Title
Martin Drake Power Plant Decommissioning Regulatory Asset Creation Resolution
Presenter:
Tristan Gearhart, Chief Financial Officer, Colorado Springs Utilities
Travas Deal, Chief Executive Officer, Colorado Springs Utilities
Body
Summary:
A Resolution Establishing a Regulatory Asset for Expenditures Associated with Drake Decomissioning Expenses. Colorado Springs Utilities Seeks Approval from City Council to Establish a Regulatory Asset to Record the Decommissioning and Obsolete Inventory Expenses Associated with Martin Drake Power Plant. These Costs will be Expensed Over a 10-Year Period as they are Incurred to Help Smooth the Rate Impact. With City Council Approval, the Proposed Total Regulatory Asset, Currently Estimated At $17,900,000, Would be Established Starting in 2023 and Adjusted Through 2024 as Final Expenses are Trued Up with the Completion of the Decommissioning Project. Incurred Costs Each Year will be Amortized (Expensed) Over a 10-Year Period.
Background:
Typically, expenses are recorded in the period incurred. However, due to Utilities' regulatory operations, there is additional accounting guidance that allows regulatory accounting and the creation of a regulatory asset pursuant to Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements (incorporating ASC 980/FAS 71 - Accounting for the Effects of Certain Types of Regulation.) Accounting Standards Codification (ASC 980) is the accounting guidance used by public utilities to recover costs through rates charged to their ratepayers, make their operating benchmarks comparable to their investor-owned peer utilities, and also match their accounting to utility industry standards.
Recognition of a regulatory asset is allowed by Colorado Springs Utilities so long as:
-our rates for regulated services are established by, or are subject to approval by its own
governing board em...
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