Question: The text of Account 555, Purchased power, states in part: “This account shall include the cost at point of receipt by the utility of electricity purchased for resale, It shall include, also, net settlements for exchange of electricity or power, such as economy energy, off-peak energy for on-peak energy, spinning reserve capacity, etc. In addition, the account shall include the net settlements for transactions under pooling or interconnection agreements wherein there is a balancing of debits and credits for energy, capacity, etc.” does this mean that Account 555 is to include all settlement amounts arising from power pool transactions regardless of how compensation for energy delivered to the power pool or capacity made available to the power pool is determined and all settlement amounts for energy provided under non-pool contractual agreements in which the agreements contain provisions pertaining to both the receipt and delivery of energy?
Answer: No. The above requirement must be read in conjunction with the sentence in the accounting text that immediately follows the above quote which states: “Distinct purchases and sales shall not be recorded as exchanges and net amounts only recorded merely because debit and credit amounts are combined in the voucher settlement.” It is the intent of the text of Account 555 to limit the use of the account to the cost of energy and capacity purchased and net settlements arising from barter transactions. compensation for energy delivered or capacity made available to a power pool or delivered pursuant to other non-barter agreements where settlements are determined through application of specific rate schedules, “split-the-saving” calculations, or simulations must be recorded gross in the appropriate operating revenue account and not netted with purchased power expenses properly recorded in Account 555.
Russell E. Faudree, Jr.
Effective: January 1, 1991