OAR 860-036-2380: Accounting for Contributions in Aid of Construction (CIAC)

(1) This rule applies to rate-regulated water utilities. (2) CIAC is any money, services or property received by a water utility to fund capital investments at no cost to the company and with no obligation to repay. (3) Each water utility must provide an accounting of CIAC upon Commission request. CIAC accounting must include contributions in any form including contributed utility plant. CIAC record keeping must identify the contributed plant, original date of installation, and original cost. (4) Each water utility must keep a record as described in section (3) of this rule and record CIAC on a separate plant and depreciation schedule. (5) The water utility will record plant assets at market value and an amount of CIAC equal to that value which will be an increase in equity of the utility. The net effect of these balance sheet accounts will be zero, and both sides must be considered in the ratemaking process. (6) CIAC related assets will be depreciated in the same method as purchased assets, and an amount equal to the depreciation expense will be taken as amortization of CIAC. Both the depreciation expense (debit) and the amortization expense (credit) will be coded to the depreciation expense on the income statement. This will result in an expense that nets to zero and has no effect on ratemaking.