FERC Account 374: Asset Retirement Costs for Distribution Plant

FERC Account 374 records capitalized asset retirement obligation (ARO) costs for electric distribution plant where a legal obligation exists to retire the asset in a specific manner.

Definition

Record in this account the asset retirement costs for plant included in the distribution plant function, where a legal obligation exists to retire the asset in a specific manner.

Account 374 is a single, consolidated account that captures capitalized ARO costs across all distribution plant components — structures and improvements, station equipment, storage battery equipment, poles and fixtures, towers and fixtures, overhead conductors and devices, underground conduit, underground conductors and devices, line transformers, and other distribution plant items. Rather than being split by asset type, all qualifying distribution-plant ARO costs are recorded together in this one account. When a utility has a legal obligation to retire a distribution asset in a specific way — such as environmental remediation at a distribution substation site or removal requirements tied to a right-of-way or easement — the estimated retirement cost is capitalized as an asset retirement cost and accreted over the asset's remaining useful life.

What is typically included

• Capitalized ARO costs tied to distribution structures and station equipment
• ARO costs associated with distribution poles, towers, and fixtures
• ARO costs for underground distribution conduit and underground conductors and devices
• ARO costs for storage battery equipment and other distribution plant components with a legal retirement obligation
• Environmental remediation and right-of-way restoration obligations tied to specific distribution assets

What is generally not included

• Transmission plant ARO costs (recorded in the applicable transmission ARO accounts)
• Generation plant ARO costs (recorded in the applicable generation ARO accounts)
• General plant ARO costs (recorded in general plant accounts)
• Estimated removal costs with no underlying legal retirement obligation
• Normal retirement and removal costs already reflected in depreciation rates

Why this account matters

• Required under ASC 410 for legal asset retirement obligations on distribution plant
• Consolidates all distribution-plant ARO costs in one account rather than by component type
• Ensures distribution ARO costs are properly capitalized and accreted over time
• Supports accurate distribution rate base calculations that include ARO assets
• Required for FERC Form 1 distribution plant-in-service detail