N.Y. Comp. Codes R. & Regs. tit. 16, § 197.21 – Operating property accounts, basis of charges to.

(a) Amounts chargeable to operating property accounts shall be the reasonable and necessary cost (see § 196.1, subd. [a][8]) of property constructed or installed by the accounting utility and the original cost (see § 196.1, subd. [a][33] and note to § 197.20) of operating property acquired from a predecessor public utility (see § 197.27). Existing book balances may be carried until the completion of the inventory and the determination of original cost as required under section 197.22. At that time proposed journal entries to adjust the differences, if any, between book cost as previously carried and original cost shall be filed with the commission. No change (except correction of errors) shall be made in the book cost of any item except upon order of the commission. Nothing herein stated shall be taken as permitting the recording as part of the original cost of operating property of amounts which in previous years were charged to operating expenses, operating taxes or to other income or surplus accounts.
(b) When the consideration given for property is anything other than money, the current money value of such consideration shall be used. In the entry recording such a transaction the actual consideration shall be described with sufficient particularity to identify it. The utility shall be prepared to furnish to the commission the particulars of its determination of the money value of the consideration if other than money.
(c) The cost of hand tools and other individual items of small value and short life shall be charged to the appropriate operating expense or clearing accounts according to the use thereof, except that if such items are consumed directly in construction work, the cost may be included as part of the cost of the constructed unit.
(d) When property is purchased under any plan involving deferred payments, no charges shall be made to operating property accounts for interest, insurance, or other expenditures incidental to such form of payment.
(e) The cost of the construction or acquisition of property chargeable to the operating property accounts shall include the cost of direct labor, indirect labor, materials, transportation, contract work, engineering and supervision, law expenditures, injuries and damages, taxes, interest during construction, permits and privileges, rent of construction facilities, compensation and other insurance applicable to construction, and other analogous elements applicable to the construction and acquisition of property. The cost includible in the principal items are as follows:
1. (1) Direct labor includes the pay and expenses of employees directly engaged in construction work and of foremen in direct charge thereof.
2. (2) Indirect labor includes the portion of the pay and expenses of employees indirectly connected with construction work, such as timekeepers, storekeepers, and general office employees, applicable to construction work. (See § 197.10.)
3. (3) Materials includes the purchase price at the point of free delivery plus customs duties, excise taxes, and the costs of inspecting, loading, and transporting, and related stores expense. In determining the cost of materials used for construction, proper allowance shall be made for unused portions of materials recovered in performance of the work involved, and for discounts allowed in the purchase of materials.
4. (4) Transportation includes the cost of transporting purchased equipment and of transporting employees, materials and supplies, tools, and service equipment to and from points of construction. It includes amounts paid therefor to others and the cost of transportation service rendered by vehicles owned by the utility.
5. (5) Contract work includes amounts paid for work performed under contract and expenses incurred by the utility in connection with such work, including inspection, engineering and supervision, and costs incident to the award of contracts.
6. (6) Engineering and supervision includes the portion of the pay and expenses of general officers, engineers, surveyors, draftsmen, and superintendents, and their assistants, applicable to construction work.
7. (7) Employee pensions and benefits includes the portion of the cost of employee pensions and benefits which is applicable to construction work.
8. (8) Law expenditures includes the general law expenditures incurred in connection with the construction or acquisition of property and the court and legal costs directly related thereto.
9. (9) Injuries and damages includes expenditures or losses in connection with construction work on account of injuries to persons or damages to property of others.
10. (10) Taxes includes taxes actually paid on physical property during construction and before the facilities are ready for service. This includes taxes on land for the period during which it is included in account 110, Construction Work in Progress, until a structure thereon is ready for service or the land is otherwise used in operations. (See note A under account 311, Land.)
11. (11) Interest includes the net current cost of borrowed funds, or funds furnished by the operating or lessor municipality, used for construction purposes and the same rate upon the utility's own funds so used. Such interest shall be charged each month upon the balance at the beginning of the month in account 110, Construction Work in Progress, and credited to account 455, Interest Charged to Property—Cr. The period for which interest may be so charged shall be limited to the duration of the construction work and shall not extend beyond the time when the property becomes ready for service. In case construction work is suspended, interest charges may not be continued for more than six months thereafter, except upon order of the commission.
  Note:
  Class D utilities are required to include the costs set forth in subdivision (e), paragraphs (2), (4), (6), (7), (8), (9), (10), and (11) only for major construction projects.