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HomeMy WebLinkAboutPower Cost Equalization, Utility Clerk Training Manual 2001Power Cost Equalization Utility Clerk Training Manual Utility Clerk Training Facilitated by Alaska Energy Authority & The Regulatory Commission of Alaska October 17 — 19, 2001 Fairbanks, Alaska Materials to be covered during this training: 1) PCE Program Overview Pages 1 - 3 a) What is the PCE Program? b) Program Manual, Utility Diskette for PCE c) AEA and RCA Overview d) Metering Requirements e) Monthly Meter Reading Schedule 2) Customer Ledger Pages 4-6 a) Eligible PCE Customers b) Community Facilities - What is a Community Facility? c) Outstanding Balances — Payment Contract Sample d) Required Information for Reporting PCE eligible kWh’s e) Lesson # 1 3) Customer Billing Requirements Pages 7 - 11 a) Notices to Customers, for PCE received b) Fuel Efficiency c) Fuel Efficiency Standard Charts d) Lesson #2 e) Fuel Efficiency and Billing Requirements 4) PCE Monthly Utility Reports Pages 12 - 19 a) Where does the information come from? b) Plant Log: Total kWh’s generated, station service, peak demand, and fuel usage. Who is required to use a “Plant Log”? c) Fuel Expense d) Lesson #3 e) Non-Fuel Expenses f) Filing Requirements g) Community Population 4) PCE Monthly Utility Reports (Cont) Pages 12 - 19 h) Donated Power and Unbilled Customers i) PCE Monthly Utility Report w/Legend j) Lesson #4 5) Utility Calendar Page 20 a) When are meters read? b) When are bills mailed? c) When is PCE Monthly Report completed and mailed? d) When is the plant log turned into the utility clerk? e) What other transactions or reports take place at regular intervals? (i.e. payroll, tax deposits, insurance payments, loan payments) 6) Regulatory Commission of Alaska Filing Requirements 7) Alaska Energy Authority BFRLF Pages 20 - 24 AEA Bulk Fuel Revolving Loan Fund 8) Reference Materials Page 25 a) Accounting Clerk Reference b) Electric Utility Fund Reference c) Fuel Sales d) Utility Calendar e) Filing System f) Sample Ordinance g) Alaska Energy Authority Regulations Regulatory Commission of Alaska Regulations PCE Statutes Trainers: Terri Harper PCE Program Administrator Alaska Energy Authority Cheryl Smith Accounting Tech | Alaska Energy Authority Darlene Herrera Utility Financial Analyst Regulatory Commission of Alaska Contact Information: Alaska Energy Authority 813 West Northern Lights Blvd. Anchorage, Alaska 99503 907-269-3000 907-269-3044 Regulatory Commission of Alaska 701 West 8"" Avenue, Suite 300 Anchorage, Alaska 99501 907-276-6222 907-276-0160 Fax Utility Clerk Training Utility Clerk Training Daily Schedule of Events Wednesday October 17, 2001 8:30am — 9:15am 9:15am — 10:45am 10:45am — 11:00am 11:00am — 12:00pm 12:00pm — 1:00pm 1:00pm — 2:30pm 2:30pm- 2:45pm 2:45pm- 4:00pm Thursday October 18, 2001 8:30am — 9:15am 9:15am — 10:45am 10:45am — 11:00am 11:00am — 12:00pm Breakfast PCE Program Overview Customer Ledger Break Customer Ledger (continued) Question and Answer Session Lunch Customer Billing Requirements Fuel Efficiency PCE Monthly Utility Reports Break PCE Monthly Utility Reports (continued) Breakfast PCE Monthly Utility Reports (continued) Break PCE Monthly Utility Reports (continued) Utility Calendar Thursday October 18, 2001 (continued) 12:00pm — 1:00pm Lunch 1:00pm — 2:30pm RCA Filing Requirements 2:30pm- 2:45pm Break 2:45pm- 4:00pm RCA Filing Requirements (continued) Friday October 19, 2001 8:45am — 9:15am Breakfast 9:15am — 10:45am RCA Filing Requirements (continued) 10:45am — 11:00am Break 11:00am — 12:00pm Question and Answer Session Certificate Presentation and Class Pictures 12:00pm — 1:00pm Lunch and Dismissal *This schedule is subject to change during the course of the training. a9 on PCE Program Overview What is the PCE Program? The goal of the PCE Program is to provide economic assistance to customers in rural areas of Alaska where, in many instances, the kilowatt- hour charge for electricity can be three to five times higher than the charge in more urban areas of the state. In 2000 the average energy rate paid by residential customers in Anchorage, Fairbanks and Juneau was 9.9 cents/kWh, comparable and typical rates in rural communities were: Cold Bay 46.4¢/kWh Fort Yukon 46.1¢/kWh Elim 39.6¢/kWh Unalaska 21.6¢/kWh State funds are appropriated by the Legislature for the PCE Program each year and are paid to utilities on behalf of eligible customers. The cost of the statewide program in FYO0O0 was $14.5 million, which provided assistance to 188 rural communities. PCE Program Manual: A PCE Program Manual is included with these training materials. Many utilities find this manual to be a useful tool when questions pertaining to the PCE Program arise. The manual includes a copy of the Statutes and Regulations that are applicable to the PCE Program, as well as contact information for the Alaska Energy Authority and the Regulatory Commission of Alaska. PCE Diskette: AEA has prepared a diskette for each Utility Clerk Training participant that contain the following forms: Customer Ledger with formulas Monthly Utility Report Sample PCE Monthly Utility Report Form Fuel Price and Rate Change Form RCA Annual Filing Forms Contact Information Update Sheet 10/10/01 -1- PCE Program Overview (continued) Alaska Energy Authority & The Requlatory Commission of Alaska: The PCE program is administered by two State agencies. The Regulatory Commission of Alaska (RCA) determines if a utility is eligible to be in the program. RCA then evaluates annual financial and fuel price changes information and sets the PCE level. The Alaska Energy Authority (AEA) determines the eligibility of the community facilities and of other customers, evaluates the monthly information and authorizes payment to the electric utility. The utility is required to reduce each customer’s bill by the amount that the State pays for PCE. 10/10/01 =2= PCE Program Overview (continued) Metering Requirements: PCE Program participation requires that all PCE utility customers be metered (this includes community facilities and the station service); that meters be read, and customers billed monthly, and that the bills be collected monthly. A monthly meter reading sheet has been included in Lesson Number 1. A fuel meter on the day tank to record the amount of fuel used to generate electric power on a daily basis is also required. You may contact Kris Noonan of the Alaska Energy Authority if you have any questions concerning “metering.” 10/10/01 -3- MONTHY METER READING SCHEDULE METERS SHOULD BE READ THE SAME DAY OF EACH MONTH (For example, April 1, May 1, June 1, July 1) _ POWERHOUSE READINGS: METER READING _|DATE OF READING nd Fuel Meter (Write the number that's on the meter) Total kWh Generated (# From Master Meter) Peak kW (Max. kw generated) | Station Service (# is on a Separate Meter) Take the above readings first then go to each [ customer's meter, billed and unbilled, and take their meter readings. Read the meters of your customers in the same way and order every month. CUSTOMER METER READINGS: ACCOUNT NUMBER CUSTOMER NAME METER READING DATE OF READING = L —|— | i | WHEN FINISHED READING ALL THE METERS THIS SHEET SHOULD BE TAKEN TO THE UTILITY BILLING PERSON. THE ABOVE READINGS ARE NEEDED TO PREPARE THE MONTHLY BILLS. DATE: PAGE OF ———————— Customer Ledger Eligible PCE Customers: The State of Alaska Statutes exclude from PCE, state and federal offices and facilities, as well as commercial customers. All other utility customers are generally eligible to receive PCE credits, with the following statutory limits: Residential customers are eligible for PCE credit up to 500-kilowatt hours per month per customer. Community facilities, as a group, can receive PCE credit for 70 kWh per month multiplied by the number of residents as certified by DCED, in the community. Community Facilities: The PCE statute defines a community facility as a water, sewer or charitable educational facility, public outdoor lighting, or a community building whose operation is not paid for by the state or federal government or by a private commercial organization. A community building is further defined as a community facility that is not operated for profit, and that is open to the general public. AEA determines the community building(s) that may be included in this class of customers based upon information provided by the utility and the facility owner. Outstanding Balances: AEA will not pay PCE for an individual’s or community facilities electric cost if the customers do not pay their portion monthly. Attached is a sample “Outstanding Balance Payment Contract” for your use. A customer may be able to continue to receive PCE credit, even with a large outstanding balance, if the customer has entered into a payment contract with the utility for the repayment of the outstanding balance. 10/10/01 -4- Utility Name Utility Address Utility Phone Number Payment Agreement This letter is to inform you that you are not eligible to receive Power Cost Equalization credit due to your high outstanding balance. We have worked out the following payment plans in order for you to pay your overdue bills. If you are interested, please select one of the following plans, sign the bottom of the page, and return your signed agreement to our office within 10 working days. If you do not have any income or cannot pay at all, please come into our office and we will be willing to work something out with you. (A) 12 Month Payment Plan: Outstanding bill +12=$ + Current bill. (B) 24 Month Payment Plan: Outstanding bill +*24=$ + Current bill. (C) 30 Month Payment Plan: Outstanding bill +30=$ ce Current bill. I, understand that | must pay the total amount according to the payment plan | have chosen by the 30" of each month in order to receive PCE credit on the following month’s bill. Signature Date 10/10/01 Customer Ledger (continued) Required Information for Reporting PCE eligible kWh’s: Customer Name Meter Number Previous Meter Reading Present Meter Reading Total kWh’s used Rate per kWh (Should be the same as reported to RCA for the PCE calculation and can be found in Appendix 3 of the Letter Order from RCA) Total due from Customer (prior to PCE credit) Eligible PCE kWh’s PCE Level (See sample “Appendix 1”) Total PCE Credit Net Total Due from the Customer Previous Customer Balances Customer Payments Received Total Due From Customer When processing the PCE Monthly Utility Report, all totals on the customer ledgers should match the totals that have been listed on the PCE Utility monthly report. Example: The Customer Ledger shows that there are 2,500 kWh’s that are eligible for PCE credit, this same 2,500 kWh’s should be listed in Section D (4) on the PCE Monthly Utility Report. This would also apply to the total kWh’s used, gross billed to customers, as well as the total PCE credit given. Ledgers should be totaled by customer classes and recorded in the appropriate spaces on the report. Lesson # 1 The Customer Ledger: Please refer to “Utility Clerk Training, Lesson # 1”. 10/10/01 -6- Qoxoet fil, ‘wae? Customer Billing Requirements Notices to Customers for PCE Received: The PCE program requires that notices are posted on each bill that tells the customer what the total bill amounts to, what portion PCE will pay, and the balance that is due from the customer, as well as the fuel efficiency of the utility. Below are sample “Notices”: Sec. 42.45.120. Notice to customers. If an electric utility receives power cost equalization under AS 42.45.100 — 42.45.150, the utility shall either give to its electric service customers eligible under this program, for each period for which the payment is received, (1) the following notices: FUEL EFFICIENCY NOTICE TO CUSTOMER For the most recent monthly reporting cere under the State of Alaska’s power cost equalization program, this utility's actual fuel efficiency for your community was kilowatt-hours a gallon. The applicable fuel efficiency standard set out in regulations for the power cost equalization program is kilowatt-hours a gallon. PCE CREDIT NOTICE TO CUSTOMER For the current billing period, the utility will be paid under the State of Alaska’s power cost equalization program (AS 42.45.100) to assist the utility and its customers in reducing the high cost of generation of electric energy. Your total electrical service cost Less state equalization Your charge (2) a eee by the department that provides electric service customers the same information provided by the notice in (1) of this section. Fuel Efficiency: Fuel efficiency standards vary from utility to utility. Minimum fuel efficiency standards can be found on the following page and in the “PCE Program Manual.” Utility Customers that have “Power Stats” are required to receive the same “Notices to Customer” as above. Lesson #2 Fuel Efficiency: Please refer to “Utility Clerk Training, Lesson #2”. 10/10/01 -7- Fuel Efficiency Standard Charts MIMIMUM EFFICIENCY STANDARDS FOR UTILITIES THAT RELY ON ALL-DIESEL GENERATION —- MEASURED IN KILOWATT-HOURS (KWH) SOLD PER GALLON CONSUMED WITH CLASSIFICATION BY ANNUAL KWH SALES 100,000 500,000 1,000,000 | 10,000,000 Less Than to to to And E B 100,000 499,999 999,999 9,999,999 More FE F G 10/1/90 6.0 7.0 8.0 9.0 10.0 E | Cc ON T N 10/1/91 7.0 8.0 9.0 10.0 11.0 I I VN E G 10/1/93 8.0 9.0 10.0 11.0 12.0 MIMIMUM EFFICIENCY STANDARDS FOR UTILITIES THAT DO NOT RELY ON ALL-DIESEL GENERATION — MEASURED IN KILOWATT-HOURS (KWH) GENERATED PER GALLON CONSUMED WITH CLASSIFICATION BY ANNUAL KWH OF DIESEL GENERATION 100,000 500,000 1,000,000 | 10,000,000 Less Than to to to And E B 100,000 499,999 999,999 9,999,999 More a= F||:G 10/1/90 6.5 7.5 8.5 10.0 11.0 El it Cc N T N 10/1/91 tS 8.5 10.0 11.0 12.0 | | VN E G 10/1/93 8.5 10.0 11.0 12.0 13.0 10/10/01 Customer Billing Requirements (continued) Many utilities have questions on how to calculate the fuel efficiency and how to let their customers know what the fuel efficiency is for the utility as well as the applicable fuel efficiency standard. QUESTION: HOW DO | CALCULATE MY UTILITY’S ACTUAL FUEL EFFICIENCY IF THE UTILITY GENERATES FROM ALL DIESEL GENERATION? ANSWER: If your utility generates from all diesel, you would look at information on your most recent PCE Monthly utility report and divide the total kWh’s sold by the total gallons consumed during that reporting period. This number would be reported as the utility's actual fuel efficiency for the community for that reporting period. This number may change from month to month, depending upon what your total sales and total gallons of fuel consumed are during the reporting period. QUESTION: HOW DO | CALCULATE MY UTILITY’S ACTUAL FUEL EFFICIENCY IF THE UTILITY GENERATES FROM DIESEL GENERATION AND PARTLY FROM SOMETHING ELSE? ANSWER: If your utility generates from diesel and partly some other way you would look at the info on your most recent PCE monthly utility report and divide the total diesel kWh’s generated by the total gallons consumed during that reporting period. This number would be reported as the utility’s actual fuel efficiency for the community for that reporting period. This number may change from month to month, depending upon what your generation and total gallons of fuel consumed are during the reporting period. 10/10/01 -9- Customer Billing Requirements (continued) QUESTION: HOW AND WHERE DO | FIND THE APPLICABLE FUEL EFFICIENCY STANDARD FOR MY UTILITY IF IT RELIES ON ALL DIESEL GENERATION? ANSWER: The minimum efficiency standards for utilities that rely on all-diesel generation — measured in kilowatt hours (kWh) sold per gallon consumed with classification by Annual kWh sales is found in RCA regulation 3 AAC 52.620, GENERATION AND LINE LOSS STANDARDS. Please refer to page 8 of this section for the “Fuel Efficiency Standard Charts”. This number would then be reported as the applicable standard for your utility. You will need to know your utility's annual kWh sales to find the standard that applies to your utility. If you do not know your utility's annual kWh sales, you should call Keith Day of RCA’s finance section at 276-6222. QUESTION: HOW AND WHERE DO |! FIND THE APPLICABLE FUEL EFFICIENCY STANDARD FOR MY UTILITY IF IT DOES NOT RELY ON ALL DIESEL GENERATION? ANSWER: The minimum efficiency standards for utilities that do not rely on all-diesel generation — measured in kilowatt hours (kWh) generated per gallon consumed with classification by annual kWh of diesel generation is found in RCA regulation 3 AAC 52.620, GENERATION AND LINE LOSS STANDARDS. Please refer to page 8 of this section for the “Fuel Efficiency Standard Charts”. This number would then be reported as the applicable standard for your utility. You will need to know your utility’s annual kWh of diesel generation to find the standard that applies to your utility. If you do not know your utility's annual kWh sales, you should call Keith Day of RCA’s finance section at 276-6222. 10/10/01 - 10- Customer Billing Requirements (continued) Example 1: ABC Utility in Alaskaville has all diesel generation and annual kWh sales of 539,675. Let’s say your billing period is over and you are preparing your customers bills. To calculate the fuel efficiency for the period that just ended you would look at the monthly utility report for that period and divide the total kWh’s sold by the total fuel consumed during that reporting period. In other words, if the report shows that your utility had total kWh sales of 56,262 and total fuel consumed was 4,686 gallons — you would divide 56,262 by 4,686 for a fuel efficiency of 12.0 kWh per gallon (56,262 + 4,686 = 12.0). Based on 539,675 annual kWh sales the applicable fuel efficiency standard set out in regulations for the power cost equalization program is 10.0 kWh-hours a gallon (see standards chart on page 8 of this section). This information indicates that this utility has exceeded the minimum acceptable level of performance by a participating electric utility because it is selling more kWh per gallon than set out in the standard. You will need to do this calculation each month and notify your customers. Example 2: DEF Utility has part diesel and part hydro generation and annual kWh of diesel generation is 502,983. Let’s say your billing period is over and you are preparing your customers bills. To calculate the fuel efficiency for the period that just ended you would look at the monthly utility report for that period and divide the total diesel generation kWh by the total fuel consumed during that reporting period. In other words, if the report shows that your utility had total diesel generation of 79,432 kWh and total fuel consumed was 7,843 gallons — you would divide 79,432 by 7,843 fora fuel efficiency of 10.1 kWh per gallon (79,432 + 7,843 = 10.1). Based on 502,983 annual kWh of diesel generation, the applicable fuel efficiency standard set out in regulations for the power cost equalization program is 11.0 kWh’s a gallon (see standards chart on page 8 of this section). This information indicates that this utility is under the minimum acceptable level of performance by a participating electric utility because it is generating less kWh’s per gallon than set out in the standard. You will need to do this calculation each month and notify your customers. If you have difficulty with the fuel efficiency calculation or notices, please contact the Alaska Energy Authority at 907-269-3000. 10/10/01 eile PCE Utility Monthly Reports Where does the information come from? Information for the PCE Utility Monthly Reports comes from several different sources. Such as the customer ledgers, plant logs, general ledgers, and invoices for fuel. Billing Period Date Meters are read Date Bills are Mailed Community Population Number of Customers Total kWh Generated 10/10/01 Monthly billing periods are set by the utility and should be consistent throughout the year. Within each fiscal year, an eligible electric utility shall submit 12 separate monthly reports to AEA. Meter reading dates are set by the utility and should be consistent throughout the year, for example; January 1-31, February 1-28, March 1-31. Bills should be mailed no more than 10 days after reading the meters. Community population number should come from the latest certification put out by the Department of Community and Economic Development. This publication is prepared and distributed every December. These totals should be taken from the customer ledgers. All customers should be listed on the customer ledger, including the donated power and the unbilled customers. Plant Operator should supply the clerk with this information on a weekly basis. Generation information should be included for diesel, hydro and any other generation produced by the utility. -12- PCE Utility Monthly Reports (continued) Generator and/or Hydro Master Meter Readings Fuel Used Total Fuel Costs Total Non-Fuel Costs Total KWh purchased Station Service & Peak Demand Total kWh’s Sold & Gross Billed Revenues 10/10/01 Plant Operator should supply the clerk with this information on a weekly basis from the Plant Log. Plant Operator should supply the clerk with this information on a weekly basis from the Plant Log. Utility Clerk can calculate the fuel cost for the month by multiplying the total fuel used by the weighted average price of that fuel. The total non-fuel costs would come from the general ledgers that record the non-fuel expenses for the utility. See Page 16. Utility should receive a bill for the purchased power from the provider. The bill should reflect the total kWh’s purchased and the charge for the kWh’s purchased. Plant Operator should supply the clerk with this information on a weekly basis from the Plant Log. Information should come from the Customer Ledgers. -13- PCE Utility Monthly Reports (continued Price of Fuel used by RCA to determine PCE Level Write the price of fuel, per gallon, that was used by RCA to determine your PCE level, as well as the date approved by RCA. This information is usually contained in Appendix 2 of the letter order sent to you by RCA. Most Recent Price of Fuel Write your most recent fuel purchase price per gallon and the date of the purchase in these spaces. This should be the most current price that you have paid for fuel. Residential Rate Charged List the amount charged to_ residential customers per kWh (Example: .2950). Eligible kWh’s Information should come from the Customer Ledgers. Total PCE Credit Total eligible kWh’s multiplied by the PCE level applicable to that customer class will equal the total PCE Credit. Plant Log: The Power Plant Operator should be completing the “Plant Log” on a daily basis, showing readings for each day. This log should be turned into the Utility Clerk on a weekly basis. At the end of the month, the clerk should have the entire months worth of information to enter onto the PCE Monthly Utility Report. Following this page, you will find a blank “Plant Log”, and a copy of the “Operator’s Daily Maintenance Schedule.” It is suggested that the utility use this log or something very similar to record the power plant information. Fuel Expense: To calculate the fuel expense, you will need to know the following information: 10/10/01 -14- PCE Utility Monthly Reports (continued) Fuel Expense (continued): How many gallons were used in the reporting period? What is the utility’s current fuel cost per gallon? If the utility’s fuel storage tanks are less than 10% of the fuel consumed by the utility in a year, the most recent invoice cost is used, otherwise a weighted average cost is required. Lesson #3 How to calculate a “Weighted Average Cost of Fuel”: Please refer to “Utility Clerk Training, Lesson #3”. 10/10/01 -15- PCE Utility Monthly Reports (continued) Non-Fuel Expenses: There are usually seven types of non-fuel expenses. They are as follows: 1. Personnel Cost: Such as wages, taxes, and insurance. 2. Parts and Supplies: Supplies such as oil and filters, small tools and supplies. 3. Repairs and Maintenance: Routine and emergency repairs and maintenance to generation, transmission, and other utility facilities. 4. General and Administrative: Costs that are not for fuel, people or plant such as postage, phone calls, paper, billing forms, accounting supplies, checking account charges, insurance on the generators, building rent, business travel, office equipment, and income taxes if privately owned. 5. Depreciation: The annual expense that matches the cost of the asset (usually equipment and buildings) to its useful life. 6. Interest Expense: If the utility has borrowed money for plant upgrades or fuel purchases, the interest expense would be eligible for PCE support. 7. Other: This is a catchall for unusual costs. Total Additional Non-Fuel Expenses: Non-fuel expenses such as equipment purchases, annual insurance premiums, and bulk supplies that are purchased during the month should be listed in this blank and not included with the regular non-fuel expenses. 10/10/01 ~16.- PCE Utility Monthly Reports (continued Filing Requirements: Please refer to AAC.97.240 for the reporting and record keeping requirements applicable to the PCE Program: 10/10/01 AAC 97.240 REPORTING AND RECORDKEEPING (a) (b) (c) (d) (e) REQUIREMENTS An eligible electric utility shall submit a power cost equalization report to the department within 10 working days after the end of its billing period. The report must set out the power consumption of the previous month and must be in the format required by the department. Within each fiscal year an eligible electric utility shall submit 12 separate monthly reports. Power cost equalization payments will not be made for power consumed through June 30 of a year if the relevant monthly report is received after August 31 of that year. An eligible electric utility shall report separately in the format required by the department, the power eligible for power cost equalization that is consumed by each of its customers. An eligible utility shall keep accurate periodic written records for the fuel day meters, generating meters, and station service meters required by 19 AAC 97.200. An eligible electric utility shall organize and maintain, in accordance with standard accounting practices, the accounts of its electric fund as a separate accounting entity in a self- balancing set of accounts that includes the assets, liabilities, balance, revenue, and expenses of the electric fund. -17- PCE Utility Monthly Reports (continued (f) An eligible electric utility shall make its records available to the department and the commission within 60 days after receipt of a request to do so. (g) Failure to comply with (f) of this section may result in (1)Suspension by the department of the power cost equalization disbursements to the eligible electric utility, until satisfactory records are provided; (2)loss of suspended power cost equalization disbursements, if satisfactory records are not submitted by January 31 of the following fiscal year. In order for AEA to recognize an eligible residential customer, the actual name of the customer must be listed on the customer ledger, and the customer billed in that same name. The eligible kWh’s listed on the monthly report must reflect that same number of eligible kWh’s listed on the customer ledger, which should also match the customer bills. Any adjustments made to the customer account are to be noted on the customer ledger. If there is a large number of adjustments to be made, they may be submitted on a separate sheet of paper and attached to the report with a written explanation and copies of back up documents. Note: The adjustments should match to actual customer bills. Community Population: A copy of the Population Certification from the Department of Commerce and Economic Development is included in the training folder. This certification is published in December of each year, and the new population figure should be used starting in January of the following year. Donated Power and Unbilled Customers: PCE credit is not paid for customers that do not pay their portion of the monthly power cost. Donated and unbilled customers are ineligible to receive PCE credit. 10/10/01 -18- PCE Utility Monthly Reports (continued) PCE Monthly Utility Report with legend: You will find this legend attached to “Utility Clerk Training, Lessons # 4. It is recommended that you keep this report handy to use as a guide when filling out your monthly reports. Lesson # 4 PCE Monthly Utility Report: Please refer to the “Utility Clerk Training, Lesson # 4.” 10/10/01 i Oke Utility Calendar Attached you will find a “sample” utility calendar that reflects some of the minimum information that should be kept on a master calendar for the utility. The following list of questions should be answered for the month of November 2001 on the calendar located on the next page. In the reference section of this notebook you will find blank calendars for 2002 for your use. When are meters read? When are bills mailed? When is PCE Monthly Report completed and mailed? When is the plant log turned into the utility clerk? What other transactions or reports take place at regular intervals? (l.e. payroll, tax deposits, insurance payments, loan payments) -20- 10/10/01 Instructions for PCE Annual Report Forms We recommend that you print this page before you start so you can follow along. These forms have been prepared so they can be filled out manually or by using Microsoft Excel 97 (or higher These are only general instructions. If you have questions, comments, or suggestions please contact Felix Melendez at (907) 276-6222 or e-mail at felix_melendez@rca.state.ak.us Printing the forms (blank or completed) To avoid formatting problems, we suggest printing each page separately. Select the page you wish to print by clicking on the tabs on the bottom of the screen. Then, from the menu above select File, Print, OK. When entering information (manually or with the computer) we suggest the following order: Hint:When using RCA Excel Forms, use the Tab key to move from one field to the next. Begin at Page 1: Electric Utility PCE Form 1. Enter the utility's name. If you are filling out the forms manually, you will have to enter the utility's name in every form. If you are using RCA Excel Forms, the utility's name will be copied to all the other forms. 2. Enter monthly kWhs generated, sold, and gallons of fuel consumed for the corresponding months. If you are filling out the form manually, add the totals at the bottom. If you are using RCA Excel Forms, the totals will be added for you. Next, go to Page 4: Appendix 2A Page 1 of 2 1. Enter employees' information from personnel files. 2. Enter employees’ compensation during test period from payroll records or check register. 3. Complete the rest of the form by entering all other non-fuel costs from your general ledger or check register. If you have costs that do not fit in the categories given, prepare a separate detailed schedule of these costs and enter the total in the spaces labled "Other". 4. If filling out the form manually, add the sub totals foreach expense category. If using RCA Excel Forms this will be done automatically. Next, go to Page 5: Appendix 2A Page 2 of 2 Instruction for this part of the report are on the form. Remember to include copies of fuel bills with your filing. Next, go to Page 6: Appendix 3 Page 1 of 2 Calculate here the average class rate for all non-community facility customers using the formulas on the form. Utilities with flat rate structures should only have one entry per type of customer. Utilities with inclining rate structures should perform a separate calculation for each block. Utilities with declining rate structures should calculate the average of all blocks. These forms only provide for up to four rate schedules with up to four blocks each. If you have questions or if you can not use these forms contact us at the phone number or e-mail address above Next, go to Page 7: Appendix 3 Page 2 of 2 Calculate here the average rate for community facilities. Perform a separate calculation for each block (if applicable). These forms only provide for up to four rate schedules with up to four blocks each. If you have questions or if you can not use these forms contact us at the phone number or e-mail address above Instructions for PCE Annual Report Forms (continued) Next, go to Page 3: Appendix 2 1. If filling out manually, enter in Lines A through D, the subtotals from Page 4 (Appendix 2a Page 1 of 2). If you are using RCA Excel Forms this is done automatically. 2. Enter the remaining non-fuel expenses in Lines E through G from your general ledger or check register. You must include in Line G any revenues not related to the sale of power. 3. Add the total non-fuel expenses. If you are using RCA Excel Forms this is done automatically. 4. If filling out manually, enter in Line | the total gallons consumed from Page 1 (Electric Utility PCE Form) If you are using RCA Excel Forms this is done automatically. 5. Depending on the result of the storage capacity test performed on Page 5 (Appendix 2A Page 2 of 2), enter the current price of fuel in Line J; or the weighted average cost of fuel per gallon from Page 5 (Appendix 2A Page 2 of 2) in Line K. If you are using RCA Excel Forms this is done automatically. 6. If filling out manually, complete lines L through P using the formulas on the form. If you are using RCA Excel Forms this is done automatically. 7. If filling out manually, enter in lines M and N total kWhs generated and sold from Page 1 (Electric Utility PCE Form) If you are using RCA Excel Forms this is done automatically. 8. Calculate fuel efficiency and line loss using the formulas on the form. If you are using RCA Excel Forms this is done automatically. Also, if you are using RCA Excel Forms, the efficiency standard and a message indicating if you meet the standard will appear. Next, go to Page 2: Appendix 1 If using RCA Excei Forms, no entries are required on this form. If filling out manually: 1. Bring forward to lines A, B, C, and E the information from Page 3 (Appendix 2). 2. Complete lines D, F, G, H, and | using the formulas on the form. 3. Bring forward to J the average rates calculated in Pages 6 and 7 (Appendix 3). 4. Complete K and L using the formulas on the form. Next, go to Page 8: Electric Engine PCE Form Enter the requested information about the utility's generators. Next, go to Page 9: Certification 1. Complete certification form. 2. If using RCA Excel Forms, print all forms as described above. 3. Sign certification form. 4. Mail report to: Finance and Accounts Section Regulatory Commission of Alaska 1016 West Sixth Avenue, Suite 400 Anchorage, AK 99501-1963 UTILITY NAME: ELECTRIC UTILITY PCE FORM TEST PERIOD: CURRENT KWH KWH GALLONS PRICE OF MONTH GENERATED SOLD CONSUMED FUEL/GAL H\Farme\PCF\Samnie Annual Renart Pane 1 Alternate Form Appendix 1 Page 1 of 2 UTILITY NAME: POWER COST EQUALIZATION CALCULATION TEST PERIOD: A. Total kWh Generated (Alternate Form Appendix 2) B. Total kWh Sold (Alternate Form Appendix 2) C. Total Non-fuel Expense (Alternate Form Appendix 2) D. Non-fuel Cost (C /B) E. Total Fuel Expense (Alternate Form Appendix 2) F. Fuel Cost (E/B) G. Eligible Cost/kWh (D + F) H. System Average Cost (G) 0.1200 |. Lesser of (H) or J. Average Class Rate (from Alt. Form Appendix 3) Rate Schedule: Rate Schedule: Rate Schedule: Rate Schedule: Community Facility: Community Facility: Community Facility: Community Facility: H\Forms\PCE\Sample Annual Report Pade 2 Alternate Form Class Power Cost Equalization Appendix 1 Per kWh Payable by DOE Page 2 of 2 K. Lesser of (1) x .95; or (J) Rate Schedule: Rate Schedule: Rate Schedule: Rate Schedule: Community Facility: Community Facility: Community Facility: Community Facility: L. Funding Level in Effect; (K) x Rate Schedule: Rate Schedule: Rate Schedule: Rate Schedule: Community Facility: Community Facility: Community Facility: Community Facility: Alternate Form Appendix 2 Meee LU UL SCHEDULE OF ELIGIBLE POWER COSTS, SALES AND EFFICIENCY TEST PERIOD: NOTE: See Alternate Form Appendix 2A for instructions and detail Non-fuel Costs A. Personnel Costs (Alt.Form Appendix 2A, 1 of 2) B. Power Plant Parts and Supplies (Alt.Form Appendix 2A, 1 of 2) C. Repairs and Maintenance (Alt.Form Appendix 2A, 1 of 2) D. General and Administrative (Alt.Form Appendix 2A, 1 of 2) E. Depreciation F. Interest Expense G. Other (Describe) [Include Revenues not related to Regular Operations} H. TOTAL Non-Fuel Costs Fuel Costs |. Gallon Consumed for Electric Generation (Electric Utility PCE Form) J. Price of Fuel (Current Cost) Date Purchased: K. Price of Fuel (Weighted Average Price) See Alternative Form 2A, pg. 2 of 2, for instructions L. Total Cost of Fuel (| x J) or (Ix K) Sales Information M. kWh Generated (Electric Utility PCE Form) N. kWh Sales (Electric Utility PCE Form) O. Efficiency (N /1) P. Line Loss ({M - N}/M) H:\Farms\PCF\Samole Annual Report Paae 3 Alternate Form Appendix 2A Page 1 of 2 UTILITY NAME: DETAILED SCHEDULE OF ELIGIBLE POWER COSTS TEST PERIOD: NOTE: Attach additional sheets if more room is needed for detail. NON-FUEL COSTS Personnel Costs: Compensation during Employee Name Employee Title Annual Wages Test Period A. Total Compensation During Test Period (Add 1-5) B. Employer Portion of Payroll Taxes (ESC, FICA, FUTA) C. Other (Describe) TOTAL Personnel Costs (To Alternate Form Appendix 2, Line A) Power Plant Parts and Supplies: D. Lube Oil E. Oil Filters/Fuel Filters F. Small Tools (Under $200) G. Other (Describe) TOTAL Parts & Supply (To Alt. Form Appendix 2, Line B) Repairs and Maintenance: H. Amortization of Major Overhauls |. Emergency Repairs J. Routine Maintenance K. Other (Describe) TOTAL Repairs & Maintenance (To Alt. Form Appendix 2, Line C) General and Administrative: L. Outside Professional Services M. Insurance N. Office Supplies O. Office Rent P. Travel Q. Other (Describe) TOTAL General & Administrative (To Alt. Form Appendix 2, Line D) H:\Forms\PCE\Samole Annual Report Paae 4 Alternate Form Appendix 2A Page 2 of 2 UTILITY NAME: DETAILED SCHEDULE OF ELIGIBLE POWER COSTS TEST PERIOD: Weighted Average Calculation (Alternate Form Appendix 2, Line K) YOU MAY NOT NEED TO A WEIGHTED AVERAGE CALCULATION: If your fuel storage capacity does not exceed 10% of your annual fuel consumption, do not use this form. The following test will indicate whether you need this form or not: + = Enter Storage Capacity here —> alae Storage Capacity Gallons Consumed If the result is less than .10 do not use this form. Enter the price per gallon from you most recent fuel bill here> and include a copy of your most recent fuel bill with your report. WEIGHTED AVERAGE CALCULATION: If the result above is greater than .10, follow these steps: 1. Find out current fuel inventory on-hand (within five days of the day you are preparing the report). Enter current fuel inventory here ——> gals. Enter inventory date here -> 2. Enter below your most recent fuel purchases until you reach the fuel inventory on-hand from Step 1 above. Example: If your current fuel inventory on-hand is 1,000 gallons and your three most recent fuel purchases were for 500, 720, and 250 gallons, enter only the two most recent purchases below and include copies of the invoices with you report Fuel Purchases Cost of Fuel # of Gallons Weighted Average (B / A) /Gallon UAL arma\DOCE\Camnle Annial Danart Dana & Alternate Form Appendix 3 Page 1 of 2 UTILITY NAME: CALCULATION OF AVERAGE CLASS RATE PER kWh TEST PERIOD: Rate Schedule: (4) (7) Total Avg. Rate ($/kWh) ($/kWh) - $ 0.1200 Avg. Rate ($/kKWh) - $ 0.1200 ($/kWh) - $ 0.1200 (4) Total ($/kWh) Avg. Rate ($/kWh) - $ 0.1200 Alternate Form Appendix 3 Page 2 of 2 UTILITY NAME: CALCULATION OF COMMUNITY FACILITY AVERAGE RATE PER kWh TEST PERIOD: Rate Schedule: (3) Surcharge ($/kKWh) (3) Surcharge ($/kWh) (3) Surcharge ($/kWh) UTILITY NAME: ELECTRIC ENGINE PCE FORM TEST PERIOD: DATE OF LAST ENGINE* PROVIDING DATE ORIGINAL | CAPACITY MAJOR NO.| ELECTRIC GENERATION | INSTALLED COST OVERHAUL * MAKE AND MODEL: EXAMPLE / CATERPILLAR D-399 Distribution System (Check One) Primary Voltage (Check One) O Single Phase a] 480 O Three Phase Oo 2,400 oO 7,200 B Other CERTIFICATION | HEREBY CERTIFY THE INFORMATION SUBMITTED TO THE REGULATORY COMMISSION OF ALASKA IN SUPPORT OF (Name of Utility) PARTICIPATION IN THE ALASKA POWER COST EQUALIZATION PROGRAM IS TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE. Signed Certifying Officer's Name/Title Date Address: Phone # Hours: Fax # Notes Alaska Energy Authority Bulk Fuel Revolving Loan Fund Topics of discussion: Purpose of Loan Fund Eligibility Lending Practices Loan Application/Procedures Letters of Endorsement Fuel Sales Reports Stipulations of Approval Repayment Process Purpose of Loan Fund: The Bulk Fuel Loan Fund provides loans to rural communities for the purchase of annual or emergency fuel supplies, including the necessary costs of transporting the fuel. By consolidating fuel needs into one large order, communities can take advantage of once-a- year barge deliveries and purchase fuel at competitive prices. The maximum loan amount is $100,000. A borrower's first loan bears zero interest, the second loan 5% interest, and interest on subsequent loans is equivalent to the average weekly bond yield of municipal bonds for the 12 months preceding the date of the loan (currently about 6.14). Eligibility: Loans may be made to an organized municipality or an unincorporated village with a population of under 2,000, or to a private individual who has a written endorsement from the recognized governing body of the community. (SAMPLE Attached) An applicant must agree to repay the loan in one year or less, according to a repayment plan determined by the Authority (currently the repayment schedule is (9) nine equal monthly payments). The amount borrowed may not exceed 90 percent of the wholesale price of the total fuel purchased plus the cost of transporting the fuel. Lending Practices: No proceeds of a bulk fuel loan may be used to a) purchase aviation gas, b) purchase fuel other than bulk petroleum fuels, c) 10/10/01 -21- subsidize a business or d) make a profit, unless the profit is used to purchase additional community fuel supplies. All loans must be repaid within the loan terms. In addition to the monthly payments, all stipulated documents must be submitted to the Authority of Energy as required. Collateral may be required to secure bulk fuel loans. Loan Application/Procedures: A loan application will not be processed without the required $25.00 non-refundable application fee. Applications must be complete, signed and notarized prior to them being reviewed. Incomplete applications will be returned to the borrower. Loans will not be made on fuel that has already been consumed, therefore, it is especially important that the application process be completed in a timely manner. There is a “Checklist” located on page 3 of the loan application, use this as a guide in completing the application. LOAN APPLICATION QUESTIONS: Page 4: Contact Name and Phone Number - this should be the person that will be handling the application and repayment of the loan. Please include a Fax number if one is available. Loan Amount Applied for - this amount should be as close to the actual cost of the fuel as possible and not exceed $100,000. Note: The borrower must pay the 10% participation portion of TOTAL fuel purchased. Quantity of fuel ordered - did you order an annual supply? Are you going to have two deliveries? If more than one delivery is expected, list all dates of delivery. Delivery Dates are important - the total loan process should be completed prior to the fuel being delivered, or very shortly thereafter. Invoices should be submitted to the Authority immediately upon receipt. Loans may not be approved for fuel already consumed. Page 5: Prior Bulk Fuel Loans - Please list all prior Bulk Fuel Loans that are repaid or outstanding. List PCE information as requested. Sign and date. 10/10/01 - 22- Page 6: Use of Loan Funds - check the appropriate box and fill in loan amount. Where/How will fuel be used - please check all boxes that apply. If “other” is checked, please describe. Why does your community need a loan to purchase fuel? - Write a brief explanation to describe the need. What revenue source will you use to repay this loan, if approved? - Give details of specific revenue sources. (These should match the sources listed in the income and expense statement) How will you finance the required 10% of the total fuel cost? - Give specific details. Page 7: Resale price of fuel - if you provide and charge for fuel to local residents and businesses, please breakdown the fuel costs by the categories listed for both Diesel and Motor Fuel. Sign and date. Page’s 8&9: Loan Agreement - fill in all blanks, make be sure the agreement is signed by the authorized signer and notarized. Original must be sent to the Authority, a copy will be returned to you upon approval and closing of the loan. Page 10: Promissory Note - fill in only the blanks preceded by the “Undersigned”, the Authority will complete the remaining blanks upon approval and closing of the loan. Sign, notarize and return the original to the Authority. Page 11: Waiver of Sovereign Immunity Resolution - this is required only if the applicant is a Traditional or IRA Village Council. If this applies to you, please complete, sign, notarize and return the original to the Authority. Page 12: Borrowing Resolution - this should be approved by the applicant’s governing body and notarized. Page 13 & 14: Bulk Fuel Facilities Questionnaire - this form should be filled out by an individual with knowledge of the bulk fuel facilities. Instructions are included 10/10/01 -23- Letters _of Endorsement: An endorsement letter is required of all applicants, who are private individuals or corporations who are borrowing on behalf of the community. A sample endorsement letter is attached for your reference. The endorsement letter must be typed, using the official letterhead of the entity making the endorsement. It must be the signed, notarized and returned with the completed loan application. Fuel Sales Reports: Fuel sales reports may be a stipulation of your loan. A sample “Fuel Sales Report” form is attached. This form, if a stipulation of your loan commitment letter, should be sent in with your regular monthly payment. Stipulations of Approval: Stipulations of the loan will be listed in the “Letter of Commitment’, that is sent to you upon approval of the loan. Approval is contingent upon the compliance of the stipulations. Stipulations that apply to every loan are 1) verification that the borrower has met the required 10% participation of the total fuel cost and 2) the final bill or invoice to document fuel delivery, so that the Authority can disburse the loan funds directly to the vendor. Other stipulations that may be required are, the submittal of monthly fuel sales reports, a resolution assigning pending and future Power Cost Equalization program reimbursements to the repayment of the outstanding loan, a resolution to implement the Load Limiters Program by a specified date, and any other stipulations set forth by the Authority. Repayment Process: Upon completion of the application process and the closing of the loan, the borrower is sent a “Disbursement Letter”, along with the executed loan documents, amortization schedule and the coupon book. In the Disbursement letter you will find the payment amount and the date in which the first payment is due. All loan payments are due on the first of each month for the term of the loan. A payment coupon should be sent in with all payments to ensure the loan is credited. A borrower is not eligible for another Bulk Fuel Loan unless all prior loans have been repaid. A blank Bulk Fuel Revolving Loan Fund Application is located on the table in the back of the room for anyone who would like to take a copy with them. 10/10/01 mAs Reference Materials Accounting Clerk Reference Electric Utility Fund Reference Fuel Sales Filing System Utility Master Calendar Sample “Ordinance” Master Meter Reading Schedule 10/10/01 -25- ACCOUNTING CLERK REFERENCE Job Description - Accounting Clerk General Description Serves as a staff member for the utility and works closely with the City Administrator, the Board of Directors and the public. Official Duties: Attend and participate in utility meetings Maintains and makes available for inspection an indexed file containing City ordinances, resolutions, rules, regulations, and codes. Serves as custodian of the official records of the City Serves as the purchaser and petty cash officer Sorts incoming mail Serves as filing clerk Regularly assists residents who have questions or requests Is the custodian of all City Funds Keep an itemized account of money received and disbursed Assist the City Administrator in compiling the annual budget Prepare and submit to the Administrator such financial reports and other data as may be required Prescribe and control such procedures as are necessary to protect City funds and property Additional Administrative Duties: Responsible for filing Records accounting activity in Economic journals Customer service Prepares quarterly tax returns Prepares monthly financial reports Responsible for Petty Cash Prepares monthly bank reconciliations Prepares payroll checks and maintains records Prepares financial statements I. SENDING OR RECEIVING MAIL INCOMING MAIL A. Accounting Clerk is responsible for retrieving the mail from the post office daily. The Clerk will be assigned a key to the Post Office Box upon employment. Only the Clerk and Administrator should have access to the P.O. Box. 1. If postage or COD is due, clerk pays postage with a utility check (this will require two trips) 2. Clerk has the authority to sign for any Certified Mail or any items requiring signature/return receipts. B. Clerk opens the mail and signs each piece with the date received. C. Clerk organizes the mail and gives all items to the Administrator. D. Administrator decides the appropriate response for the received mail. (Whether to authorize payment of invoices, or respond to letters, etc.) E. Administrator/Clerk carries out appropriate action OUTGOING MAIL A. Administrator is responsible for all outgoing mail. He/she may assign or authorize Clerk to mail certain items. II. FILING THE MAIL (AND OTHER IMPORTANT PAPERS) A. After The Administrator takes appropriate action with the document, the clerk files all necessary items. ; B. Clerk files according to the following Filing Index: C. Once there are over three items for the same topic or vendor, a separate file is to be created. FILING INDEX 1. Accounting -Check Registers -Bank Statements -Financial Statements (monthly and annually) -Budgets 2. Accounts Payable -Bills to be paid -Invoices due -Monthly Recurring Payments -Outstanding Loans -Paid bills by year 3. Accounts Receivable -Loans and advances by entity or person -Unpaid utility bills 4. Correspondence -State and Federal Letters -IRS Letters 5. Legal -Contracts -Law Suits -Correspondence 6. Payroll -Employee Earnings -Time Cards by year -IRS Forms -Deduction Reports -Council Stipends 7. Personnel -Employment Applications -Personnel Records -Employee History Data -Leave Requests -Pay Advances -Personnel Manual 8. Administration File -Constitution -Resolutions -Mapping -Code and Ordinances -City Election Results -Water and Sanitation Projects -Press Releases and Public Meetings -Compact of Free Association -C ant Files -Tribal Court -Improvement Proposals -Village Police -Copies of Paid Bills and Invoices Attached to Check Copy Filed By Month C. Ifthe item does not fit into any of the above classifications, the Clerk will discuss, with the Administrator, the addition of a new file to the existing Filing Index. The Administrator must give proper approval before any new files are made. NOTE: When the filing cabinets eventually fill up, the Administrator is responsible for the proper storage of noncurrent files until such a time when the outdated files are deemed not necessary for storage. NOTE: Rule of thumb is that the current year plus the previous year should be in the files, records from other periods should be in long term storage. For further information on records retention, see Appendix A - Record Retention. III. PURCHASING NOTE: The following procedures should be followed for purchasing or a contract for goods or services. A. Clerk or employee notices a need for a new item. B. Clerk writes a memo and communicates the need to Administrator. C. Administrator compares the need of the purchase with available cash flow and decides if item or contract should be purchased. D. Administrator meets with Board to obtain Board approval for purchase. E. If Board approves, Administrator informs Clerk to purchase new product. F. Clerk orders or purchases new product. NOTE: In an emergency, Administrator has the authority to purchase items as necessary without Board approval. The Board would be informed later of the items purchased and the justification for purchasing those items. XI. CUSTOMER PAYMENT ON ACCOUNTS A. Customer comes into utility for payment on his/her account B. Clerk pulls customer file from Accounts Receivable File C. Clerk takes cash or check from customer. D. Clerk Updates customer sheet for amount paid. If customer is paying off loan balance: -Stamp “PAID” on customer loan sheet. E. Give customer a receipt for payment if they want one. F. Clerk updates Economic Journal for the amount of payment. G. Clerk puts check or cash in safe until deposit. NOTE: Clerk sends out monthly reminders for customers who have not paid. If customers are more than one month behind, notify Administrator for immediate action. IV. PAYING BILLS OR INVOICES A. At month’s end, Clerk reviews accounts payable files for each of the accounting systems (general, utility, etc.) B. Clerk brings all due bills or invoices to the Administrator for payment approval. B. Administrator decides whether or not to pay current payables based on current cash flow situation. C. Administrator approves payables for payment and gives bills and invoices to Clerk for preparation of checks. . D. Clerk delivers completed checks to Administrator. E. Administrator reviews for accuracy and signs checks. F. Administrator must obtain one additional authorizing signature from pre-approved list of check signers. NOTE: The additional check signers must be Board members. Not all Board members must be authorized check signers, but the Banks must have an updated list of authorized check signers before any new people are eligible to sign for checks. G. Administrator gives checks to Clerk for mailing & recording in appropriate Economic journal. . H. Once a month, Administrator reviews files for old payables. NOTE: Checks for general fund will come from the general fund account, checks for Utility will come from Utility bank account, etc. J. Clerk gets checks back from Administrator, and reviews for 2 (two) signatures on the checks. : K. When everything is correct, handout or mail checks to employees. L. Fill out Form 8109 - Federal Tax Deposit Coupon and deposit taxes withheld in “Steps D SE M. Give to Administrator for approval and signature. N. After approval and signature, mail Form 8109. VIII. PAYROLL PROCEDURES (Continued) - QUARTERLY NOTE: These procedures must be performed after the end of each quarter, but before the end of the following month. For a list of filing deadlines, see consultant calendar of important events. The Accounting Clerk should be familiar with the JRS publication 15 “Circular E, Employer’s Tax Guide” before beginning this section. A. Total each employee wages for the quarter just ended. B. Transfer calculations to a spreadsheet containing the following columns: Employee | Job Description | Gross Pay | FICA | MEDICARE | FED INCOME TAX | AK ESC | Net Pay C. Repeat “Step B” for each employee who received wages during the quarter. D. Total the columns in the spreadsheet. E. Give to Administrator for approval. NOTE: The utility is required to pay a tax on employee earnings in addition to the amount of taxes taken out of employee Gross Pay. The 941 and ESC reports are the way the State and Federal governments collect the taxes. F. Complete Form 941 with the instructions starting on page 21 of the Circular E and the instructions following the original 941 form. G. Complete the Alaska Quarterly Contribution Report (ESC) by following the instructions following the original form. H. Attach Net Pay spreadsheet calculated in “Step D” to the 941 form and the ESC form. I. Give to Administrator for signature. J. Record amount of EMPLOYER taxes as Payroll Expense in the General Journal. J. Mail forms to address printed on the forms with the Net Pay spreadsheet and payment before the filing deadline. VIII. PAYROLL PROCEDURES (Continued) - END OF YEAR NOTE: Follow the Payroll Procedures - Quarterly to complete 941 and ESC Reports for the 4th Quarter of the year. NOTE: The Form 940 is an unemployment tax to the employer and is not taken out of employee earnings. : A. From the Net Pay spreadsheet calculated in Payroll Procedures - Quarterly, complete Form 940. B. Use the instructions on page 26 of the Circular E and the instructions provided at the end of the original form to help complete the form. NOTE: The utility gets a credit on the 940 Form for the payments on the Alaska ESC reports. Pay careful attention to page 2 (two) of the form for instructions on how to take this credit. C. Attach Net Pay spreadsheet to 940 Form. D. Give to Administrator for authorized signature E. Mail forms to address printed on the forms with the Net Pay spreadsheet and payment before the filing deadline. VIII. PREPARING FINANCIAL BUDGET - BEGINNING OF YEAR A. Administrator, Board Members, and Maintenance Worker and have a meeting to complete the budget. B. Together, they determine how much income the utility expects to earn in the following year for each accounting system. C. Maintenance Worker details all broken equipment, and presents cost summary to repair all broken equipment. D. Board decides how much money can be spent on repairing the equipment and assigns dollars to actual equipment parts. E. Together, they determine estimated expenses for all city accounting systems F. Compare expenses to income and adjust amounts if necessary. G. Together, they compare Budget to Actual every quarter. H. Board and Administrator can revise as necessary throughout the year. L. Careful attention is paid by both the Administrator and the Board Members so city does not exceed budgeted amounts. XII. PREPARING FINANCIAL STATEMENTS - END OF MONTH A. Clerk reviews files for any unposted transactions and enters any necessary amounts in the appropriate journals. B. Totals all columns for each Economic Journal for the month ended. C. Transfer all income amounts on the right side of the Economic Journal to the income portion of the Income Statement. D. Transfer all expense amounts on the left side of the Economic Journal to the expense portion of the Income Statement. E. Repeat “Steps C and D” for each of city's accounting centers (general, utility). F. Give to Administrator for approval. G. After Administrator approval, give to City Treasurer. H. Clerk works with City Treasurer to resolve any differences. NOTE: See the flowchart on the following page for further instructions. MONTHLY FINANCIAL STATEMENT PROCEDURES Clerk inputs any ; Yes——_> unposted transactions Total all columns in! the Economic § <—— Journal Complete these procedures for each accounting center Disregard all non-income items from income total i No——> Record income on Income Statement Record all classification on the, Income Statement Calculate Net Income on the Income Statement Present Income Obtain Work with City Statement to Board}¢——Yes Administrator ‘No- Treasurer to of Directors approval?, resolve differences XIII. PREPARING FINANCIAL STATEMENTS - YEAR END A. Clerk reviews files for any unposted transactions and enters any necessary amounts in the appropriate journals. B. Rechecks computations in Economic Journals. C. Clerk completes Year End Payroll Procedures D. Clerk adds up monthly income statement amount to get yearly total. E. Transfer all amounts to the year end Income Statement. F. Give to Administrator for approval. G. After Administrator approval, give to City Treasurer. H. Clerk works with City Treasurer to resolve any differences. 15 APPENDIX A RECORD RETENTION According to the AICPA publication The Accountant's Business Manual, the IRS recommends retaining the following business records for the stated amount of time: General and Financial Membership records Corporate records & minutes Property titles & mortgages Federal, state & local tax returns Fixed asset records & appraisals Accountants’ audit reports Interim financial statements Year-end general ledgers & trial balances Monthly trial balances Cash receipts & disbursements Bank statements, canceled checks, & deposit slips Bank reconciliations Petty cash vouchers Inventories Perpetual inventory records Physical inventory records Sales & receivables Sales journals Shipping tickets Accounts receivable ledgers & trial balances Invoices Uncollectible accounts & write-off s Expired contracts and notes receivable Purchases & payables Purchase journals Bills of lading Accounts payable ledgers & trial balances Purchase orders Paid bills & vouchers Bids & offers Expired purchase contracts oN Permanent Permanent Permanent Permanent Permanent Permanent 7 years Permanent 7 years 7 years 7 years 7 years 3 years 7 years 7 years 7 years 3 years 7 years 3 years 7 years 7 years 7 years 3 years 7 years 3 years 7 years 7 years 7 years Payroll Payroll journals Time cards Payroll reports (federal & state) Assignments & garnishments Forms W-4 17 7 years 7 years 7 years 3 years 7 years Chapter 10 Electric Utility Fund - 181 - TABLE OF CONTENTS » Chapter 10 - ELECTRIC UTILITY FUND Page OCIS Secccccsorancecssecsssosesesassscerestescscenesess .- 183 Overview 186 Electric Utility Fund Record Keeping ...........sscssesseseeeeeerereeeeeeeeeeeeeeneeeees 186 Bank ACCOUNTS ...........ssecccoccsssossccccsscssresecssecsscnscnesanssnnsncesssessssesenssssees 186 Cash Receipts Journal ...........0...-.c-ssssssssorsossecsseseasccnenssessssessacasssorers 187 Ekonomik Check Register 187 BARC FRECOMEIatiOMersrssrerorscereserecscessecscaseseseacescacceccesrasceasecacecscacsarcares 188 PEGI oo oca-ccseseccceoceececccesessSecssesseceencoessessosenccssnsesessccassoasonnsenccsseaess ... 188 Monthly Financial Statement ...........ccccssesseeseseeeeeseeeeeeseeeceseneeeteeeenees 189 Gost Of Doing Business .............:..----.ccccsvsvcosconcessesencserersessansencgeseusntsnss 189 PRUNGHOBING i recccccseseatscesaceesceceeseese? Renaeateraniaseaeversnsatesunicrsereeteseseesseesesseses 189 IMorathily EsiMt racy scecovcsssssssscsavesescoetoctatacccccsctesacssacstenasnstccsscctvepecpysrocisrseses ». 189 Billig} PPOCOCUIG ceccrsearececceressceszecessscesccesscececesesececencteseecenaceetsevecvececeesas 190 Billing Statement IMStruCtiONS ...........ssssesesseeeseeseeeetseseseseeseneeeeeseneneeeeeees 191 Electric Utility Cash RECONCIIAtION .........ssesssseecesseseseseesessseeseeseseseeseeeeesens 192 NIVSEICH OMS oo ooo csenceneceeecoesseeceeeseceeacvacoecsenceoncssousssecsencanceseneesswenerssuccnsatsns 192 FREOO CIATION) FOL secsccscseccsecesczscocescsueessascoccnccccncesccseasetteacenacesecscsssees7s 193 DOD ERC OM recersstccsssercecectcrtiacsnccccessnoestcassccsscacnssecseernsreccnenscsqracsenucezareneness 194 Calculating Depreciation .................cccccsssssssssrsssersscssesscscsecssesonseecceseee 194 Depreciation Schedule ...197 - 182 - TERMS USED IN THIS CHAPTER The following terms are used in this chapter. If you find other terms that you don't understand check with the central glossary beginning on page 1. Accumulated Depreciation - This is the total amount of depreciation expense which has been taken on a piece of equipment since the year it was pur- chased. The cost of the piece of equipment less its accumulated depreciation gives the "Luok value” of the equipment. Alaska Energy Authority (AEA) - Formerly the Alaska Power Authority. The Authority is a public corporation providing means of construction, acquiring, financing, or operating power projects to achieve the lowest reasonable con- sumer power costs. The Authority provides technical assistance and market- rate financing to support Alaskan utilities. Alaska Public Utility Commission (APUC) - The Commission regulates public utilities by certifying qualified providers of public utilities and ensuring utilities provide safe and adequate services at just and reasonable rates, terms and conditions. Audit Trail - All of the various documents and accounting records that are used to tell when, why, by whom, and for what monies were received or ex- pended by the city. An audit trail provides a history of a financial transaction. Book Value - The current value of a piece of equipment or other personal property according to the city's accounting records. Book value is equal to the Original cost of the property less its accumulated depreciation. Billing Statement - Billing Statement is an itemized description of a customer's account and how much customers owe. Cash - Money in the form of currency or checks. Cash Disbursements Journal - A record listing all cash payments by the city organized by date of the check. The Ekonomik Check Register is a Cash Disbursements Journal. Cash Receipts Journal - Record of cash received by the city organized in chronological order. Checks - A written order to a bank to pay a certain amount to a specific indi- vidual or organization from funds on deposit in that bank. Currency - Money in the form of dollars and coin. - 183 - TERMS USED IN THIS CHAPTER (continued) Customer Files - Customer Files keep the information about the customer's account including Customer Billing Statements, Customer Ledger Cards, and the Posting File. The Customer Files are set up alphabetically. Customer Ledger Cards - Customer Ledger Cards keep track of each customer’s account. The Customer Ledger Card is an on-going account of customer charges, payments made, and balance due. Depreciation - A method of spreading the cost of equipment or other personal property over the expected life of the property. Electric Utility Fund - One of the three Funds used in this Model Financial Record Keeping System. The Electric Utility Fund serves as the accounting unit to organize transactions associated with the operation of a city owned electric utility. Expenditures - Money spent by acity. All money spent by a city is an expen- diture and must be authorized through the official city budget. Numeric Billing File - File for copies of Billing Statements sent to customers. Statements are arranged in the file by form number. File is used to make sure that all billing statements are accounted for and that no falsified billings to customers can occur. Pay Record - A record for each employee showing earnings, deductions, and net pay for each pay period, quarter and year to date. Payroll Journal - A record of all the costs for employees for each pay period. The Journal includes calculations of gross pay, employee withholdings and net pay for each employee. The Payroll Journal also includes calculations of employer's share of taxes. Posting file - A Posting File organizes the Customer Ledger Cards. It consists of a steel desktop file box with alphabetical index guides. Customer Ledger Cards are filed alphabetically in the Posting File for easy access. Power Cost Equalization (PCE) - State financial support for rural electric utilities. Program designed to reduce the cost of electricity in rural communi- ties. Utilities must apply for subsidy. Funding for program through legislative appropriation. Contact Alaska Energy Authority for more information. Phone: (907) 561-7877. - 184 - TERMS USED IN THIS CHAPTER (continued) Reconciling - A comparison of check and bank deposit slips with monthly bank statements. The comparison is done to make sure that the city check- books have heen accurately kept and that the bank has not improperly charged the city for bank services. Salvage Value - The amount of money that is expected to be received for selling or scraping a piece of equipment or other personal property at the end of its useful life. This amount is used in determining the depreciation expense of the property. Set Cash - Cash to make change for customers. The amount of Set Cash is established by the manager of the electric utility. This amount of currency and coin should always be available in the cash box.. Source documents - Document or record that is the origin for an entry in the city books. Straight Line Depreciation - A method of calculating depreciation in which the cost is allocated equally to each year of the equipment's expected life. Time Certificates of Deposit (CD’s) - Investment offered by banks that pays higher interest rates than normal bank savings accounts but requires that a certain amount of money be left in the bank for a specific period of time. Tariff - A schedule of rates and charges of a pubiic utility. Transfers - Payments from one Fund to another Fund. Useful Life - The amount of time in years that a piece of equipment or other personal property is expected to be used by the city. The useful life may vary by different types of property. Vendor - Seller of goods or services. - 185 - Chapter 10 ELECTRIC UTILITY FUND If your city operates an electric utility, an Electric Utility Fund must be estab- lished. The Electric Utility Fund is set up to create the records necessary to provide an Audit Trail and to account for money spent and revenues received by the electric utility. Major components of the Electric Utility Fund are: 1) An interest-bearing checking account. 2) A one-write cash receipts system. See Chapter 8, General Fund. 3) A cash disbursement system that includes: Purchase Orders, Check Requests, 3-part checks, and an Ekonomik Check Register. See Chap- ter 4, Cash Disbursements, for instruc- tions on setting up the Ekonomik Check Register. 4) A filing system that includes Vendor Files, Personnel Files, Revenue Files, Customer Files, Expense Files, Book- keeping Files, and Correspondence Files. See Appendix A, Filing System. 5) A payroll system that includes: Time sheets, employee Pay Records and Leave Records, a Payroll Journal, and federal and state payroll tax records. See Chapter 6, Payroll. 6) A Monthly Financial Statement. See Chapter 12, Monthly Financial State- ment. 7) A separate Budget. 8) A billing system. Two agencies are involved in the adminis- tration of the State's financial assistance program to small utilities. Alaska Public Utility Commission (APUC) examines the finances of electric utilities when the utility applies for Power Cost Equaliza- tion (PCE) payments. The APUC deter- mines what costs of the utility are PCE eligible and sets up the utility's Tariff. Alaska Energy Authority (AEA) uses the tariff to pay utilities their PCE payments. They also examine the operations of a PCE eligible utility to make sure they follow the regulations of the State pro- gram. requires that a Power Cost | Equalization (PCE) eligible utility | organize and maintain the | accounts of its electric fund as a | separate accounting entity in a self | balancing set of accounts that includes the assets, liabilities, fund | balances, revenue, and expenses. | This enables a community to track | utility costs and PCE payments. | (For more information on the PCE | Program, contact Sue White, AEA, | at 561-7877 and Jean McPherren, \_APUC, at 276-6222.) i ELECTRIC UTILITY FUND: Bank Accounts Establish an Electric Utility Fund checking account separate from the General Fund checking account. Deposit revenue from 186 - the electric utility's operation into this account. All electric utility Expenditures are made on this account. Use triplicate Checks. Deposits to this account are from: > Payments from electric utility cus- tomers. Refunds from Vendors on prior electric utility expenditures. Income from investments purchased with electric utility money. For example, cash from Time Certifi- cates of Deposit (CD’s) bought with electric utility revenues. (See Chapter 3, Cash Receipts, for more information on CD's) Payments from the State through the Power Cost Equalization (PCE) program. > > Personnel Costs Salaries Pyroll Taxes L 110 130 471 OilFuei Small Toots Other airy Fikers 472 = 473 474 bel} [ea pre Plant Parts = & Maintenance / & Supplies \ eee eal ae Routine Overnis Mainine 353 Cash Receipts Journa The Cash Receipts Journal identifies and tracks customer payments and shows the balance of Cash on hand. All pay- ments are identified from the time of receipt until they are deposited into the bank. Pre-numbered Cash Receipts assure accounting control at the time Currency and checks are received. As deposits are made to the bank, Cash Receipts provide back up information to show how much money should be depos- ited and in what Fund checking account. Source Documents for bank deposits are checks and currency received by the city from customer payments and other sources. Ekonomik Check Register The Ekonomik Check Register is the Cash Disbursements Journal. It tracks deposits and expenses, including payroll and transfers. The Electric Utility Fund (03) has its own Ekonomik Check Regis- ter. Set up the following headings in the Ekonomik Check Register. General & Admin Travel 210 Suoples 410 Prjct Serves 'nsereee Ottice Rem 631 au Note: The headings are designed to tie in with the APUC Electric Utility PCE Forms. - 187 - Set up the Ekonomik Check Register and reserve the last column for Transfers to the General Fund. This is titled “General Fund 01”. See the Chapter 9, Grants Fund, “Record- ing Expenses” Section for information on how to set up a column in the Ekonomik Check Register for Transfers. See Chap- ter 9. Grants Fund, “Transfers” Section for information on how to record transfers. Expenditures are recorded by Budget line item. Source documents are Time sheets/Time cards for payroll, and Check Requests or Purchase Orders for every- thing else. Bank Reconciliation The Bank Reconciliation Forms provide an easy method for Reconciling the bank account to the Ekonomik Check Register. The method of bank reconciliation is handled the same for all bank accounts. Source documents for doing bank recon- ciliation are the Bank Statement from the bank, cancelled checks, deposit slips and the Ekonomik Check Register. IN| FAVOR OF EKONOMIK CH Register Electric Utility Fund 02 CREDIT BANK ACCOUNT pmol Sel Deposit Deposit sgt + || [ alaldofod ao tit | l2laigaf od | l2[2| 49 od allie PT Electric utility payroll is paid from the Electric Utility Fund checking account. Payroll taxes are reported and paid to the federal and state governments from the General Fund. Transfers are made to the General Fund for the Electric Utility Fund share of payroll taxes. Payroll is done twice a month. The Payroll Journal serves as a source document for federal and state taxes. Pay Records provide information for payroll as well as tracking each individual's pay for purposes of any cutoff amounts for taxes. It serves as a source document for the Payroll Journal. For information on how to do payroll, refer to h r6, Payroll. Pay Records - Pay Records track an individual's payroll information, includ- - 188 - ing federal and state taxes. They serve as source documents for the Payroll Journal. Payroll Journal - The Payroll Journal gives a break-down of payroll and payroll taxes by grant. It's a source document for federal and state taxes charged to the various grants. Monthly Financial Statements The Monthly Financial Statements provide detail of revenue and expenditures. Infor- mation from the Cash Receipts Journal, Ekonomik Check Register, and the prior month's Monthly Financial Statement are used to prepare the current Monthly Financial Statement for the council and the monthly reports required by AEA and APUC for PCE payments. This report serves as a source document to provide information to the council on how much of the Budget has been spent to date and how much is available to spend. Cost of Doing Business An electric utility is an enterprise and must be self supporting and generate enough revenue to pay | for its maintenance and staff, anda portion of the city’s administrative expenses. If sales do not generate | enough money for these purposes, see what changes need to be | made, for example, increasing | prices. The “cost of business” or “overhead” needs to be taken into consideration when setting prices for electricity. The “cost of doing business” includes any amounts | the city pays for the electric utility's | staff, buildings, maintenance, improvements, equipment, installa- tion, audits and replacing inventory. All expenditures, other than payroll checks, are required to have authorization through Check Requests and Purchase Orders. Refer to Chapter 5, Purchasing. An organized billing system is needed to make sure that the utility has operating revenue and receives payments from customers for services provided by the city. The following system is proposed for the electric utility but it could be used for any enterprise the city oper- ates that requires billing customers for revenues. The parts of a billing system are: / Billing Statements / Customer Ledger Cards ~¥ Posting File / Customer Files. Billing Statements are an itemized description of accounts and how much customers owe. Billing Statements are sent out once a monti to all cus- tomers. Billing Statements are com- mercially available; we recommend a three-part carbonless billing statement. (NEBS Product 100-3) STATEMENT Numeric Billing File must be estab- lished to keep copies of all Billing Statements sent to customers (third copy of Billing Statements). The Billing Statement forms are numbered in sequence. Arrange the Billing Statements in the Numeric File by the form number as they are filled out and sent to customers. (See Appendix A, Filing System for more information.) Customer Ledger Cards track each customer's account. The Customer Ledger Card is an on-going account of customer charges, payments made, and balances due. Customer Ledger Cards are commercially available; we recommend NEBS Product 99 Ledger Cards. if e e a”) ACCOUNTS RECEIVABLE LEDGER ore wwece samen /crvemrmon | cures | owes | caso BALANCE FORWARD > A Posting File organizes the Cus- tomer Ledger Cards. It consists of a steel desktop file box with alphabetical index guides. Customer Ledger Cards are filed alphabetically in the Posting File for easy access. We recommend NEBS Product 945 Posting File and NEBS Product 45 Index Guides. Customer Files keep the information about the customer's account includ- ing Customer Billing Statements, Customer Ledger Cards, and the Posting File. The Customer Files are set up alphabetically. (Refer to Cus- tomer Files in Appendix A, Eiling System.) Billing Procedure After setting up the billing system, you're ready to start billing customers. Step 1: Prepare a Billing Statement for each customer. Step 2: Enter the Billing Statement information on the Customer Ledger Card for each customer. Step 3: Mail the original Billing Statement to the custemer. +190 - Step 4: File the Billing Statement copies in the Customer's File and the Numeric Billing Statement File. ed Remember: Bill customers on a | Utilites participating in the PCE program | monthly basis. | are required by statute to notify custom- | | ers for each period for which the PCE | | Payment is received of its participation | | Billing Statement - Instructions jin the program. Example shown below. 1. Date - Enter the date you're Preparing the bill. STATEMENT! 2. Account Number - This is a code number to identify the type of account. Electricity could be 300, for example . It may not be needed in small communities but using a code is easier than writing the account.name (“Elec- tricity’) on each billing statement. 3. Customer Name & Address - Enter the name and address of the customer. This information is used to mail billings and is found on the Customer Ledger Card. Notice To Customers 4. Date - Enter the date you are For the current billing period the utilay will be paid under the State of Alaska’s i i p Equaiizatvon P: : tity ana i Preparing the bill. poner Cont ere rausn earns sacey ts Your total elecincal service cost $ 5. Charges and Credits - Describe Loss state equaizaton s what the bill is for. (August- - Electric, Disconnect, Electric Hookup) 6. Amount - Enter the amount of the charges and any “past due” amounts, and interest on money owed the city. ; ' Notices which provide the same information | and are approved by the Alaska Energy | | Authority can be used as an alternative to | the above example. {enya ns ee nese - 191 - Use the following Cash Reconciliation Form to account for the currency and checks that are received for electricity sales when a deposit is made to the Electric Utility Fund’s bank account. Instructions Acash reconciliation is prepared each time electric utility receipts are deposited to the Electric Utility Fund’s bank account. The cash reconciliation is prepared as follows: 1. Details of coin and currency to be transferred to the Electric Utility bank account are entered in the box provided and the total entered on line (1). The amount to be transferred is equal to the cur- rency and coin in the cash box minus the Set Cash amount. This must be the same amount as the total of the amount paid (currency) on the Cash Receipts Journal sheet since the last deposit. Set Cash is cash to make change for customers and is not depos- ited in the bank account. The Set Cash amount is established by the Electric Utility Office Manager as sufficient to provide change to customers. This amount of cur- rency and coin should always be available in the cash box. - 192 - . Details of checks being trans- ferred are entered in the box provided and the total entered on line (2). (This must be the same amount as the total of the amount paid (check) column on the Cash Receipts Journal sheet.) . Total currency and checks re- ceived are entered on line (3) by adding lines (1) and (2) together. This is the amount deposited. (The total of this amount must equal the total of the amount paid currency and amount paid check columns on the Cash Receipts Journal sheet.) These are the same amounts that would be entered on the bank deposit slip. . The signature of the preparer goes in the box provided. ELECTRIC UTILITY SALES CASH RECONCILIATION Date} SEN e es el CURRENCY Coin: Pennies x Nickels Halves Currency: Twenties Hundreds Total (Enter on line 1 below) RE a UTILITY DEPOSIT SLIP 1) Currency In (2) Checks In LL | | (3) Total Deposit ie Signature of Preparer *Remember: Set Cash amount is NOT included in amount of currency to be deposited. - 193 - Many utilities don’t take full advantage of the State’s willingness to reimburse through PCE payments the costs of oper- ating rural utilities. One of the most com- mon costs not used by a small utility for purposes of calculating PCE payments is depreciation. Depreciation is a cost toa utility of the use of equipment. As a cost it makes the utility eligible for higher PCE payments. Depreciation can be applied to utility owned equipment for purposes of estab- lishing a PCE payment, if: > The equipment was purchased with city funds; or, > The equipment was bought with revenues generated by the utility. Equipment purchased with Federal or State grants is not eligible for PCE reim- bursement of depreciation expenses. Because PCE payments may represent sizable revenues to your utility, let's look closer at depreciation. Depreciation is a method of spreading the cost of a piece of equipment over the expected or Useful Life of the equipment. Depreciation is not, however, a procedure of setting aside monies to replace a piece of equipment once it is worn out. Depreciation can also apply to other types of personal property besides equipment, which have an expected life of more than one year. For the purposes of this manual, only the depreciation of equip- ment will be explained. Similar proce- dures would be used for other types of personal property. Depreciation is a method used mostly by businesses in developing profit and loss statements. Smail cities usually only use depreciation in preparing financial reports to the Alaska Energy Authority for their electric utility. If a business or enterprise buys an expen- sive piece of equipment and charges its full cost in the year of purchase, the business will probably show a loss for that year. But, the equipment will last for several years and the business will re- ceive benefit from the equipment during that time. By using depreciation, the business spreads or allocates the cost of the equip- ment over all of the years that the equip- ment is expected to be used. This lowers the cost in the year of purchase, and spreads the cost of the equipment to the time periods in which the business re- ceives the benefit from the equipment. Calculating Depreciation To calculate depreciation, a city needs to know or estimate three things. First, the city must know the cost of the equipment. This should be the purchase price less any discounts. Also, the cost of freight or any installation charges should be in- cluded in the cost of the equipment. The second thing the city must estimate is the useful or expected life of the equip- ment. This is an estimate in years of the length of time the city expects that it will be able to use the equipment before it wears out or has to be replaced. Different types of equipment will have different expected or useful lives. Finally, the city must estimate if the equip- ment will have any value or will yield any money at the end of its useful life. Some- times a piece of equipment may have a Salvage Value or value as scrap when it - 194 - is worn out. Or, sometimes the equip- ment may still be useable longer than it was originally expected, and if so, the city might be able to sell the equipment. These amounts are the salvage value of the equipment. There are several different ways to calcu- late depreciation. This manual deals only with the simplest and easiest of these methods. This method is called “Straight Line Depreciation.” Under the straight line method, the cost of the equipment less any salvage value is divided by the expected useful life of the equipment to yield the yearly depreciation amount. This is often put into the follow- ing format: CoE — Cost of Equipment SV — Salvage Value YoUL — Years of Useful Life YD -— Yearly Depreciation For example, the City of Pacific buys a pickup truck for $10,000 to use for its electric utility. The City Manager esti- mates that the truck, because of expected heavy usage, will only last for 3 years before it will have to be replaced. The City Manager also estimates that at the end of the 3 year period the city can sell the truck for $1,000. The City of Pacific would calculate the depreciation of the equipment by taking the cost of the equipment, $10,000, less the expected salvage value, $1,000, to yield the net cost of the equipment, or $9,000. This amount is then divided by the expected life of the equipment, 3 years, to give the yearly depreciation amount, or $3,000. For the purposes of developing a financial report for the elec- trical utility, the City of Pacific would show depreciation expense for the truck of $3,000 for each of the three years of the expected life of the truck. The city would not, however, report the full cost of the truck during the year that it was pur- chased. In the first year of using the new truck, the city would show depreciation expense of $3,000. This would also be the total amount of the depreciation taken on the truck. At the end of the second year, the city would again show another $3,000 of depreciation expense. At the end of the second year, however, the total deprecia- - tion taken on the truck would be $6,000. This is the $3,000 from the first year plus the $3,000 from the second year. The total depreciation taken is also known as Accumulated Depreciation. The original cost of a piece of equipment less its accumulated depreciation is known as the “Book Value” of the equip- ment. This is the value of the equipment according to the city’s accounting books. For example, at the end of the second year of using the truck, the accumulated depreciation is $6,000. If this amount is subtracted from the original cost of the truck, this gives the book value of the truck. That is, $10,000 original cost less $6,000 accumulated depreciation equals a $4,000 book value. At the end of the third year of use, the depreciation expense would again be $3,000 and the total depreciation on the truck would be $9,000. The $9,000 is the total of the $3,000 depreciation taken in - 195 - each of the three years. At the end of the three years, the truck is said to be fully “2preciated. This means the truck has ~-3ached the end of its useful life and the city will not take any more depreciation expense on the truck in following years. When the equipment is fully denreciated, the remaining value of the truck should be equal to its salvage value. The City of Pacific bought the truck for $10,000 and the accumulated depreciation is $9,000. The truck’s original cost less the accumu- lated depreciation is equal to its salvage value, or in this example the $1,000. The example of the City of Pacific as- sumed that the city purchased the truck at the beginning of its fiscal year. This isn’t always the case as cities buy equipment throughout the year. As aresult, in some situations cities should not take the full depreciation amount during the year of urchase. The City of Pacific follows a July 1 to June 30 fiscal year. If the city bought the truck on Apri 1, they would only be using the truck for the three remaining months of their fiscal year. In this situation the city should not take the full $3,000 deprecia- tion in the year of purchase. Instead, because the truck was only in use for less than one-half of the fiscal year, they should only take one-half of the deprecia- tion for the first year, or $1,500. If the city purchased the truck before December 31, they would use the truck for more than half a year and could claim a full years depreciation on the truck. In the second ang third years of using the truck the city would again take the full $3,000 depreciation. This is because the sity used the truck for the entire year. At -ne end of the second year the accumu- lated or total depreciation taken would be $4,500, or the $1,500 from the first year plus the $3,000 depreciation from the second year. At the end of the third year the accumu- lated depreciation would be the $4,500 from the previous year plus the third year’s $3,000 in depreciation expense. The total would be $7,500. At the end of the third year, the truck would have a remaining book value of $2,500. That is, the original cost of $10,000 less the accu- mulated depreciation of $7,500 equals $2,500. The $2,500 is more than the expected salvage value of the truck of $1,000. Asa result, the city is able to take the differ- ence, $1,500, in depreciation expense in the next year of operations. This $1,500 is equal to the other half of the yearly depreciation which the city was not able to take in the year of purchase. Since the city used the truck for less than half a year the first fiscal year, the unused part of the three year life will extend beyond the next two fiscal years. In total, the expected life is still three years. When a piece of equipment, such as the truck, has reached the end of its useful or expected life, this does not mean that the city will not be able to still use the equip- ment. This will depend upon whether or not the equipment is still operable. If so, then the city can still use the equipment or it may decide to sell the equipment and buy a replacement. When the expected or useful life of the equipment is reached, this means that the city should have fully depreciated the equipment. When this occurs, the book value of the equipment is equal to the salvage value of the equipment. In future years, the city will not report any addi- tional depreciation expense on the equip- ment even though the city may continue to use the equipment. - 196 - When the city prepares its annual finan- cial report for the Alaska Energy Authority, the yearly depreciation expense for all equipment used in the electric utility is totalled and included as an expense in the report. Only equipment which has not been fully depreciated should be included. The city includes “epreciation expense, although the city may not have actually expended money for this expense during the year. As noted, this is a method of spreading the original cost of the equip- ment over its useful life. Depreciation Schedule The city should develop a depreciation schedule for all of the equipment or other personal property used in its electric utility fund. The depreciation schedule provides a listing of all of the equipment and perti- nent information about each piece of equipment. A sample of the depreciation schedule is on the next page The city should complete and update the depreciation schedule each year when completing the AEA financial report. Much of the information can be taken from the previous year's depreciation schedule. The schedule should also list “Additions” (new equipment placed in service during the year) and “Deletions” (any equipment which the city has sold or scrapped during the year). Fully depreciated items are retained on the schedule at their book (i.e., salvage value), although no depreciation expense will be taken for those items during the fiscal year. This is so that the deprecia- tion schedule can act as part of a property inventory for the electric utility. In the example provided on the following page the City of Pacific’s 25 KW Genera- tor has been fully depreciated and its book value is its salvage value. Because the generator has been fully depreciated, there is no depreciation expense during the year and the new accumulated depre- ciation remains at $24,000. The genera- tor will continue to be listed on the sched- ule until the city sells or scraps it. In the example, the book value of the 75 KW Generator is greater than the salvage value, so the city is able to take a full years depreciation on this equipment. The city’s purchase of a new truck is included under the section called “Addi- tions.” Because the city used the truck for less than half a year, only one-half of the annual depreciation is included in column 10. In this example, the City of Pacific sold or ’ scrapped its previous truck. That truck had been fully depreciated (i.e., its book value equals its salvage value). Because the city sold or scrapped the equipment, it is included under the “Deletions” section. This piece of equipment would not be included on the following fiscal year’s Depreciation Schedule. Any funds re- ceived from selling or scrapping the truck would be included in the revenues for the Electric Utility Fund for the year. The city only had two pieces of equipment that had depreciation expense during the year: the 75 KW Generator and the 1988 Truck. The total amount of depreciation expense for these items is $11,500. This is the amount the city would include as depreciation expense on their report to the Alaska Energy Authority. - 197 - ELECTRIC UTILITY FUND DEPRECIATION SCHEDULE Year Ended 3 4 s 6 7 Cream «SALVAGE = NET = UBER YEARLY cost VALUE cost (3-4) (reams) (8) Total This Year's Depreciation Expense: ELECTRIC UTILITY FUND DEPRECIATION SCHEDULE Year Ended June 30. 1990 Cty of Pacttic a 9 10 " prencus = o<w oars Ame OF waa SALVAGE Tt useru, YEAy = AccUM soak vets sccm PuRcn. — coer vas cosr UFE OGRREC. OSPREC. VALUE GRIEG. COPE. (vesme) (5/8) 6 7? Additions ee Total This Year's Depreciation Expense: _ 11.500 - 198 - __|f fuel is sold commercially to the public, -. | sales are treated as a department \expense Function Code 82) of the Gen- eral Fund and set up in the General Fund Ekonomik Check Register to give ac- counting control over its activities. Rev- enue from fuel sales are paid and re- ceived at the city office and recorded on the General Fund Cash Receipts system. (Refer to the General Fund Cash Receipts system.) If fuel is only for internal use, it is paid for out of the General Fund (01) Administra- EXAMPLE tion and Finance Department (20) and charged back to departments and grants on a monthly basis via Budget Detail Sheets. This is accomplished by making a "Monthly Fuel Adjustment” on the Bud- get Detail Sheets. The amount to be charged back through this process is recorded on the applicable Budget Detail Sheet. The amount is added to the fuel Expense Object Code line item column and recorded on the Administration and Finance Budget Detail Sheet where it is subtracted from the fuel expense object code line item column. This treatment is similar to a "journal entry" in accounting. BUDGET DETAIL SHEET ENTRIES BDS Admin/Finance Fuel 20,000 - 1,500 18,500 For Example, let’s say the City made a Oulk fuel purchase in the amount of $20,000. This is recorded on the Admin- istration/Finance Budget Detail Sheet. The Clinic used $1,500 worth of fuel during the month. Admin/Finance Fuel has $1,500 deducted from fuel and the Clinic has $1,500 added to its fuel col- umn. As the year goes on and as each BDS Clinic Fuel + 1,500 department or grant is charged for its share of the fuel you will note the amount carried in the Admin/Finance Budget Detail Sheet will decline and the fuel costs for the other departments or grants will increase. The monthly report to the council will reflect charges for fuel as they are used. - 208 - Fuel Sales Meter Report “he meter report is used to keep track of “>yages in the fuel supply, to make sure ‘sales are properly accounted for, and 2 keep track of potential fuel leaks, 2vaporation and theft. ‘nstructions for completing ‘uel Sales Meter Report aily Procedure - The attendant enters formation on a Fuel Sales Meter Report sheet when fuel is pumped. The atten- ant: /Y Enters the date in the “date” column. /” Records the meter reading before fuel is pumped under the “Start Meter” column. ~/ Enters the meter reading after fuel is ss, Pumped under the “End Meter” column. / Figures the “Gallons Sold” and records the amount. v If fuel is for a city department, enter which cepartment or grant the fuel is charged to. ~v The “Soild To” column is for the signature of the person receiving the fuel. t the end of the day draw a line under ‘he last entry on the Fuel Sales Meter eport and record the total gallons - imped that day. onthly procedure - At the end of the uonth, compare the quantities of fuel “imped with the total of Fuel Sales Cash r Receipts and fuel charges to be sure that all gallons have been accounted for. There may be a difference because of spillage or evaporation between the actual fuel and the gallons accounted for. Remember: Put the “End Meter’ figure on next month’s Fuel Sales Meter Report. - 210 - TYPE OF FUEL: FUEL SALES METER REPORT GALLONS AT START METER END METER GALLONS SOLD 219 DEPT. OR GRANT SOLD TO Ic, ~uctions. for completing Inventory and ~~, Allocation Form The Inventory and Fuel Allocation ‘orm tracks fuel received and used so Jepartments and grants are charged for their share of the cost. A separate In- entory and Fuel Allocation Form is used for each different type of fuel sold ‘heating oil, gasoline, diesel). aking inventory - Take an inventory of “Jel on the last day of the month. Dip the anks and count the full and partially full drums of fuel. Enter the number of gal- ns on line six (6) of the Inventory and ‘uel Allocation Form. NOTE: If the quantities of fuel stored are -ery large, the gallons should be tempera- “are corrected to 60 degrees and the maunt of water determined by using * ar Paste.) /omputation of Gallons Used > Transfer the last month's inventory from line six (6) “Gallons at End of Month” to line one (1) of the current month’s form for each fuel tank you have. Add the amounts across to equal “Total Gallons” on line one (1). \NOTE: If you have only one fuel tank, enter all items under total gallons. If you on't have fuel tanks count ful! and par- ually full drums.) » Enter fuel received during the month on lines two (2) through four (4) with the deliver rch r gallon Delivered purchase cost per gallon equals the total cost of the fuel plus eight or delivery charges divided by the number of gallons received. >» Add lines one (1) through four (4) and enter the total on line five (5) to get “Total Gals. Available”. Add the amounts across to get “Total Gallons” on line five (5). > Subtract line six (6) from line five (5) to find “Gallons Used”. Add line seven (7) across for “Total Gallons” used. This is allocated to the individual departments and grants that used fuel during the month. > If there's a noticeable difference (more than five gallons, for example) be- tween the Inventory Fuel Allocation | Form and the Meter Report, check for theft or leaks. The cost of missing fuel is a cost to the city. Charge the cost to General Fund (01), Administration (330) Fuel. Allocation of Gallons Used and Computa- tion of Cost: » Enter the department or grant name on the first line of the Form. Use a separate column for each department and grant. » Determine how much fuel was used by the each department and grant. If you have a fuel meter, use the meter record to figure how much each de- partment or grant used. If you have separate tanks for each department/ grant, use the fuel tank dippings. » You must have some record of fuel used by each department/grant to determine how much to charge to them. You may have to estimate how much was used by each program until a metering system is installed. w Once you have determined “Gallons Used”, enter the amount for each department and grant on line eight (8). - 212 - > Enter the “Cost per Gallon” on line nine (9). Cost per gallon is found from purchase invoices and includes the costs of fuel delivery and operating the fuel facility, including payroll. You may have to estimate some costs such as electricity, wages, and drums. » The “Cost of Fue! Used” is found by multiplying “Gallons Used” (line eight) by “Cost Per Gallon” (line nine). Enter the figure on line ten (10) for each department or grant. » Each department or grant reimburses the General Fund for fuel purchases based on their costs for fuel. Summary of Costs The summary of costs separates depar- ment fuel usage from grant fuel usage so © grants are charged for fuel used. The summary also provides the figure for the check request for each grant’s reimburse- ment to the General Fund. Formula for Figuring Cost Per Gallon Cost per delivered gallon times the total gallons purchased plus the cost of doing business equals the total WHOLESALE COST. The total wholesale cost divided by the number of gallons purchased equals the break even cost per gallon. (Selling at anything less than this amount costs you money!) Mark up percent times the break even cost equals amount of mark up price per gallon. Mark up is the percentage above cost that the city considers reasonable. Total mark up price per gallon plus the break even point equais the selling price or retail price (sale to the public) per gallon. Example . Cost per delivered gallon $1.66 multiplied by gallons purchased x_16,00C | $26,560.( plus the cost of doing business + 9,905.48 equals the Total Wholesale Cost $36,465.: Total Wholesale Cost $36,465.< divided by number of gallons + 16,000 equals Break Even Cost per Gallon $2.27¢ rounded off to $2.26 Assuming a 5% mark up, multiply the Break Even Cost $2.28 by 5% x_.08 equals price of Mark Up per Gallon $0.114 rounded off to $0.1" Mark Up per Gallon price . $0.1° plus the Break Even Cost per Gallon + $2.26 equals Retail or Selling Price per gallon $2.37 - 213 - INVENTORY AND FUEL ALLOCATION FORM COMPUTATION OF GALLONS USED ee Geared aes eran eM ITV CULT re peter oe Gallons Received! Date / Type of Fuel Fea aie marae |||) eT arora 00) PgR Leen a Add (1) to (4) Gallons at end of Month: Gallons Used ( Beer eee ATT LTeSTITTELN TER Total Gallons sold (from Fuel Meter Report) Subtract Total Gallons sold from line 7 “Gallons used” (If difference is more than 5 gallons check for fuel leaks or pilferage) ALLOCATION OF GALLONS USED AND COMPUTATION OF COST Department or Grant Name ; Department (Grant name Gallons Used Department Name: Total for Departtients——_—_——----—-___. . J Grant Name: Ae SUT ETAT Total for ARTA cme LC TTT TUT De ae Total cost of fuel US@d----------------nvemnennnf The city will often run businesses that bill customers for payment. The city may also allow customers to make payments on acredit account. In both cases a billing system needs to be set up by the city and maintained. The parts of a billing system are: => Billing Statements => Customer Ledger Cards = Posting File => Customer Files Billing Statements Billing Statements are an itemized description of accounts and how much customers owe. Billing statements are sent out once a month to all custom- ers. Billing statements are commer- cially available. We recommend a three-part carbonless billing statement (NEBS Product 100-3). ——.———___—_—_—————“— STATEMENT OaTe ) Fenl You "sical | A Threepar carvoniess Gilling Statement Numeric Billing File must be estab- lished to keep copies of all Billing Statements sent to customers (third copy of Billing Statements). The Billing Statement forms are numberec in sequence. Arrange the Billing Statements in the Numeric File by the form number as they are filled out anc sent to customers. (See Appendix A, Filing System for more information.) Customer Ledger Cards Customer Ledger Cards track each customer's account. The Customer Ledger Card is an on-going account ot customer charges, payments made, and balance due. Customer Ledger Cards are commercially available. We recommend NEBS Product 99 Ledge! Cards. A ACCOUNTS RECENVABLE LEDGER weer. - 215 - Posting File A Posting File organizes the Cus- tomer Ledger Cards. It is a steel desktop file box with alphabetical index guides. Customer Ledger Cards are filed alphabetically in the Posting File for easy access. We recommend NEBS Product 945 Posting File and NEBS Product 45 Index Guides. Customer Files Customer Files contain the billing statements. The customer files are set up alphabetically. (Refer to Customer Files in the Filing section of this manual.) Billing Procedure After setting up the billing system, you're ready to start billing customers. Step 1: Prepare a Billing Statement for each customer. Step 2: Enter the Billing Statement information on the Customer Ledger Card for each customer. Step 3: Mail the original Billing Statement to the customer. Step 4: File the Billing Statement copies in the Customer's File and the Numeric Billing Statement File. Remember: Bill customers on a monthly basis. Billing Statement - Instructions 1) Date - Enter the date you are prepar- ing the bill. 2) Account Number - Enter the name of the account. (Water/Sewer, Cable TV, Fuel) 3) Customer Name & Address - Enter the name and address of the customer. This information is obtained from the Customer Ledger Card. 4) Date - Enter the date you are prepar- ing the bill. 5) Charges and Credits - Description of what the billing is for. (August Cable TV, September Water/Sewer, Septem- ber Fuel) 6) Amount - Enter the amount of the charges described in #5. Refer to the Sample Billing Statement on the next page. - 216 - Your clty's name and address STATEMEN T DATE @ NUMBER @ Prease Detacn ano ReTuRN wit Your RemITTANce CHARGES AND CREDITS BALANCE FORWARD > © a S Phau You "as se ae A Three-part carbonless Billing Statement - 217 - Appendix A FILING SYSTEM TABLE OF CONTENTS Appendix A FILING SYSTEM Page aT QUITS saceccncsssesesscsessecececsesccatenrensnceesateeaceneseeeeceee ee RT TTR TTR Ta 263 ila lic orrrigttiomeccsssssessssrcnecscensssscszccencenacecscenesneset cremate aectete area eaten TeeaTTes 266 Great Film lecccscecsessresctecrrctrerersecmscercnensccccescee snes oat are 266 Fillings by Frtes@all Y O80 <<c.c-2..c-<sceo-ccscscsessaseveesesnsucceces-sesedocsesuseustescesestevensesereeee 266 File Degertption By il yp jss.c.<00-000-02s-cencaassvsevess soc nonsccnsccasatasssovaccscsasscsateteoato 267 Contractual Agreements..... wae? Revenue Files ............... 0 267 Customer Files .. .268 Customer billing statement file... .268 Customer ledger card ............. + 268 Posting file oe -.-- 268 NONE E OS ere erreeeeee eee eee cee ereatcteeteteeteretiente steers 269 XDOMSS ie lOS ecsrccsersssressterrtcecrcstees eee te tieee ceteceeccereecocepeterercecsesee ete 269 Employee Payroll Files 0.0.0... cceessseceseeeececceesceceeeseeeesceeeeeececeseseasees 269 Bookk@epigg!rilas esses. cerectscerctrcscsreccnseactececcaccecsecerercaceceseranctecss 270 RETIKGRILGS rececseececseresecece-sececcerect reesecceceenceessncsescezasccesuserszaszsccczssasses 270 Budget Detail Sheets oe eccecccssssseeesseesesesaeeeeeeneeeeceneeeseneeaees 270 Monthly Financial Statement Files «00... eee seeceeeeneeeeeeeeseseneeeees 270 Gee icgett} Fil GS weeceseeeeserecseeecenscsssssecncnettactecess cette teeta :270 e@deral' Payroll Tax Files. ccccc.c.cccicceccccscoscseccocecsconccesescsersessascesesesocue 270 Employment Security Tax File oo... eee ceeeeceseeeseeetseeeseeeeseeeeceeeees 270 Worker's Compensation Files ....... ieee eeeseseceseecerseeeeeereeseesseeeees 271 INSU FANG) Riles etessrrcetccceecesetcesstecceeecceesceceeeescncectareeccceserersresecsese 271 Payroll R@GOrdS Fi@S tere crececeeecc-cteeecees cones ccsescccesccecsostcnsersacsserotoese 271 INUM@rIC GHEGK FHGS recce-ceccescccceac-seeceececeaoccacossssosnseocsbasseaesassscnaoeste 271 Numeric Purchase Order File ............eeescsssesseseseseseeesssesceesesceeeeenee 271 Numeric Billing Statement File oo... ee eeseeeseseeeeenseeneesesenensesees 271 Correspondence File 0.0... eeeseseceeceeeesesecssecsesesseesesssssceseneeeeentenses 271 GAM FUOS sc.cccccSs-ccessececescececeoceesecesoucassaonassesseeccsecceceesaveresescccersacccosaesest 271 Open & ClOSGd............-.-..-...-.-s0ce-e-aceonceocornsnscscseuosescsssensasnseoscsnends 271 S@MINGIW Pi Gran; ROS seeccressecsccoccccessscctoccsctsssscecescscessesescscesnetestesees 271 Retention Schedule for Files .....csscescssesessessesssesesssccecneescesccsessnucceseceeneees eet 272 - 262 - TERMS USED IN THIS SECTION The following terms are used in this appendix. If you find other terms that you don’t understand check with the central glossary beginning on page 1. ACCO Fasteners - Metal prongs used to attach loose paper to a file folder. Accounts Receivable - Money owed to the city that is expected to be col- lected in the future. Chart of Accounts - A series of numbers that classify expenses and rev- enues. The Chart of Accounts is used to organize financial transactions into meaningful records. Closed files - Files that are not active and information is no longer placed in the file. Contractual Agreement - An agreement between two or more parties that is usually written and entorceaole by law. Correspondence - Communication by letter. Customer Files - Customer Files contain the billing statements. The cus- tomer files are set uo alphabetically. Customer Ledger Cards - Customer Ledger Cards keep track of each customer's account. The Customer Ledger Card is an on-going account of customer charges, payments made, and balance due. Filing system - A method and procedure for setting up and maintaining - records. Fiscai year - A specific twelve month period the city budgets and prepares the annual financial reports. Grant Agreement - An agreement between an organization providing grant money and the recipient of the money. The agreement is a contract to pro- vide money based on the condition that certain actions be taken by recipient. Hanging files - File designed to hold multiple manila files. Hanging file is designed to hang from metal frame in the file drawer. Invoice - A bill for goods that lists the goods shipped. Invoicing is the act of billing for goods shipped. - 263 - TERMS USED IN THIS SECTION (continued) Manila file - File folder of heavy stock paper. Monthly Vendor Statement - Monthly statement from the vendors servicing the city showing current charges, payments and balance owed. Municipal Assistance - State program of funding of local governments. Open files - Files that are active and information continues to be placed in the file. Payment Vouchers - Written authorizations to issue checks (authorized check requests). Personai Property - Propeny, other than real propery, such as merchan- dise, machinery and equipment. furniture and fixtures, and other property that is not attached to the land. Personnel Files - Files containing information required by law on each em- ployee. These files are organized by employee name and Social Security number. - Personne! Payroil Files - Payroll information for each employee. These files are organized by employee name and Social Security number. Posting File - The Posting File keeps the Customer Ledger Cards organized in a card file, usually a steel desktop file box with alphabetical index guides. Purchase Agreements - Contract to purchase goods or services from a vendor. (See Contractual Agreement.) Purchase Order - An order and authorization to purchase goods or services. Purchase order is the first step in the purchasing of items or services and is the source document for checks written to vendors. Real Property - Land, buildings, and other permanent structures located on the land. Retention Schedule - Instructions on what files to keep and for what period of time Sales tax - Tax levied by cities based on a percentage of total sales occurring within the city. - 264 - TERMS USED IN THIS SECTION (continued) Sales Tax Delinquent Notice - Notice to local merchants that the sales tax revenues they are to collect and give to the city is past due. Sales Tax Report - Record of sales tax receipts. Report presented to the ci council hy the Mayor or Manager. Service Contracts - Contract with a vendor to provide services to the city. State Revenue Sharing - State funding program for communities. Program provides money to cities based on population and municipal powers as- sumed. Vendor - Seller of goods or services. W-4 Form - IRS tax form used to declare an employee's tax status and with- holding allowances. A W-4 form must be on file for every employee of the city. - 265 - AppendixA FILING SYSTEM A filing system organizes documents, accounting records, and other written information in an orderly manner so you can find them easily and quickly. You should be able to get information easily from the files. For move information on filing, read the Local Government Hang- Dook, Administration of Local Govern- ment, Chapter 2, Section 1. Set uo files using Manila File folders to nold cccuments. These folders are then slaced in Hanging File folders: Hanging File: Each file should have a nanging file that fits into the file drawer. Type the name of the file on the tab. The nanging folder holds the file and is used year after year. SSE chee ccchecakhbacde Manila File: Manila file folders (legal size) hold filed documents or other information; type the name of the file on the label. The file name is the same as the hanging folder; make sure the Fiscal Year is on the label. Use ACCO Fasteners to attach docu- ments to the file folders. GRANT FILES: Grant files are considered “open” or “closed”. An open grant file is active. A closed grant file is a completed grant an no longer active. Ifa grant file closes during a fiscal year, keep it with the rest of the open grant files for that year. Store it with the closed grant files at the end of the fiscal year. "FILING BY. FISCAL. YEAR® File folders, except permanent file folders, by Fiscal Year. Keep files for the current fiscal year in the metal filing cabinet drawers. Files for prior fiscal years are stored in cardboard filing boxes and placed in a safe place. - 266 - | FILE. DESCRIPTION BY TYPE: Group files by type in alphabetical! order. Keep the following groups of files: i Contractual Agreements There are two types of contracwual acree- ments: 1. Contracts that cause an expense to the city; 2. Contracts that generate revenue for the city. Contracts causing an expense are iiled in the Vendor Files. Contracts that provide revenue are filed in the Revenue Files. Each contractual agreement should have a separate file and be filed alphabetically. (NOTE: Keep a masier file of the >) | original contract documents in a | fire safe location and a photocopy Revenue Files Revenue files are arranged by revenue categories from the Chart of Accounts. Note the Chart of Account’s number (Revenue Object Code) on the file label. Keep ail information about that revenue in the file. Keep acopy of checks received in the files, arranged by date received. If you get revenue from more than one source in the overail revenue catego file the information alphabetically by source in a hanging file for the rever category. For example; the city gets revenue from Health Clinic and Post Office rental. The Health Clinic infor tion is in a file before the file for Post Office rental in the hanging file for Bi ing Rentai (#906). Here’s a list of revenue files: Building Rental Agreements: Inf tion on rentals of city buildings or Use a separate file for each rentz source. Equipment Rental: Use one han: file for all equipment rentals and: rate manila files jor each piece o: equipment rented out. Sales Tax Revenues: Use a sepz file for each business paying sale File copies of sales tax repons, F¢ ment vouchers, delinquent notice and any information related to sa tax from that business. Municipal Assistance: Keep cc of checks and correspondence ir file. State Revenue Sharing: Keep: of the application, checks, deterr tion letters, important reporting d and correspondence in this file. - 267 - ;Customer Files | Set up customer files for Water/Sewer, Cable, or any other business you bill customers for and may have unpaid amounts to be collected (accounts receiv- aple). “Accounts receivable” is money owed the city for goods sold on credit. Label a hanging file for each customer; xeep Maniia files alphabetically by cus- tomer name inside the hanging file. Set up customer files alphabeticaily with: Customer billing statement file. Customer ledger card. Posting File. Customer billing statement file: Use a sepereie file cabinet drawer for Cus- icimart Files. Set up individual files for each customer. File a copy of eacn month's Billing Statement and any corresoondence relating to the ac- count (past due notices). Customer Billing Statement Files (Alphabetically by Name) - 268 - Customer ledger card: A Customer Ledger Card is the record for each credit customer. It shows the amou owed for purchases on credit. The Customer Ledger Card is a record c the customer's account. The Cus- tomer Ledger Card has the following information: A. customer's name and mailing address; . account name (water/sewer, cable, fuel); . date of billing statements; . date of payments made; . amount of charges and payment and, unpaid balance of the customer's account. mogd wo mu Posting File: The Posting File keet the Customer Ledger Caras organized in acard file, usually a steel desktor file box with alphabetical index guid NOTE: Billing Statements, Custom: Ledger Cards, and Posting Files are commercially available. A Vendor is one who seils. Vendor Files keep information about individuals or companies you buy things from. The files have the name of the vendor (seller) typed on the Manila file and they're placed in the hanging file alphabetically. Each Vendor File has copies of checks wnitten to that vendor, the Check Request, In- voices, and other related documents. The documents in the Vendor File that relate to a purchase should be attached to the check in the following order: 1. Check copy. 2. Check request. 3. Invoices, monthly vendor state- ments and other cocuments subD- stantiating the payments. 4. Purchase Order ccpy. Set un a file for each vendor getting more than one payment during the year. Usea - file folder labeled “Miscellaneous Vendors” for vendors that get only one payment during the year. This is the only time more than one vendor is filed in one file. Expense Files Set up a file for each contract or agree ment the city enters into that requires « payments. These include: Loan Agreements Purchase Agreements Service Contracts Employee Payroll Files Set up a Payroll File for each employe This is different from an employee’s Personnel File with confidential inform: tion. The employee’s Payroll File is us to write payroil. The empioyee’s name on the hanging file and the Manila file folder. Use ACCO fasteners on both sides of the Manila folder. The left sid has the permanent information, such é the most current W-4 Form, pay rate authorization, and other relevant payrc information. The right side has a copy each payroll check with the time card attached and authorized Leave Slips. up a new file for each fiscal year. Put permanent information in the new file. - 269 - Bookkeeping Files Keep bookkeeping files in the bookkeeper's desk. These files have information important to the day to day transactions the bookkeeper hancles: 1. Bank Files: “ Bank Reconciliation Files contain completed bank recon- ciliations with the monthly Bank Statement attached and are filed by month. =» Cancelled Check Files contain cancelled checks in numerical order. = Bank Deposit files contain Deposit Slips in chronological order. 2. Oeparment Budget Detaii Sheets: Use a separate file for each department's Budget Detail Sheets, arranged by month. 3. Monthly Financial Statement Files: File the Monthly Financial State- ments reported to the council by month. 4. Budget Files: File the approved Budget, budget worksheets, budget amendments, and other information about the Budget. 5. Eederal Payroil Tax File: Keep copies of Federal deposits. includ- ing federal tax deposit worksheets, copies of quarterly repors (Form 941 or 941E), copies of IRS notices about federal payroll taxes, letters from or to the IRS about payroll taxes, and copies of all checks paying taxes. Use one hanging file - 270 - labeled “Federal Payroll Tax File” and two Manila file folders: “IRS” File includes; = Copies of IRS notices, check copies for payments or receipt copies for refunds = Copies of correspondence with the IRS. “941”, or “O41E” File includes; => Quarterly report form (941E) or (941). = Copies of checks and fed- eral tax deposit worksheets with the Form 941E or 941 they support. loymen rity Tax File: Keep copies of ESD (Employment Security Division) rate determinatic- notices, quarterly reports, checks with quartery ESC (Employment Security Contribution) report worksheet attached, notices from the ESD, and correspondence. Use a hanging file labeled “Employmen Security Tax File” with two Manila file folders. One, is “ESD” file containing: s® Copies of ESD rate determ'- nation notices, copies of ESD notices, check copies (for payments), or receipt copies (for refunds), and m=» Copies of correspondence. Two, is “ESC” file containing: p> Quanery ESC reports, an me Check copies for payor made and ESC quarterly report worksheets attached to the quarterly ESC repor they support. ts 11, Ww. : nsation Files: Hold the Workers’ Compensation Insurance policy, check copies for payments, check requests, pay- ment notices, copies of reports filed, and correspondence. Insurance files: Keep the liability insu-ance pulicy, check copies for payments, Check Requests, pay- ment notices, copies of repons filed, and correspondence. Payroll Records Files: Keep the W4's, copies of individual Pay Records, and time cards. File alphabetically by last name. Use a separate file for Payroll Journai sheets. Numeric Check File: Holds second copy of the three part check; filed by month. This is usually a Post Binder. Numeric Purchase Order File: Keeps the third copy of P.O.s in file arranged by form number. This file ensures that all P.O.s can be ac- counted for and no unauthonzed P.O.s have been issued. 12. ric Billin nt File: Holds the third copy of the three part Billing Statement. The file i used to account for ail Billing Sti ments and make sure that unau rized billing of customers has nc occurred. 777-7 n--------- | NOTE: Set up new files at the | beginning of every fiscal year. Correspondence Files Keep correspondence filed in the indi- vidual files and in a Correspondence F by month. For example: file a letter to IRS in the Federal Payroll Tax File anc copy in the Correspondence File. There are two categories of Grant File: open and closed. Open files (active grant files) are grants where work remains to satis the grant agreement or payments fi the Grantor have not been receivec Closed files (inactive grant files) a grants that are completed with final payments received and final close-: reports done. Note: if a grantis closed during a fiscal year, keep it' the rest of the files until the end oft year. At the end of the year, store with the closed grant files. Setting up Grant Files: Use a separate file folder for each grar Use a legal (8 1/2 X 14 inch) multi-pag + 271 - folder and ACCO fasteners. File the Grant Agreement and amendments on the first leat labelled “Contracts and Amend- ments." File correspondence on the second leaf labelled “Correspondence.” File grant receipts, budgets, bids and supporting documents on the third leaf labelled “Supporting Documents.” File invoices requesting grant payments to the city, grant worksheets, and monthly finan- cial reports on the fourth leaf labelled “Warrant Requests”. Supporting Contracts and Documents Amendments Warrant Correspondence Requests — [<1 | polg of! Fes Use a separate section in the file drawer for each grant; file the lega multi-file first. Use a separate section for Vendor Files, filed behind the grant multi-file. Set up the Vendor Files the same. y as the General Fund’s Vendor Files (described earlier). Use the last file for payments from ¢« Grant Fund to other Funds, check copies and Check Request forms. RETENTION: oo FOR: FILES: The Alaska State Archives has a book titled “Alaska Local Government General Records Retention Schedules.” We" - copied some information relating to fin 1 cial records from this booklet and pre- sented it on the next few pages. A retention schedule identifies how long records should be kept. To find how! 1 to keep files and records examine the tables that follow. For example, to find ‘Audit Reports’, (A-3 look under section “A, Accounting and Finance”, and under that section find “Audit Reports”, look across and there !s “P” to indicate that audit reports are pt manent files. The legend provides information on th contents of the booklet as weil as ho long to retain the documents. - 272 - - £22 - GENERAL RETENTION SCHEDULE FOR LOCAL GOVERNMENT CENTRAL ADMINISTRATION: FINANCE AND ACCOUNTING FUNCTIONS SCHEDULE A PAGE 1 of 5 Item] Series Title & Description A-l A-7 Annual Final Operation & Capital Budget Official plan and policy for the expenditure of funds approved by the governing body. Buugel Workpapers Includes drafts, instructions, worksheets, preliminary budgets, and agency requests. Annual Estimates of Revenue General review of anticipated funds available used in budget preparation. Annual Financial Repors Repon prepared by the Chief Fiscal Officer summarizing financial condition, aclivily, and balances. Audit Repons Repons prepared eilher by external or internal sources showing results and recommendations. Books of Original Entry General ledger/journal, revenue ledger/ journal, expendilure ledger/journal. Subsidiary Ledgers and Journals Accounts receivable, accounts payable, daily cash receints cash disbursements. Retention Period Oftice Storage Total P Nemarks - 9lZ- GENERAL RETENTION SCHEDULE FOR LOCAL GOVERNMENT CENTRAL ADMINISTRATION: FINANCE AND ACCOUNTING FUNCTIONS SCHEDULE A (continued) PAGE 2 of 5 . , _ Retention Period ltem | Series Title & Description : Remarks Office Storage Total A-8 |Receipls Official documentation of payment for goods or services, tines, lees, and permits. A-9 |Banking Records Bank statements, cancelled checks, check stubs or copies, deposit slips, check registers, and reconciliation worksheets. A-10 |Bond and Coupon Register Numeric listing of bonds and coupons. A-11 |Cancelled Bonds and Coupons Proof of issuance and payments to individual bondholders. A-12 |Bond Sale Records and Transcripts A-13 |Bills of Sale Olficial documentation of transaction belween government agency and buyers. A-14 |Vouchers Olticial authorization to pay a claim or bill. A-15 |Paid Bills and Invoices A-16 |Travel Requests and Vouchers Offigial doct lation of travel requests 1 au AliOvs, avd CO v fein ime =IS22 = GENERAL RETENTION SCHEDULE FOR LOCAL GOVERNMENT CENTRAL ADMINISTRATION: FINANCE AND ACCOUNTING FUNCTIONS SCHEDULE A (continued) PAGE 3 of 5 Series Title & Description Savings Account Records Passbooks, statements, and reconciliations. Monthly or Quarterly Financial Management Reports Contract Files Official documentation of selection of contractor and issuance of the contract. May include requests for proposals wilh allidavils of publication, evaluation ol responses, nolices of award, contract negoliations, original signed contracts, correspondence, and payment records. Responses to RFPs (not selected) Grant Files Official documentation for receipt of grant lunds trom either State or Federal agencies. Should include grant applications, budgets, project narralive, plans of work, progress reports, records of matching or inkind contributions, and correspondence. Individual contents will depend on regulations of source agency. A-22 | Grant Application (not successtul) Retention Period Storage Total 7 Remarks T = expiration of contract and final payment. A = audit Total retention time may depend on regulations of source agency. - 9l¢ - ns jaa GENERAL RETENTION SCHEDULE FOR LOCAL GOVERNMENT CENTRAL ADMINISTRATION: FINANCE AND ACCOUNTING FUNCTIONS SCHEDULE A (continued) PAGE 4 of 5 oo a Retention Period ltem | Series Title & Description = Remarks Office Storage Total A-23 | Financial Suppon Records for Contracts A A = completion of source agency audit. and Grants: May include workpapers, spreadsheets, Summaries, and other data reflecting the expenditure of contract or grant funds. A-24 | Employee Withholding Exemptions (W-4) 4 A-25 | Employer Copy of W-2 (Federal Wilhholding 4 Tax Stalement) A-25 | Payroll Policies and Procedures i A-26 | Records of Allachments, Garnishments, or T+7 T = satisfaction or termination of Levies against salaries or wages. employment. A-27 | Timesheets or Timecards 3 Relain 3 years only il kept as a separate Daily, weekly, or monthly record of time, series. including overtime. A-28 | Employee Earnings Record 50 Shows gross earnings, deductions, and net pay to each employee. A-29 | Payroll Deduction Authorization and Lists 7 A-30 | FICA and Unemployment Insurance Repons 4 A-31 | Savings Bond Accounting Records 50 -LlZ- GENERAL RETENTION SCHEDULE FOR LOCAL GOVERNMENT CENTRAL ADMINISTRATION: FINANCE AND ACCOUNTING FUNCTIONS SCHEDULE A (continued) PAGE 5 of 5 Series Title & Description Retention Period Payroll Warrant Register Shows check number, employee name, net amount, and cost center coding. A-33 | Individual Payroll Case Files Documents related to the employees salary, may include payroll action forms, PERS/TRS/SBS enrollment and transaction forms, etc. A-34 | Billing Statements Statements for services or taxes due. Fund Investment Records Includes buy/sell orders, contirmations, salekeeping advices, and ledgers. Storage Aemarks T = termination of employment. Noies - 278 - 8/24/2001 8/24/2001 8/24/2001 10) | 12) 15) aes 19 22 8/24/2001 4 8/24/2001 5 8/24/2001 6 8/24/2001 7 8/24/2001 8 8/24/2001 9) 8/24/2001 10 8/24/2001 11 8/24/2001 SAM PLE ORDINANCE NO. 86-1 AN ORDINANCE CHAPTER 1, PUBLIC UTILITIES BE IT HEREBY ORDAINED BY THE COUNCIL OF THE CITY OF DIOMEDE, ALASKA. CHAPTER 1: PUBLIC UTILITIES 1.01.001 Council Powers. The Council reserves itself the power and authority to approve or disapprove by ordinance all budgets, rates and the acquisition or disposal of real property. 1.01.002 Diomede ‘Joint Utilitv Board. There is hereby created the Diomede Joint Utility Board to manage and operate all utilities owned by the City of Diomede in accordance with the provisions of this Chapter. 1.01.003 Powers and Duties. The Board shall: (a) Appoint a manager of the public utilities for a term not exceeding one (1) year, and set his salary; (b) Prepare and submit to the Council annual budgets, and make recommend- ations thereon for the efficient and economical operation of the system; (c) Formulate and enforce the general rules and policies of the public utilities, and generally have full and complete surveillance of all the systems and their operations and fiscal affairs, including the maintenance, operation, expansion, extension and improvement of the public utilities; and (d) Study and make recommendations generally on public utility matters such as, but not limited to, rates, fiscal matters, personnel staffing, labor relations, expansion or extension of services, and public relations. 1.01.004 Membership, Qualifications, Term and Vacancies. (a) The board shall consist of five (5) members. Each seat on the board is a separate office and shall be designated as A, B, C, D, and E. Candidates for the board shall file for a particular office or seat, which shall be stated in the declaration of candidacy. The term of office of those members of the board holding seats A and B shall be two (2) years, and the terms of office of those members of the board holding seats C, D, and E shall be three (3) years. At the first expiration of a term of a memoer of the board in office on the effective date of this chapter, a member shall be elected for seat A; at the second such expiration, a member shall be elected for seat B: at the third such expiration a member shall be elected for seat C; at the fourth such expiration, a member shall be elected for seat D; at the fifth such expiration, a member shall be elected for seat E. It is the intention of this section that upon the first expiration of the term of the member elected for seat A, and in each year thereafter, two members shall be elected to the board, one for a term of three (3) years, and one for a term of two (2) years. (b) Any city voter is eligible to hold the office of Board member. A Board member who ceases to be eligible to be a city voter immediately forefeits his office. (c) Board members shall be elected at large and qualified in the same manner as prescribed for members of the Council. Elections shall be held on the first Tuesday on October, and the regular term of office shall begin on the first Thursday following the election. (1) (d) (e) (£) 1.01.005 Before taking office, Board members shall take the oath of office as required by members of the Council, and shall affirm in writing that they will honestly, faithfully and impartially perform their duties. The oath shall be filed with the City Clerk. The remaining Board shall declare a vacancy on the Board when a person elected: (i) Fails to qualify or take office with in thirty days after his election or appointment; (ii) Is physically absent from the City for a niney day period, unless excused by the Board; (iii) Resigns and his resignation is accepted; (iv) Is physically or mentally unable to perform the duties of his office; (v) Is removed from office; (vi) Misses three consecutive regular meetings unless excused by the . Board; or (vii) Is convicted of a felony or of an offense involving a violation of his oath of office. Vacancies shall be filled by the Mayor with approval of a majority of the Council and from names recommended by the Board. Such appointments shall continue for the unexpired term and until a successor is elected and has qualified. Compensation. Each member of the Board shall receive compensation in amount of Thirty Dollars ($30.00) per monthly meeting, special meetings will not be compensated of this ($30.00). Such compensation shall be paid from the general fund of the Diomede Joint Utilities. 1.01.006 (a) (d) (c) Meetings. A majority of the membership of the Board shall constitute a quorum for the transaction of all business, and the chaizman of the Board shall have a vote on all matters. The affinmative vote of a majority of the Board shall be sufficient to pass upon all matters coming before it. The Board shall choose a chairman, vice-chairman, and secretary in accord- ance with rules of procedure passed and promulgated by the Board. The Board shall meet at least once each month at a regulary scheduled time and place within the City.All meetings of the Board shall be open to the public. The secretary shall draft the minutes of all reqular and special meetings in a manner accurately reflecting the actions of the Board, and shall file the minutes permanently as public records. 1.091.007 Powers and Duties of Utilities Manager. The utility manager is a chief administrative officer. The utility manager shall: (a) (b) (c) (d) (e) (f) (g) Manage and operate all public utilities; Appoint, hire, promote, layoff, suspend, demote or remove all employces of the public utilites; Prepare the annual budget and capital improvement program for review by the Board prior to submission to the Council; Administer the budget and capital improvement program as enacted by the Councils Prepare and submit to the Council at the end of each fiscal year a report on the finances and administrative activities of the public utilities; and prepare and make available for public distribution an annual report on public utilities affairs; Enforce the ordinances and regulations pertaining to the policies and practices of the public utilities; and Assume such other authority and perform such other duties as may be law- fully prescribed by the Board. 1.01.008 (a) Fost Audit and Bondinc. Yhe Board shall provide for an annual independent audit of the accounts aa financial transations of the public utilities. The audit shall be performed by a public accountant who has no personal interest, direct or indirect, in the fiscal affairs of the municipality. Copies of the audit shall be available to the public upon request. 1.901.009 Separation of Funds. (a) (b) (c) 1.01.010 (a) (b) 1.01.011 (a) (b) (c) All public utilities owned by the City and managed by the Board shall be operated from a fund or funds separate from the general fund of the city. Separate books, records and accounts shall be maintained by the Board to reflect the financial conditions of these public utilities, their income, their expenses and the status of their bond redemption funds. None of the income, money or proverty of the Diomede Joint Utilities shall be placed in the general fund of the City or be used for the benefit of anything outside of the fund to which it belongs without due compensation or due value received in return. The City of Diomede shall pay for the use of Utilities services at the rate set for such utilities services. Rules and Requlations. The Board shall promulgate rules and regulations consistent with this Chapter for the conduct of its meetings and for the orderly and efficient operation of the public utilities within its management control. The Board may establish rules and regulations imposing civil fines or penalties for violations, provided such rules and regulations are prom- ulgated in accordance with the procedures set forth in subsection (c). All proposed rules or regulations, including additions, delections, amendments and modifications of existing rules or regulations, shall be presented at a regularly scheduled meeting of the Board and approved or disapproved for public notice. Public notice shall be accomplished by timely publishing in a local newspaper of general circulation, a descrip- tive summary of the proposed rules or regulations, including the date and time of consideration for passage by the Board, and a statement that the full text of the proposed rules or regulations is available for public inspection at the office of the City Clerk. Penalties. Unless another penalty is expressly provided by ordinance or regulation, any person who violates any provision of this Chapter or any rule or regulation enacted pursuant to this Chapter, shall be subject to a civil penalty or not more than Five Hundred Dollars ($500.00) for each offense, or injunctive relief to restrain the person from continuing the violation or threat of violation, or both injunctive relief and a civil penalty. Upon application for injuctive relief and a finding that a person is violating or threating to violate any provision of this Chapter, the Superior Court shall grant injunctive relief to restrain the violation. Any person who willfully or knowingly violates any provision of this Chapter or any rule or regulation enacted pursuant to this Chapter shall be subject to a fine of not less than Fifty Dollars ($50.00) nor more than Five Hundred Dollars ($500.00) for each offense, or imprisonment for not more than thirty (30) days, or both. Each day of violation of any provision of this Chapter shall constitute a separate offense. (3) 1.02: UTILITY CUSTOMER SERVICE 1.02.001 Disconnection of Service. The Diomede Joint Utilities may disconnect the service and remove its meters, wires or other facilities for any of the following reasons: (a) I£ a utility bill or payment due pursuant to an agreement for the installation of facilities becomes delinquent; (0) I£ any part of the customer's electrical wires, lines, pipes, machinery or apparatus is determined by the Diomede Joint Utilities to be unsafe or hazardous, or contrary to the provisions of applicable construction, building, plumbing or electrical codes; (c) To prevent fraud or to prevent any other material violation of this Chapter; or (d) For any other reason for which disconnection is necessary to protect the best interests of the public utility, as may be prescribed by rules and regulations of the Board. 1.02.002 Billing and Payment. (a) Bills shall be mailed to each customer on an approximately monthly basis to the mailing address furnished by the customer, and shall be mailed at least twenty (20) days prior to the date the bill becomes delinquent, which date shall be shown on the bill. (b) Upon determination of a delinquency as provided above, the manager shall notify the delinquent customer that services shall be disconnected. Notice shall be given at least 48 hours prior to the discontinuance of service by placing written notice in a conspicuous location at the ent- vance of the building receiving said utility service. The cost of serving . notice shall be included in the account balance. The total amount due and cwing shall accrue interest at the rate of ten percent (10%) per annum or the maximum rate of interest provided by law, whichever is less, from the due date of collection of the account. 1.02.003 Deposits. (a) A person requesting a utility service requiring periodic billing toa premises may be required to deposit a sum of money not exceeding the . estimated sum of two months' billings for the utility service requested. If the estimated amount of the deposit exceeds Five Hundred Dollars . ($500.00), the person requesting the service may furnish an approved cash deposit. (bo) Interest shall be paid on said deposits at a rate of five percent (5%) per annum. (c) A deposit will not be required of, or if once required it will be re- funded to any person who: (i) Has had municipal utility services continuously for a period ot two (2) years; and (ii) The Diomede Joint Utilities has notfbeen forced to disconnect that customer's service for reasons of delinquency in payment of charges; and (d) A deposit shall be refunded to a customer or within twenty (20) days after the customer has ceased purchasing the utility service if the customer has paid all accured utility bills. (e) A utility deposit shall be made in the name of the customer. A deposit may not be transferred from one customer to another. (4) 1.02.004 (a) (b) (c) Payment of Assessments. No person may connect a storm sewer, sanitary sewer, water extension or other improvement from properties especially assessed for a public improvement to a mmicipal storm sewer, sanitary sewer main, water main or connection, or other utility improvement, unless all special assessment payments or payments in lieu of assessment, due or delinquent against the property from which the improvement is to be connected, have been paid prior to the connection. Special assessments, or payments in lieu of assessment, must be paid as required by this section even though the validity of the assessment or payment is contested, unless a court of competent jurisdiction has ruled that the assessment or payment in invalid. Payment as required by this section shall not be deemed to prejudice an other wise valid contest. . A lessee or user of federal, state of muunicipally owned or held property may not connect an improvement from that property to a municipal improve- ment unless such person pays an amount equal to the assessments or payment in lieu of assessment due or delinquent against that property, if the assessments or payments in lieu of assessment have been ledied or charged against the government owned property or to a lessee or user of the property. 1.033” ELECTRIC SERVICE 1.03.001 1.03.002 1.03.003 (a) (b) Rates, Fees, and Charges. Electric service will be provided only at the rates, fees and charges established by the tariff schedules provided in Chapter 1.03.002 below, unless another rate, fee or charges is provided by a special contract negotiated by the Board and approved by the Council by ordinance. Rules and Regulations. Customers accepting electric service thereby agree to abide by the rules and regulations established by the Board and by the requirements set forth in this Chapter, including alterations and amendments which may be made from time to time. Additional Conditions of Service. Electric service may be refused to any applicant who has not complied with pertinent national, state and local construction, building and safety codes, regulations and ordinances relating to the installation and maintenance of electrical wiring and equipment. Upon request the applicant or customer shall furnish to the utilities manager a certifi- cate of approval from the authority having jurisdiction to secuure com- pliance with the building and safety codes, regulations and ordinances prior to connection being made or electric service being furnished to the applicant or customer. The Diomede Joint Utilities may refuse or discontinue service to a premise if the installation has load characteristics that may cause excessive voltage fluctuations, loss of service or damage to the facilitie of the public utiliteis or other customers. The Diomede Joint Utilities may require as a condition of service that the customer install, at his own expense, equipment which will eliminate undesirable load character- istics, that include, but are not limited to, an unbalanced load between phases, unacceptable variations from the unity power factor, and unusual demand fluctuations produced by the customer's equipment. Installations of electric welders or motors larger than five horsepower must be coordin- ated with the utilities manager prior to installation. (5) (c) 1.03.004 (a) (b) (c) A properly identified employee of the public utility shall have access to the premises of a customer at all resonable times for the purpose of reading meters, testing or inspecting the customer's load and equipment. or installing, repairing, removing or exchanging equimment belonging to the public utility. In the event that a customer refuses such access to the premise, the utility manager may discontinue electric service. Prohibited Acts. It shall be unlawful for any person: To connect to, interefere with, or alter the connector, meter, seals or other municipal facilities used in connection with rendering electric service, or permit connection to, interference with, or alteration by any person other than an authorized agent or employee of the Diomede Joint Utilities. In addition to the penalties provided by law, any person engaging in any activities prohibited by this subsection shall pay for any damage to municipal property, caused or permitted directly or indirectly by that person; To cause the electrical system on any premises or facility. which is served by the Diomede Joint Utilities to be connected to anotner electrical system, except to standby power with has been installed to serve that premise or facility and is connected through a double throw switch suffic- ient to prevent backfeed into the municipal electrical system; To sell any of the electric energy furnished by The Diamede Joint Utilities unless the person holds a valid certificate of Public Convenience and Necessity issued by The Alaska Public Utilities Commission for retail distribution of electric energy, and has executed a contract with the Diomeae Joint Utilities, or is accepting service under a tariff schedule which specifically authorizes the resale of electricity, unless such service is being fuurnished unmetered to rental units where the cost of electrcity is included in the rental charge. (6) MONTHY METER READING SCHEDULE METERS SHOULD BE READ THE SAME DAY OF EACH MONTH (For example, April 1, May POWERHOUSE READINGS: Fuel Meter (Write the number that's on the meter) Total kWh Generated (# From Master Meter) Peak kW (Max. kw generated) | 1, June 1, July 1 METER READING DATE OF READING U Station Service (# is on a Separate Meter) Take the above readings first then go to each customer's meter, billed and unbilled, and take their meter readings. Read the meters of your customers in the same way and order every month. CUSTOMER METER READINGS: ACCOUNT NUMBER CUSTOMER NAME + METER READING | DATE OF READING LIL — = : L L L L 4 [ [ — WHEN FINISHED READING ALL THE METERS THIS SHEET SHOULD BE TAKEN TO THE UTILITY BILLING PERSON. THE ABOVE READINGS ARE NEEDED TO PREPARE THE MONTHLY BILLS. DATE: PAGE OF Alaska Energy Authority PCE Regulations 3 AAC 107. 200 - 207 Source: Alaska State Legislature Textual Infobases, http://www. legis.state.ak.us/folhome.htm POWER COST EQUALIZATION PROGRAM 3 AAC 107.200 TECHNICAL REQUIREMENTS; METERING. (a) An eligible electric utility shall install and maintain (1) operational equipment designed to meter power consumption of its utility customers, including community facilities and power stations; (2) a fuel meter on the day tank to record the amount of fuel used to generate electric power on a daily basis; (3) an appropriate master meter or totalizing meter and demand register to measure the electric power generated at the main bus-bar; and (4) a station service meter to measure the power consumed by the utility for lights and heat for the power plant. (b) No metering is required for street lights. (c) An electric utility that has technical or financial problems in implementing the metering requirements in (a) of this section may petition the authority for technical assistance. (d) The authority will, in its discretion, exempt an electric utility from the requirements of (a). of this section if the authority determines that compliance is not practicable. The exemption will remain in effect until the authority determines that the conditions for which it was granted no longer exist. (e) An electric utility owning or operating any new generating plant built or upgraded after October 28, 1989 is not eligible for the exemption in (d) of this section. (f) Failure to comply with (a) of this section or to secure an exemption under (d) of this section, means that non-metered electric utility customers, including community facilities, are not eligible to receive power cost equalization credits. History - Eff. 2/16/96, Register 137 Authority - AS 42.45.100 AS 42.45.110 AS 42.45.130 AS 44.83.080 3 AAC 107.210 OVERPAYMENTS. (a) The authority is entitled to reimbursement if an eligible electric utility, or its electric utility customers, have received power cost equalization payments to which they were not entitled. (b) Grounds for reimbursement include (1) an interim or permanent power cost equalization reduction ordered by the commission; (2) a reduction of power cost equalization resulting from an adjustment to fuel or other eligible costs ordered by the commission; (3) payment disbursed in error or based on an erroneous or undocumented monthly report. (c) An adjustment in the power cost equalization amount per kilowatt hour in (b)(1) and (b)(2) of this section is retroactive to the effective date of its determination by the commission. (d) The authority will recover any overpayment under this section by reducing the future power cost equalization payments to be disbursed or by demanding repayment from the participating utility, whichever method the authority determines is appropriate. History - Eff. 2/16/S6, Register 137 Authority - AS 42.45.100 AS 42.45.110 AS 42.45.160 AS 42.45.170 AS 44.83.080 3 AAC 107.220 POWER COST EQUALIZATION PRO-RATA REDUCTION. When power cost equalization payments paid to each electric utility are reduced on a pro rata basis as required by AS 42.45.110 (i), eligible electric utilities will implement the pro rata reduction effective with the comparable monthly report. An electric utility shall consult with the authority regarding implementation of the reduction. History - Eff. 2/16/96, Register 137 Authority - AS 42.45.100 AS 42.45.110 AS 42.45.160 AS 42.45.170 AS 44.83.080 3 AAC 107.230 EXCLUSIONS FROM POWER COST EQUALIZATION. (a) A customer whose facility has more than one meter will only receive power cost equalization credit for the master meter. (b) Power consumption measured by a station service meter required in 3 AAC 107.200 is not eligible for power cost equalization credit. History - Eff. 2/16/96, Register 137 Authority - AS 42.45.100 AS 42.45.110 AS 42.45.160 AS 42.45.170 AS 44.83.080 3 AAC 107.240 REPORTING AND RECORDKEEPING REQUIREMENTS. (a) An eligible electric utility shall submit a power cost equalization report to the authority within 10 working days after the end of its billing period. The report must set out the power consumption of the previous month and must be in the format required by the authority. Within each fiscal year an eligible electric utility shall submit 12 separate monthly reports. (b) Power cost equalization payments will not be made for power consumed through June 30 of a year if the relevant monthly report is received after August 31 of that year. (c) An eligible electric utility shall report separately, in the format required by the authority, the power eligible for power cost equalization that is consumed by each of its customers. (d) An eligible electric utility shall keep accurate periodic written records for the fuel day meters, generating meters, and station service meters required by 3 AAC 107.200 . (e) An eligible electric utility shall organize and maintain, in accordance with standard accounting practices, the accounts of its electric fund as a separate accounting entity in a self-balancing set of accounts that includes the assets, liabilities, balance, revenue, and expenses of the electric fund. (f) An eligible electric utility shall make its records available to the authority and the commission within 60 days after receipt of a request to do so. (g) Failure to comply with (f) of this section may result in (1) suspension by the authority of the power cost equalization disbursements to the eligible electric utility, until satisfactory records are provided; (2) loss of the suspended power cost equalization disbursements, if satisfactory records are not submitted by January 31 of the following fiscal year. History - Eff. 2/16/96, Register 137 Authority - AS 42.45.100 AS 42.45.110 AS 42.45.130 AS 42.45.160 AS 42.45.170 AS 44.83.080 3 AAC 107.250 POWER COST EQUALIZATION AND THE COMMISSION. (a) The authority and the commission have statutory responsibilities in furtherance of the power cost equalization program. (b) 3 AAC 107.200 - 3 AAC 107.270 should be read together with 3 AAC 52.600 - 3 AAC 52.690. History - Eff. 2/16/96, Register 137 Authority - AS 42.45.100 AS 42.45.110 AS 42.45.120 AS 42.45.130 AS 42.45.140 AS 42.45.150 AS 42.45.160 AS 42.45.170 AS 44.83.080 3 AAC 107.260 STANDARDS FOR CUSTOMER ELIGIBILITY. To receive a power cost equalization payment, a customer of an eligible electric utility (1) must be billed by the utility in accordance with the relevant tariff, rate structure, separate demand charge, or minimum charge; (2) shall make timely payments to the utility, for the electric power purchased, at least annually or on an appropriate schedule throughout the year, and in an amount equal to the required annual payment, if this practice is justified by the community's seasonal economy, the local utility rule, and the economic feasibility of the practice by the local utility; and (3) shall pay to the utility at least the applicable base amount determined by the commission under AS 42.45.110 and 3 AAC 52.160 , plus the difference between the utility rate and the amount of power cost equalization, for each kilowatt-hour consumed. History - Eff. 2/16/96, Register 137 Authority - AS 42.45.100 AS 42.45.110 AS 42.45.120 AS 42.45.130 AS 42.45.140 AS 42.45.150 AS 42.45.160 AS 42.45.170 AS 44.83.080 3 AAC 107.270 DEFINITIONS. (a) In 3 AAC 107.200 - 3 AAC 107.260 and in AS 42.45.110 - 42.45.170, unless the context requires otherwise, (1) "commission" means the Regulatory Commission of Alaska; (2) "customers" means (A) an eligible electric utility's residential customer of energy for a single-family or multi-family dwelling, or residential housing unit; (B) an eligible electric utility's commercial customer of energy for a business, school, or building other than the customers identifiedin (A), (C), and (D) of this paragraph (C) a community facility as defined in AS 42.45.150 ; (D) state or federal customers; (3) deleted; (4) "state or federal customer" means a state or federal office or facility other than public schools. (5) "authority" means the Alaska Energy Authority created in AS 44.83.020; (b) As used in AS 42.45.150 (1), "community building" means a community facility that (1) is not operated for profit; (2) is open to the general public; (3) complies with 3 AAC 107.260 (1); (4) makes timely payments to the utility for the electric power consumed; and (5) complies with 3 AAC 107.260 (3). History - Eff. 2/16/96, Register 137 Authority - AS 42.45.100 AS 42.45.110 AS 42.45.120 AS 42.45.130 AS 42.45.140 AS 42.45.150 AS 42.45.160 AS 42.45.170 AS 44.83.080 Regulatory Commission of Alaska PCE Regulations 3 AAC 52. 600 - 690 Source: Alaska State Legislature Textual Infobases, http:/Awww.legis.state.ak.us/folhome.htm 3 AAC 52.600 APPLICABILITY, PURPOSES, AND WAIVER. (a) The provisions of 3 AAC 52.600 - 3 AAC 52.690 apply to all electric utilities participating in the power cost equalization program established in AS 42.45.100 - 42.45.190. (b) The purposes of 3 AAC 52.600 - 3 AAC 52.690 are to establish criteria for the determination of power cost equalization per kilowatt-hour and to encourage economic and efficient practices by participating electric utilities. (c) For good cause shown, the commission will, in its discretion, waive all or any portion of 3 AAC 52.600 - 3 AAC 52.690 for a participating electric utility and establish appropriate criteria for that utility. History - Eff. 10/28/89, Register 112; am 5/18/96, Register 138 Authority - AS 42.05.141 AS 42.05.151 AS 42.45.110 AS 42.45.130 AS 42.45.160 AS 42.45.170 3 AAC 52.610 COMPUTATION OF POWER COST EQUALIZATION. (a) Power cost equalization per kilowatt-hour is determined separately for each rate schedule. (b) The power cost equalization per kilowatt-hour for each rate schedule is the least of (1) the average rate per kilowatt-hour for that rate schedule; (2) the amount equal to .95 x (52.5 - B) where B is the base amount set by the commission under (c) of this section; (3) the amount equal to .95 x (F + NF - A - B) where F is the total fuel cost per kilowatt-hour,; F is the total fuel cost per kilowatt-hour; NF is the total nonfuel cost per kilowatt-hour; and A is other assistance per kilowatt-hour that reduces a customer's rate on a kilowatt-hour basis and that is provided to the utility within 60 days before the commission determines the power cost equalization per kilowatt-hour; and B is the base amount established by order of the commission under (c) of this section. (c) During each fiscal year the commission will notify the public and each utility receiving power cost equalization of a proposed base amount per kilowatt- hour and the basis for that amount. Within 45 days after notice of the proposed base amount is issued, the commission will hold a public hearing to receive comments on the proposed base amount. Within 60 days after notice of the proposed base amount is issued, the commission will issue an order establishing the base amount. (d) In the case of all service provided under a flat kilowatt-hour rate structure and in the case of service provided under a declining block rate structure to a customer that is not a community facility, the average rate per kilowatt-hour is calculated by dividing the cost of the first 700 kilowatt-hours of service by 700 kilowatt-hours and subtracting the base amount established under (c) of this section from the result. In calculating the cost of the first 700 kilowatt- hours of service, all energy charges, including base rates, fuel surcharge rates, and customer charges, are included, but demand charges are not included. (e) In the case of all service provided under an inclining block rate structure and in the case of service provided under a declining block rate structure to a community facility, the average rate per kilowatt-hour is determined separately for each block of the declining or inclining block rate structure. For each block of service within each rate schedule, the average rate per kilowatt- hour is the total energy charges for each kilowatt-hour in that block (including both base rates and fuel surcharge rates but not including demand charges) minus the base amount established under (c) of this section. (f) For a regulated participating electric utility, the total fuel cost per kilowatt-hour is calculated in accordance with the fuel surcharge calculation for that utility, subject to adjustment if the utility does not achieve the generation efficiency and line loss standards set out in 3 AAC 52.620. (g) For a nonregulated participating electric utility, total fuel cost per kilowatt-hour is calculated by dividing total fuel cost by the number of kilowatt- hours sold, as follows: (1) total fuel cost is calculated by multiplying the price of fuel per gallon times the lesser of the (A) actual number of gallons consumed for electric generation; or (B) number of gallons that would have been consumed if the utility had achieved the line loss and generation efficiency standards set out in 3 AAC 52.620; (2) for a utility that does not have substantial inventory capacity, the price of fuel per gallon is the current invoiced price of fuel; for a utility that has substantial inventory capacity, the price of fuel per gallon is the most current weighted average cost of fuel; in either event, the price of fuel per gallon includes costs of delivery of the fuel to the utility; (3) in determining total fuel cost per kilowatt-hour, both the number of gallons consumed and the kilowatt-hours sold are based on a 12-month period ending no more than 30 days before the date that the utility requests a change in its power cost equalization per kilowaitt-hour; (4) in determining whether the utility achieved the generation efficiency and line loss standards set out in 3 AAC 52.620, the number of gallons consumed, the kilowatt-hours generated, and the kilowatt-hours sold are based on the same 12-month period used in (3) of this subsection. (h) Subject to the standards set out in 3 AAC 52.630, total nonfuel costs include all nonfuel costs, except return on equity, that regulated electric utilities are allowed to include in the revenue requirement recoverable from ratepayers. (i) In calculating the fuel and nonfuel costs per kilowatt-hour under this section, neither the costs nor kilowatt-hour sales associated with a United States Department of Defense facility are considered. History - Eff. 10/28/89, Register 112; am 5/18/96, Register 138 Authority - AS 42.05.141 AS 42.05.1541 AS 42.45.110 AS 42.45.130 AS 42.45.160 AS 42.45.170 3 AAC 52.620 GENERATION EFFICIENCY AND LINE LOSS STANDARDS. (a) Generation efficiency and line loss standards are established to encourage efficient and economical generation, transmission, and distribution of electricity. The standards represent the minimum acceptable level of performance by a participating electric utility. (b) For a participating electric utility that relies exclusively on diesel generation for all power requirements, an efficiency standard measured in kilowatt-hours sold per gallon consumed is established to incorporate both generation efficiency and line loss requirements. The efficiency standard applicable to a utility under this subsection is based on the size of the utility, measured in annual kilowatt-hours sold, and the date that the standard is applied, as set out in the chart below. MINIMUM EFFICIENCY STANDARDS FOR UTILITIES THAT RELY ON ALL-DIESEL GENERATION - MEASURED IN KILOWATT-HOURS (KWH) SOLD PER GALLON CONSUMED WITH CLASSIFICATION BY ANNUAL KWH SALES EB Less | 100,000 | 500,000] 1,000,000 | 10,000,000 FOE Than to to to and FG 100,000 | 499,999 | 999,999 | _ 9,999,999 More 7 to1/90 | 6.0 7.0 8.0 9.0 10.0 7 N 40/1/91 | 7.0 8.0 9.0 10.0 11.0 : : 10/1/93 | 8.0 9.0 10.0 11.0 12.0 (c) For a participating electric utility that does not rely exclusively on diesel generation for all power requirements, separate generation efficiency standards and line loss standards are established. The following generation efficiency standard applies only to the utility's diesel generation and is measured in kilowatt-hours generated per gallon of fuel consumed. The following line loss standard applies to all electricity sold and is measured as all kilowatt-hours generated or purchased (from whatever source) minus kilowatt-hours sold, divided by kilowatt-hours generated or purchased. (1) Beginning October 1, 1990, the line loss standard is 12 percent. (2) The efficiency standard applicable to a utility under this subsection is based on the annual number of kilowatt-hours of diesel generation and the date that the standard is applied, as set out in the chart below. MINIMUM EFFICIENCY STANDARDS FOR UTILITIES THAT DO NOT RELY ON ALL-DIESEL GENERATION - MEASURED IN KILOWATT-HOURS (KWH) SOLD PER GALLON CONSUMED WITH CLASSIFICATION BY ANNUAL KWH OF DIESEL GENERATION EB Less] 100,000 | 500,000] 1,000,000 | 10,000,000 FE Than to to to and FG 400,000 | 499,999 | 999,999 | 9,999,999 More E | © Ni 1090 | 65 7. 8.5 10 11 7 7 tonie1 | 7.5 85 10 1 12 VN EG 1093 | 8.5 10 11 12 13 (d) In determining the generation efficiency standard for a participating electric utility that provides service to two or more locations Sy separate generation, transmission, and distribution systems and that charges the same rates and relies exclusively on diesel generation for all locations, an average of kilowatt-hours sold will be used. That average is determined by dividing the total kilowatt-hour sales for all locations by the total number of locations. The generation efficiency standard that applies to a utility the size of that average is then applicable to the total system. The same methodology applies to a uniform rate, multi-location utility that does not rely on diesel generation for all power requirements at all locations, except that two separate averages are required, one average for those locations that do rely totally on diesel and one for those locations that do not. Separate computations for generation efficiency and line loss standards are also required for the latter group. (e) A utility that does not meter street lights shall estimate the kilowatt- hours used by unmetered street lights and add those kilowatt-hours to kilowatt- hours sold for the purpose of determining compliance with the generation efficiency and, if appropriate, line loss standards in this section. Nonetheless, actual kilowatt-hours sold shall continue to be used for the purpose of computing power cost equalization per kilowatt-hour. History - Eff. 10/28/89, Register 112 Authority - AS 42.05.1441 AS 42.05.1541 AS 42.45.110 AS 42.45.130 AS 42.45.160 AS 42.45.170 3 AAC 52.630 STANDARDS FOR NONFUEL COSTS. Nonfuel costs used in the calculation of power cost equalization per kilowatt-hour are subject to the following standards: (1) depreciation rates must be in accordance with the guidelines established by the Rural Electrification Administration that were in effect as of January 1, 1988, or, if different, the standards established by the commission; (2) depreciation expense is not allowed on plant funded with grants, contributions in aid of construction, or other nonutility money; and (3) major overhauls on equipment must be amortized over an appropriate period. History - Eff. 10/28/89, Register 112 Authority - AS 42.05.141 AS 42.05.151 AS 42.45.110 AS 42.45.130 AS 42.45.160 AS 42.45.170 3 AAC 52.640 ADJUSTMENTS TO POWER COST EQUALIZATION. (a) A regulated participating electric utility shall request a change in its power cost equalization per kilowatt-hour only in conjunction with a request for (1) approval of a fuel surcharge rate change; or (2) a permanent or interim rate change that establishes higher or lower nonfuel costs for the utility. (b) A nonregulated participating electric utility shall request a change in its power cost equalization per kilowatt-hour only if (1) the utility has experienced a change in its fuel or purchased power costs; or (2) a change in the utility's rates has resulted from an increase or decrease in the utility's nonfuel costs. (c) The commission will, in its discretion, adjust the power cost equalization per kilowatt-hour of a participating electric utility based on (1) a review by the commission or by the Department of Community and Regional Affairs of monthly data submitted by the utility to the Department of Community and Regional Affairs; (2) a review of the annual filing submitted by the utility; (3) any other evidence that the power cost equalization per kilowatt-hour of the utility is not just and reasonable; or (4) a determination by the Alaska Energy Authority that appropriations are insufficient to finance full payments to eligible electric utilities, in which case the power cost equalization per kilowatt-hour of each participating utility will be reduced by an equal percentage. (d) A regulated participating electric utility shall submit in support of each request for adjustment of its power cost equalization per kilowatt-hour (1) a tariff advice letter under 3 AAC 48.270; (2) tariff sheets that show the amount of power cost equalization per eligible kilowatt-hour requested; (3) a schedule showing the computation of the requested power cost equalization per kilowatt-hour for each rate schedule; (4) a summary of the data necessary for determination of the power cost equalization per kilowatt-hour; and (5) documentation of all data submitted under (4) of this subsection, except that in the case of a request for an adjustment of power cost equalization per kilowatt-hour that is in conjunction with a request for a fuel surcharge rate change, the utility shall rely on the nonfuel costs per kilowatt-hour established in its most recent general rate case. (e) A nonregulated participating electric utility shall submit in support of each request for an adjustment of its power cost equalization level (1) a written statement of the power cost equalization per kilowatt-hour requested and the name of the person responsible for providing information in support of the request; (2) a copy or summary of all effective rate schedules for each customer class, stating the current charges without power cost equalization; (3) a schedule showing the computation of the power cost equalization per kilowatt-hour for each rate schedule; (4) a summary of all data necessary for determination of power cost equalization per kilowatt-hour; and (5) documentation, including a copy of the most recent fuel bill, of all data submitted under (4) of this subsection, except that in the case of a request for an adjustment of power cost equalization per kilowatt-hour that is in conjunction with a change in fuel or purchased power costs only, the utility shall rely on the nonfuel power costs per kilowatt-hour established in the approval of its most recent power cost equalization change. (f) When a participating electric utility receives information regarding changes in fuel or purchased power costs that could result in a change in power cost equalization per kilowatt-hour, the utility shall promptly file that information with the commission. History - Eff. 10/28/89, Register 112; am 5/18/96, Register 138 Authority - AS 42.05.141 AS 42.05.1541 AS 42.45.110 AS 42.45.130 AS 42.45.160 AS 42.45.170 3 AAC 52.650 PROCESSING OF POWER COST EQUALIZATION REQUESTS. (a) Within 45 days after receipt of a request by a participating electric utility for an adjustment of its power cost equalization per kilowatt-hour, the commission will, in its discretion, approve the filing, modify and approve it, or suspend it for further action. (b) If the commission determines that a request for an adjustment of power cost equalization per kilowatt-hour should be suspended, the commission will, in its discretion, grant interim, refundable power cost equalization per kilowatt-hour. History - Eff. 10/28/89, Register 112 Authority - AS 42.05.141 AS 42.05.1541 AS 42.45.110 AS 42.45.130 AS 42.45.160 AS 42.45.170 3 AAC 52.660 ANNUAL FILING REQUIREMENTS. (a) In order for the commission to determine whether the power cost equalization per kilowatt-hour of a participating electric utility is just and reasonable, a utility shall annually file with the commission a report for review. (b) For a regulated participating electric utility, the report required by (a) of this section is the annual report required under AS 42.05.451(b). (c) For a nonregulated participating electric utility, the report required by (a) of this section must be filed on the date specified by the commission by order and include the following information: (1) a copy or summary of the effective rate schedule for each customer class, stating the current charges without power cost equalization and the amount of power cost equalization per kilowatt-hour that has been approved by the commission; (2) a computation of the power cost equalization per kilowatt-hour for the annual reporting period; (3) a summary of all data necessary for determination of power cost equalization per kilowatt-hour; (4) documentation to support the data submitted under (3) of this subsection; and (5) a list of each customer qualifying as a community facility. History - Eff. 10/28/89, Register 112 Authority - AS 42.05.141 AS 42.05.151 AS 42.45.110 AS 42.45.130 AS 42.45.160 AS 42.45.170 3 AAC 52.670 OTHER REQUIREMENTS. A participating electric utility shail (1) install and maintain adequate meters to measure kilowatt-hours of generation, fuel consumption, and energy consumption by all ratepayers as prescribed by 19 AAC 97.200; (2) make reasonable efforts to minimize administrative, operating, and overhead costs, including use of the best available technology consistent with sound utility management practices; (3) cooperate with appropriate state agencies to implement cost-effective energy conservation measures and to plan for and implement feasible alternatives to diesel generation; and (4) file a monthly report with the Alaska Energy Authority in accordance with the requirements of AS 42.45.110(h)(1) and 42.45.170(a)(2). History - Eff. 10/28/89, Register 112; am 5/18/96, Register 138 Authority - AS 42.05.1441 AS 42.05.151 AS 42.45.110 AS 42.45.130 AS 42.45.160 AS 42.45.170 3 AAC 52.680 EFFECT ON POWER COST EQUALIZATION FOR NONCOMPLIANCE. (a) If a participating electric utility fails to comply with any of the requirements of AS 42.45.100 - 42.45.190 or 3 AAC 52.600 - 3 AAC 52.670, the power cost equalization (PCE) of that utility becomes interim and refundable effective as of the initial date of the noncompliance. (b) If a nonregulated participating electric utility fails to notify the commission promptly after a change in fuel or purchased power cost, the PCE per kilowatt-hour of that utility becomes interim and refundable effective on the first day of the (1) month following the change if the change occurs during the first 15 days of a month; or (2) second month following the change if the change occurs after the first 15 days of a month. (c) If a participating electric utility fails to file its annual report when due, the PCE becomes interim and refundable on the date the annual report was due. (d) The PCE rate designated as interim and refundable under this section is subject to modification when a permanent PCE rate is approved by order of the commission. The modification will be made as follows: (1) if the permanent PCE rate is less than the interim and refundable PCE rate, the effective date for the permanent PCE rate is the date that the interim and refundable PCE rate was established_by the commission; the difference between the two rates will be recovered by the Alaska Energy Authority under the provisions of 3 AAC 103.210(d); (2) if the permanent PCE rate is greater than the interim and refundable PCE rate, the effective date for the permanent PCE rate is the date that the permanent PCE rate is established by the commission; the lower interim and refundable PCE rate will be made permanent for the period from the date that the interim and refundable PCE rate was established to the date that the higher permanent PCE rate is effective. History - Eff. 10/28/89, Register 112; am 5/18/96, Register 138 Authority - AS 42.05.1441 AS 42.05.1541 AS 42.45.110 AS 42.45.130 AS 42.45.160 AS 42.45.170 Editor's Notes - As of Register 151 (October 1999), the regulations attorney under AS 44.62.125(b)(6) made technical conforming amendments to 3 AAC 52.680(d)(1) to implement ch. 58, SLA 1999. 3 AAC 52.690 DEFINITIONS. Unless the context indicates otherwise, in 3 AAC 52.600 - 3 AAC 52.690 (1) "commission" means the Alaska Public Utilities Commission; (2) "community facility" means a facility determined by the Alaska Energy Authority to be a community facility as defined in AS 42.45.150(1) and 3 AAC 107.270(b); (3) "fuel surcharge" means a fuel cost rate adjustment, a cost-of-power adjustment, or any similar mechanism; (4) "kilowatt-hour sold" means all electric energy delivered by a utility to consumers and includes energy furnished by the utility to a consumer free of charge; (5) "nonregulated participating electric utility" means a utility that is exempt from the provisions of AS 42.05, except for the provisions of AS 42.05.221 - 42.05.281, or from all the provisions of AS 42.05; (6) "participating electric utility" means an eligible electric utility as defined in AS 42.45.150(2) that receives payments from the power cost equalization fund; (7) "regulated participating electric utility" means a utility as defined in AS 42.05.990(4)(A) that is subject to the provisions of AS 42.05; (8) "substantial inventory capacity" means fuel storage capacity exceeding 10 percent of annual usage. History - Eff. 10/28/89, Register 112; am 5/18/96, Register 138 Authority - AS 42.05.141 AS 42.05.151 AS 42.05.9980 AS 42.45.110 AS 42.45.130 AS 42.45.160 AS 42.45.170 10 Editor's Notes - For Department of Community and Regional Affairs' regulations regarding the power cost equalization program, see 3 AAC 107.200 - 3 AAC 107.270. As of Register 151 (October 1999), the regulations attorney under AS 44.62.125(b)(6) made technical conforming amendments to 3 AAC 52.690(3) to implement ch. 58, SLA 1999. 11 PCE Statutes AS 42. 45. 100 - 170 Source: Alaska State Legislature Textual Infobases, http://www.legis.state.ak.us/folhome.htm Sec. 42.45.100. Power cost equalization and rural electric capitalization fund. (a) The power cost equalization and rural electric capitalization fund is established as a separate fund for the purpose of (1) equalizing power cost per kilowatt-hour statewide at a cost close to or equal to the mean of the cost per kilowatt-hour in Anchorage, Fairbanks, and Juneau by paying money from the fund to eligible electric utilities in the state; and (2) to make grants to eligible utilities under AS 42.45.180 to improve the performance of the utility. (b) The fund shall be administered by the authority as a fund distinct from the other funds of the authority. The fund is composed of (1) money appropriated to provide power cost equalization to eligible electric utilities and to provide grants for utility improvements; (2) money appropriated from the National Petroleum Reserve - Alaska special revenue fund under AS 37.05.530 (g); (3) gifts, bequests, and contributions from other sources; and (4) interest earned on the fund balance. (c) The fund is not a dedicated fund. Sec. 42.45.110. Entitlement to power cost equalization. (a) The costs used to calculate the amount of power cost equalization for all electric utilities eligible under AS 42.45.100 - 42.45.150 include all allowable costs, except return on equity, used by the Regulatory Commission of Alaska to determine the revenue requirement for electric utilities subject to rate regulation under AS 42.05. The costs used in determining the power cost equalization per kilowatt-hour shall exclude any other type of assistance that reduces the customer's costs of power on a kilowatt-hour basis and that is provided to the electric utility within 60 days before the commission determines the power cost equalization per kilowatt-hour of the electric utility. In calculating power cost 1 equalization, the commission may not consider validated costs or kilowatt-hour sales associated with a United States Department of Defense facility. (b) An eligible electric utility is entitled to receive power cost equalization (1) for sales of power to local community facilities, calculated in the aggregate for each community served by the electric utility, for actual consumption of not more than 70 kilowatt-hours per month for each resident of the community; the number of community residents shall be determined under AS 29.60.020 ; and (2) for actual consumption of not more than 500 kilowatt-hours per month sold to each residential customer. (c) The amount of power cost equalization provided per kilowatt-hour under subsection (b) of this section may not exceed 95 percent of the power costs, or the average rate per eligible kilowatt-hour sold, whichever is less, as determined by the commission. However, (1) during the state fiscal year that began July 1, 1999, the power costs for which power cost equalization were paid to an electric utility were limited to minimum power costs of more than 12 cents per kilowatt-hour and less than 52.5 cents per kilowatt-hour; (2) during each following state fiscal year, the commission shall adjust the power costs for which power cost equalization may be paid to an electric utility based on the weighted average retail residential rate in Anchorage, Fairbanks, and Juneau; however, the commission may not adjust the power costs under this paragraph to reduce the amount below the lower limit set out in (1) of this subsection; and (3) the power cost equalization per kilowatt-hour may be determined for a utility without historical kilowatt-hour sales data by using kilowatt-hours generated. (d) An electric utility whose customers receive power cost equalization under AS 42.45.100 - 42.45.150 shall set out in its tariff the rates without the power cost equalization and the amount of power cost equalization per kilowatt-hour sold. The rate charged to the customer shall be the difference between the two amounts. Power cost equalization paid under AS 42.45.100 - 42.45.150 shall be used to reduce the cost of all power sold to local community facilities, in the aggregate, to the extent of 70 kilowatt-hours per month per resident of the community, and to reduce the cost of the first 500 kilowatt-hours per residential customer per month. (e) The power cost equalization program shall be administered by the authority based on a determination by the commission under (a) and (c) of this section of power cost equalization per kilowatt-hour for each eligible electric utility. (f) The authority may not deny an eligible electric utility power cost equalization because complete cost information is not available. The commission shall assist an eligible electric utility that is exempt from rate regulation under AS 42.05 to provide the cost information the commission considers necessary to comply with AS 42.45.100 - 42.45.150. Only power costs that are supportable may be considered in calculating power cost equalization. Each electric utility is responsible for keeping records that provide the information necessary to comply with AS 42.45.100 - 42.45.150 including records of monthly kilowatt-hour sales or generation, monthly fuel balances, fuel purchases, and monthly utility fuel consumption. (g) The commission shall determine the cost of fuel for each eligible electric utility using the procedure for approving fuel cost rate adjustments of electric utilities subject to rate regulation under AS 42.05. (h) Each electric utility receiving power cost equalization approved by the commission shall (1) report monthly to the authority within the time and in the form the authority requires; and (2) use operational equipment designed to meter individual utility customer power consumption and to determine and record the utility's overall fuel consumption. (i) The authority shall review the report required under (h) of this section. After review and approval of the report, the authority shall, subject to appropriation, pay to each eligible electric utility an amount equal to the power cost equalization per kilowatt-hour determined under (a) and (c) of this section, multiplied by the number of kilowatt-hours eligible for power cost equalization that were sold during the preceding month to all customers of the utility under (b) of this section. Payment shall be made by the authority within 30 days after receipt from the utility of the report required under (h) of this section. If appropriations that have been made for the purpose by July 1 of a fiscal year are insufficient for payment in full, the amount paid to each electric utility shall be reduced on a pro rata basis. In making the pro rata reductions required by this subsection, the authority may not consider any potential supplemental appropriation until the appropriation has been enacted. Sec. 42.45.120. Notice to customers. If an electric utility receives power cost equalization under AS 42.45.100 - 42.45.150, the utility shall either give to its electric service customers eligible under this program, for each period for which the payment is received, (1) the following notice: NOTICE TO CUSTOMER For the most recent monthly reporting period under the State of Alaska's power cost equalization program, this utility's actual fuel efficiency for your community was kilowatt-hours a gallon. The applicable fuel efficiency standard set out in regulations for the power cost equalization program is kilowatt-hours a gallon. For the current billing period, the utility will be paid under the State of Alaska's power cost equalization program (AS 42.45.100 ) to assist the utility and its customers in reducing the high cost of generation of electric energy. Your total electrical service cost §...... Less state equalization $...... Your charge §....; or (2) a notice approved by the authority that provides electric service customers the same information provided by the notice in (1) of this section. Sec. 42.45.130. Cost minimization. (a) In order to qualify for power cost equalization, each electric utility shall make every reasonable effort to minimize administrative, operating, and overhead costs, including using the best available technology consistent with sound utility management practices. In reviewing applications for power cost equalization, the commission may require the elimination of unnecessary operating expenses. Each eligible electric utility shall cooperate with appropriate state agencies to implement cost-effective energy conservation measures and to plan for and implement feasible alternatives to diesel generation. (b) In this section, "energy conservation measures" include weatherization and other insulating methods, utilization of waste heat, appropriate sizing of new generating equipment, and other programs of the state or federal government intended and available for energy conservation. Sec. 42.45.140. Customer petitions. If the authority receives a petition requesting power cost equalization, signed by at least 25 percent of the customers of an electric utility that is subject to rate regulation under AS 42.05 and that has not applied for power cost equalization 4 under AS 42.45.100 - 42.45.150, the authority shall require the utility to submit a power cost equalization application. Upon a determination of eligibility for power cost equalization, the utility, as a part of its service, shall receive power cost equalization and pass power cost equalization benefits to its customers under AS 42.45.100 - 42.45.150. Sec. 42.45.150. Definitions for AS 42.45.100 - 42.45.150. In AS 42.45.100 - 42.45.150, (1) "community facility" means a water and sewer facility, public outdoor lighting, charitable educational facility, or community building whose operations are not paid for by the state, the federal government, or private commercial interests; (2) "eligible electric utility" or “electric utility" means a public, cooperative, or other corporation, company, individual, or association of individuals, and includes the lessees, trustees, or receivers appointed by a court, that (A) owns, operates, manages, or controls a plant or system for the furnishing, by generation, transmission, or distribution, of electric service to the public for compensation; (B) during calendar year 1983, had a residential consumption level of power eligible for power cost equalization under former AS 44.83 of less than 7,500 megawatt hours or had a residential consumption level of power eligible for power cost equalization under former AS 44.83 of less than 15,000 megawatt hours if the utility served two or more municipalities or unincorporated communities; and (C) during calendar year 1984, used diesel fired generators to produce more than 75 percent of the electrical consumption of the utility; an electric utility that is a subsidiary of another electric utility is an "eligible electric utility" if the operations of the subsidiary, considered separately, meet the eligibility requirements of AS 42.45.100 - 42.45.150; if an electric utility did not receive power cost assistance in 1983 but is otherwise eligible for power cost equalization under AS 42.45.100 - 42.45.150, the utility is an "eligible electric utility”; (3) "power costs" means costs used in determining power cost equalization under AS 42.45.110 (a) and (c). Sec. 42.45.160. Adjustments to power cost equaiization. (a) The commission may adjust the power cost equalization per kilowatt-hour, determined under AS 42.45.100 - 42.45.150, payable to an electric utility that is subject to rate regulation under AS 42.05 if the 5 (1) commission has approved a fuel cost rate adjustment caused by an increase or decrease in the electric utility's cost of fuel; (2) commission has approved a permanent or interim rate increase or decrease that establishes a higher or lower power cost; (3) authority has discovered, in reviewing the monthly data submitted by the electric utility, discrepancies that require adjustment of the power cost equalization; or (4) authority determines that appropriations are insufficient to finance full payments to eligible electric utilities. (b) An electric utility that is eligible to receive power cost equalization under this section and that receives power cost equalization per kilowatt-hour approved by the commission shall report monthly to the authority within the time and in the form the authority requires. An electric utility shall report (1) the power cost equalization per kilowatt-hour approved by the commission; (2) the total kilowatt-hours sold to each class of customer during the preceding month; (3) the total kilowatt-hours eligible for power cost equalization under this section sold to each class of customer during the preceding month; (4) the total kilowatt-hours generated during the preceding month, if available; (5) any commission approved amendments to the schedule of rates in effect during the preceding month; and (6) an increase or decrease in the current unit price of fuel from the base price used by the commission in determining power costs if the change is expected to result in a subsequent power cost equalization adjustment. (c) The provisions of AS 42.45.100 - 42.45.150 relating to the determination of the amount of power cost equalization and payment of the equalization assistance apply to equalization assistance under this section. Sec. 42.45.170. Equalization assistance to unregulated utilities. (a) An electric utility that is not subject to rate regulation by the Regulatory Commission of Alaska under AS 42.05 may receive power cost equalization if the utility is otherwise eligible for equalization assistance under AS 42.45.100 - 42.45.150 and if the utility (1) files with the commission financial data necessary to determine the power cost equalization per kilowatt-hour as prescribed by the commission and that is in compliance with AS 42.45.100 - 42.45.150: (2) reports monthly to the authority, within the time and in the form required, the information required in (b) of this section; (3) sets rates (A) that consider the power cost equalization provided under AS 42.45.100 - 42.45.150 by subtracting from its revenue requirements for electric services the power cost equalization per kilowatt-hour that it is eligible to receive; and (B) under which the power cost equalization provided in AS 42.45.060 - 42.45.110 is applied as a credit only against the cost of kilowatt-hours eligible for equalization assistance under AS 42.45.100 - 42.45.150 that are consumed by each customer in any month; (4) allows audits that the commission determines are necessary to ensure compliance with this section; and (5) furnishes its electric service customers eligible under this program a notice as specified in AS 42.45.120 . (b) An electric utility that is eligible to receive power cost equalization under this section shall report in accordance with (a)(2) of this section (1) the power cost equalization per kilowatt-hour approved by the commission; (2) the total kilowatt-hours sold to each class of customer during the preceding month; (3) the total kilowatt-hours eligible for power cost equalization under this section sold to each class of customer during the preceding month; (4) the total kilowatt-hours generated during the preceding month, if available; (5) any amendments to the schedule of rates in effect during the preceding month; and (5) an increase or decrease in the current unit price of fuel from the base price used by the commission in determining power costs if the change is expected to result in a subsequent equalization assistance level adjustment. (c) An electric utility that is eligible to receive power cost equalization under this section may have its power cost equalization per kilowatt-hour determination changed by the commission if the (1) commission has verified an increase or decrease in the electric utility's cost of fuel: (2) commission has verified an increase in rates based on an increase in costs; (3) authority has discovered, in reviewing the monthly data submitted by the electric utility, discrepancies that require adjustment of the power cost equalization; or (4) authority determines that appropriations are insufficient to finance full payments to eligible electric utilities. (d) The provisions of AS 42.45.100 - 42.45.150 relating to the determination of the amount of power cost equalization and payment of the equalization assistance apply to equalization assistance under this section. (e) An application for power cost equalization by an electric utility that is eligible to receive power cost under this section does not extend the jurisdiction of the Regulatory Commission of Alaska beyond that established by AS 42.05.