HomeMy WebLinkAbout2001514_jh.docDECISION MEMORANDUM
TO: COMMISSIONER KJELLANDER
COMMISSIONER SMITH
COMMISSIONER HANSEN
JEAN JEWELL
RON LAW
BILL EASTLAKE
LOU ANN WESTERFIELD
TONYA CLARK
DON HOWELL
DAVE SCHUNKE
RANDY LOBB
TERRI CARLOCK
BEV BARKER
GENE FADNESS
WORKING FILE
FROM: JOHN R. HAMMOND
DATE: MAY 14, 2001
RE: IN THE MATTER OF THE APPLICATION OF PACIFICORP FOR AN ACCOUNTING ORDER AUTHORIZING ESTABLISHMENT OF A REGULATORY ASSET OR LIABILITY FOR DEFERRAL OF THE EFFECTS OF CERTAIN DERIVATIVE AND HEDGING FINANCIAL ACCOUNTING RULES. CASE NO. PAC-E-01-5.
On March 30, 2001, PacifiCorp filed its Application for an accounting order authorizing the establishment of a regulatory asset or liability for deferral of the effects of certain derivative and hedging financial accounting rules. PacifiCorp requests that the Commission issue an order authorizing the establishment of a regulatory asset and/or regulatory liability associated with the implementation of Financial Accounting Standards 133 and 138 (FAS 133/138), Accounting for Certain Derivative Instruments and Certain Hedging Activities for its electric operations. The Financial Accounting Standards Board (FASB) issued FAS 133 in June 1998. FAS 138 later amended it in June 2000. PacifiCorp must adopt these rules no later than April 1, 2001. Companies with calendar year ends were required to adopt the standards by January 1, 2001.
The Notice of Application, Notice of Modified Procedure, Order No. 28697 was issued on April 5, 2001. Staff was the only party to submit comments. See Comments for analysis.
Staff Recommendation:
Staff recommends that the Commission issue an accounting order authorizing PacifiCorp to establish regulatory assets and/or regulatory liabilities to defer the impact associated with the implementation of Financial Accounting Standards 133 and 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities for its electric operations. Staff believes deferral is reasonable and is more consistent with existing regulatory policies. PacifiCorp will record the fair value of the various contracts according to FAS 133/138, as assets in Account 186, Miscellaneous Deferred Debits, or as liabilities in Account 253, Other Deferred Credits. Regulatory assets using Account 182.3 and/or regulatory liabilities using Account 254 would offset the non-cash accounting entries. Staff recommends PacifiCorp use unique subaccounts to designate these entries from other deferrals.
Commission Decision:
Does the Commission wish to approve PacifiCorp’s Application for a deferred accounting order and require the Company to establish unique subaccounts to designate entries associated with FAS 133/138 from other deferrals?
John R. Hammond
Staff: Terri Carlock
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DECISION MEMORANDUM 2