20150904AVU to Staff 150 Attachment C.doc

Capitalization Policy
(Effective October 1, 2007)

All project related activities are identified as either capital or expense before expenditures are approved. Project expenditures relating to construction or acquisition of utility property are considered capital if they meet one of the following criteria:

Items costing more than $1,000 per item and having a useful life greater than one year, or defined in the Retirement Unit Catalog and meeting one of the following tests:
Addition of retirement units as identified in the Retirement Unit Catalog that did not previously exist
Replacement of existing retirement units
A portion of the replacement of minor items that substantially betters the related retirement unit by increasing the units capacity or significantly extending the unit’s useful life

- OR -

Physical additions of a minor item resulting from regulatory action, improved system reliability, or increased security and/or sustainability of utility assets when the total project cost is $250,000 or greater. An analysis supporting the aforementioned criteria must be included with the project request submitted to Project & Fixed Asset Accounting.

Project & Fixed Asset Accounting is responsible for establishing and maintaining the Retirement Unit Catalog and providing interpretation when questions arise.

Staff_PR_150 Attachment C Page 1 of 1