ML19322C631
| ML19322C631 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 07/26/1979 |
| From: | Vandenberg R NRC - NRC THREE MILE ISLAND TASK FORCE |
| To: | |
| References | |
| TASK-TF, TASK-TMR NUDOCS 8001180202 | |
| Download: ML19322C631 (2) | |
Text
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7, 4 Y7g4l' j NUCLEAR REGULATORY CO"?AISSION C
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g % ge RECORD OF TELEPHONE CONVERSATION JULY 26, 1979 2:00 p.m. - 2:30 p.m.
Mr. Sheldon Chasson Director, Accounting and Auditing Division Rural Electrification Administration 447-7221 I asked Sheldon two questions:
1.
What are the accounting criteria for transferring nuclear plants from " Construction Work in Progress" (CWIP) to " Plant in Service"?
2.
Would a utility (or a coop that issues bonds commercially) ever have an incen'ive to bring plant into commercial service in order to either (a) secure good bond ratings, or (b) maintain require-ments of indentures of existing boncs?
Sheldon responded to question No. I that accounting classification always follows the engineering criteria. The constructing engineer (and also the consulting engineer, if any) nust issue a written certification that the plant has passed all appropriat tests and is complete and ready for service.
The certification will specify a completion date.
The certification is the basis for the accounting change from CWIP to Plant in Service and is also the basis for halting the capitalization of interest during construction (AFC) and beginning depreciation.
There are specific engineering criteria to be fulfilled in order for engineers to sign certification.
Also suggests I call Mr. Mike D-ennan, Chief Acccuntant for FERC.
Phone:
275-4C31 - 625 North Capitol Street.
Regarding question No. 2, he remembers a case where a utility requested a rate of return increase because a, plant was completed and came on line prior to projected date of service.
Hewever, he is not sure if plant in service vs.
CWIP status affects bond rating decisions.
Basic financial tests are: 1) Times Interest Earned, and 2) Debt Service Coverage.
Believes basic questions to ask investment specialist are:
l What profile analysis is performed?
What ratios utilize plant in service and CWIP amounts?
i i
l (Note: Moody's, per my phone call last week witn Peter Jodrosick, is sending i
us copy of most recent review of Met-Ed.
This should disclose any profile analysis and ratio bests sed in determining bond ratings.)
800118 0M
O Record of Telephone Conversation 2
July 26, 1979 Sheldon will send an example of an engineering certification of the type relied on by REA in their audits of electric coops.
R. L. Vandenberg l
l