1. (1) Each utility shall determine and file with this commission not later than six months following the date when it becomes subject to this system of accounts, a statement showing composite annual percentage rates considered applicable to the book cost of each class of depreciable property or subdivision thereof (see subdivision [c] of this section) used wholly or partly in electric operations, which rates shall be based upon the estimated service values and service lives developed by a study of the utility's history and experience, the history and experience of other utilities and electric corporations, and such engineering and other information as may be available in respect of probable future conditions. These percentage rates shall be computed in conformity with the group plan of accounting for depreciation and shall be such that the loss in service value of the property will be distributed in equal monthly charges during the service life of the property in accordance with the straight- line method (see § 196.1, subd. [a][44]). When a class of depreciable property covers two or more distinct types of property with different service lives and/or net salvage values, the service lives and net salvage values shall be separately determined for each such type of property. When this is done the composite annual rates shall be computed so as to produce a charge to operating expenses for each class of depreciable property which will be equal to the sum of the amounts chargeable for each of the various types of depreciable property included in such class. The composite annual rates so filed shall be accompanied by a statement subscribed by the responsible municipal official or other duly authorized representative of the utility showing the bases therefor and the methods employed in their computation, including the estimated service life and net salvage value at retirement of each class, or subdivision thereof, of depreciable property, and the date when such rates become effective. The utility shall be prepared to submit evidence showing the correctness and applicability under the principles and methods herein prescribed of such rates, and to compute and submit at any time, upon direction of this commission, revised rates when existing rates are deemed inapplicable.
2. (2) If in the judgment of the utility any composite rate filed with the commission becomes no longer currently applicable, the utility shall in like manner file revised annual composite depreciation rates which in its judgment should be established.

3. (3) The utility shall keep such records of property and property retirements as will reflect the service life of property which has been retired, or will permit the determination of probable service life by appropriate methods; and also such records as will reflect the percentage of salvage value, or net salvage value, as appropriate, for property retired from each class, or subdivision thereof, of depreciable operating property used wholly or partly in electric operations.

   (b) Depreciation charges.

4. (1) Charges for currently accruing depreciation on Operating Property—Electric shall be made monthly to the various operating expense accounts provided for such charges, to clearing accounts, or to account 432, Deductions from Rent Revenues—Electric (see paragraph [3] hereunder), with concurrent credits to account 261, Depreciation Reserves. Charges for Operating Property—General (used partly in electric operations) shall be apportioned among the depreciation expense accounts or clearing accounts provided for electric operations and the corresponding accounts for other operations (see § 196.1. subd. [a] [32]). In computing the monthly charges, one-twelfth of the composite annual rate applicable to each class of depreciable operating property (see subd. [c] hereunder) shall be applied to the balance at the beginning of the month in each account or subdivision thereof covering such depreciable operating property.
5. (2) Depreciation charges shall be made upon property used but not owned only to the extent that the cost of such property is included in the operating property accounts (see § 197.17, subd. [a]) and shall be made upon the same basis as for owned depreciable property. Any additional reserve required to meet losses expected to be incurred through reversion of such property to the lessor prior to the expiration of its service life shall be provided through charges to account 790, Amortization of Intangible Property, and credits to account 262, Amortization Reserves. For treatment of depreciation upon leased property, see subdivision (d) of section 197.28.
6. (3) Depreciation charges on electric property constituting a distinct operating unit leased to others for electric operations, when the lessee has exclusive possession, shall be made to account 432, Deductions from Rent Revenues—Electric, with concurrent credits to account 261, Depreciation Reserves.

7. (4) In computing depreciation charges, a separate composite annual rate shall be used for each class, or subdivision thereof, of depreciable Operating Property—Electric and Operating Property—General. Such composite rates shall be those filed in accordance with paragraphs (1) and (2) of subdivision (a) of this section, unless otherwise ordered by the commission. Until the filing of such rates, each utility shall use such provisional composite rates as will in its judgment approximate as closely as is reasonably possible the rates to be filed.

   (c) Classes of depreciable electric operating property.

8. (1) The classes of depreciable electric operating property, upon which composite depreciation rate shall be based, and the accounts covering such operating property are as follows:

   Steam Power Plant Land^* and all in account 312, Structures, into one class. [account 311(1)]

   Hydro-Electric Power Plant Land^* [account 311(2)]

   Internal Combustion Power Plant Land^* [account 311(3)]

   Transmission System Land and Rights of Way^* [account 311(5)]

   Distribution System Land and Rights of Way^* [account 311(6)]

   Office Land^* [account 311(7)]

   Shop Land^* [account 311(8)]

   Stores Land^* [account 311(9)]

   Transportation Land^* [account 311(10)]

   Miscellaneous Land^* [account 311(11)]

   Steam Power Plant Structures [account 312(1)]

   Hydro-Electric Power Plant Structures [account 312(2)]

   Internal Combustion Power Plant Structures [account 312(3)]

   Transmission System Structures [account 312(5)]

   Distribution System Structures [account 312(6)]

   Office Structures [account 312(7)]

   Shop Structures [account 312(8)]

   Stores Structures [account 312(9)]

   Transportation Structures [account 312(10)]

   Miscellaneous Structures [account 312(11)]

   Boiler Plant Equipment (account 321)

   Engine Driven Generator Units—Steam (account 322)

   Turbo-Generators—Steam (account 323)

   Accessory Electric Equipment—Steam (account 324)

   Miscellaneous Power Plant Equipment—Steam (account 325)

   Reservoirs, Dams, and Waterways (account 331)

   Roads, Trails, and Bridges (account 332)

   Water Wheels, Turbines, and Generators (account 333)

   Accessory Electric Equipment—Hydro (account 334)

   Miscellaneous Power Plant Equipment—Hydro (account 335)

   Engine Driven Generator Units—Internal Combustion (account 342)

   Accessory Electric Equipment—Internal Combustion (account 344)

   Miscellaneous Power Plant Equipment—Internal Combustion (account 345)

   Transmission Roads and Trails (account 351)

   Transmission Substation Equipment (account 352)

   Transmission Overhead Conductors (account 353)

   Transmission Underground Conductor (account 354)

   Poles, Towers, and Fixtures (account 358)

   Underground Conduits (account 359)

   Distribution Substation Equipment (account 361)

   Storage Battery Equipment (account 362)

   Distribution Overhead Conductors (account 363)

   Distribution Underground Conductors (account 364)

   Line Transformers (account 365)

   Overhead Services (account 366)

   Underground Services (account 367)

   Consumers' Meters (account 368)

   Consumers' Meter Installation (account 369)

   Other Property on Consumers' Premises (account 370)

   Street Lighting and Signal System Equipment^** (account 371)

   Office Equipment (account 381)

   Stores Equipment (account 382)

   Shop Equipment (account 383)

   Transportation Equipment (account 384)

   Communication Equipment (account 385)

   Laboratory Equipment (account 386)

   General Tools and Implements (account 387)

   Miscellaneous General Equipment (account 388)

   Miscellaneous Tangible Property (account 391)

9. (2) In case the utility carries any operating property in account 392, Undistributed Operating Property, the depreciation provisions herein set forth shall apply thereto. The depreciation charges for such property shall be made to the same accounts as if it were distributed among the operating property accounts appropriate to its character and use.

   (d) Depreciation of other than electric property.

10. (1) The instructions for depreciation of operating property as outlined herein shall apply to Operating Property—Electric and to Operating Property—General. The accounting for depreciation on operating property in other operating departments which are subject to regulation by the commission shall be in accordance with the effective systems of accounts applicable to such operations.
11. (2) Separate expense and reserve accounts shall be maintained for each operating department for recording depreciation upon operating property. Depreciation on non-operating property shall be charged to account 449, Non-operating Revenue Deductions, and credited to an appropriate subdivision of account 267, Miscellaneous Reserves.

(a) Computation and filing of depreciation rates.