Uniform System of Accounts (USOA)
FERC also has regulatory authority to promulgate rules for the accounting and reporting of proceeds from the disposition of transmission-related and other jurisdictional assets, including those transactions that do not exceed Section 203's $50,000 approval threshold.16 These accounting rules are set forth in the comprehensive USOA, initially developed by the Federal Power Commission (FERC's predecessor) in the 1930s in order to provide a consistent, rational accounting system to assist regulating agencies and to prevent accounting abuses that preceded the adoption of the uniform system.17
This system of accounts for public utilities and licensees subject to the Federal Power Act is set forth at 18 C.F.R. Part 101 (2003). Almost 1,000 specific accounts are systematically organized in the major subdivisions of the USOA: balance sheet chart of accounts, electric plant chart of accounts, income chart of accounts, and operation and maintenance expense chart of accounts. The USOA also provides detailed explanatory information and FERC's occasional orders adopting or modifying portions of the accounts often include interpretative provisions.
FERC's chief accountant ensures compliance with the Commission's accounting regulations, and accounting pursuant to the USOA does have ratemaking implications. The uniform accounting system, however, does not dictate even FERC's own ratemaking policies; and the courts have recognized this distinction.18
Pursuant to Public Utilities Code Section 793, we adopted FERC's USOA in 1970 to provide consistency with FERC accounting practices. We indicated at the time "that the Commission does not commit itself to approve or accept any item set out in any account for the purpose of fixing rates or determining other matters which may come before it."19 As FERC has changed its accounting requirements, we also have adopted those changes.20 We have consistently maintained, however, "that the accounting provisions contained [in the Uniform System of Accounts] are not controlling as to the ratemaking policies which this Commission may determine to be reasonable and necessary."21
16 16 U.S.C. § 824(b) (LEXIS through May 29, 2003). 17 See 16 U.S.C. § 825(a) (LEXIS through May 29, 2003) (FERC authorized to "determine by order the accounts in which particular outlays and receipts shall be entered, charged, or credited."). 18 Public Service Comm'n of the State of New York v. FERC, 813 F.2d 448, 456 n.12 (D.C. Cir. 1987) ("We are unpersuaded by petitioner's argument that the inclusion of a category for institutional advertising within the Commission's System of Accounts requires allowance for such expenses here. . . . In any event, the Commission's accounting system alone cannot be said to dictate the Commission's ratemaking policies.); Alabama-Tennessee Natural Gas Co. v. Federal Power Comm'n, 359 F.2d 318, 336 (5th Cir. 1966) (distinction between tax accounting and ratemaking; "The short answer is that accounting for tax purposes and even the Commission's present Uniform System of Accounts may be valuable tools, but they cannot dictate ratemaking policies."); cf. Town of Norwood v. FERC, 53 F.3d 377, 379 (D.C. Cir. 1995) ("the accounting approach does not necessarily dictate the ratemaking approach, and the Commission did not hold itself to be bound by FAS [Financial Accounting Standards] 106 for ratemaking purposes."); Interstate Commerce Comm'n v. Goodrich Transit Co., 224 U.S. 194, 211 (1912) ( "The object of requiring such accounts to be kept in a uniform way and to be open to the inspection of the Commission is not to enable it to regulate the affairs of the corporations not within its jurisdiction, but to be informed concerning the business methods of the corporations subject to the act that it may properly regulate such matters as are really within its jurisdiction."). 19 D.42068, 48 CPUC 253, 257 (1948). 20 See, e.g., D.87-07-067, 25 CPUC2d 7 (1987). 21 D.87-07-067, 25 CPUC2d at 8. See also D.89-12-057 at 129, 1989 Cal. LEXIS 687 (1989).
