Michigan, Rhode Island tackle employee benefits

Journal Article · Mon Feb 01 00:00:00 EST 1993 · Public Utilities Fortnightly; (United States)

OSTI ID:6679894

In separate cases concerning post-retirement employee benefits other than pensions (PBOPs), regulators in Michigan and Rhode Island have shifted to accrual accounting for utilities to conform with Financial Accounting Standard No. 106, issued by the Financial Accounting Standards Board. In Michigan, the Public Service Commission ordered utilities to follow FAS 106 but told telecommunications carriers to look to the Federal Communications Commission for guidance. It allowed utilities to defer any additional costs related to FAS 106 for up to three years, or at least until the next rate case that is begun within the three year deferral period. It noted that rate recognition of FAS 106 costs would help utilities prefund the expense, and that growth on investment of recovered funds would tend to lower the overall cost of providing post-retirement benefits. In Rhode Island, the Public Utilities Commission allowed utilities to change from pay-as-you-go to accrual funding, but limited rate recovery to only the tax-deductible amount of the expense, citing uncertainty over the actuarial assumptions that must be used to calculate the FAS 106 liability. It denied arguments that PBOPs funding below the full FAS 106 level would adversely affect financial integrity. But utilities that opt to switch to accrual funding will be allowed each year to file a single-issue rate case to recover the tax-deductible amount. Meanwhile, utilities must place the funds in IRS-approved trusts, to maximize tax deductibility and provide tax-free benefits to retirees.

• OSTI ID: 6679894
• Journal Information: Public Utilities Fortnightly; (United States), Vol. 131:3; ISSN 0033-3808
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING
POLICY AND ECONOMY
20 FOSSIL-FUELED POWER PLANTS
03 NATURAL GAS
PUBLIC UTILITIES
ACCOUNTING
LABOR RELATIONS
CARRIERS
COMMUNICATIONS
COST
GROWTH
INVESTMENT
MICHIGAN
REGULATIONS
RHODE ISLAND
STANDARDS
STATE GOVERNMENT
DEVELOPED COUNTRIES
NORTH AMERICA
USA
290200* - Energy Planning & Policy- Economics & Sociology
200600 - Fossil-Fueled Power Plants- Economic
Industrial
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030600 - Natural Gas- Economic
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