utility Depreciation
Practices (1968) and Depreciation Practices for Small Water Utilities (1979). Requests to use alternative depreciation rates may be ruled upon by the Director of the Technical Analysis Division, in consultation with the Director of the Finance Division whose decision shall be contained in a written order. This delegation of authority shall not affect the Commission's authority to rule upon requests or review the decision of the Director of Technical Analysis.
STATUTORY AUTHORITY: 35 M.R.S.A. §53-57
This rule was approved by the Secretary of State January 15, 1986 and will be effective January 20, 1986.
May 4, 1996
March 24, 1999 - converted to MS Word.
November 9, 1999 - minor spelling and formatting.