FERC Account 368 – Line Transformers
FERC Account 368 is used to record the installed cost of line transformers in electric distribution operations.
Definition
Record in this account the cost installed of line transformers used in electric distribution operations.
Account 368 generally captures distribution transformers installed on poles, pads, or other locations on the distribution system to step voltage down for customer use. These assets are distinct from substation power transformers typically recorded in Account 362.
What is typically included
- Pole-mounted and pad-mounted distribution transformers
- Related mounting and installation costs that are part of the transformer unit
- Capital replacements and betterments meeting capitalization policy
- Direct labor and capitalizable overheads associated with installation
- Line transformers serving customer and system distribution needs
What is generally not included
- Substation transformers and related station equipment recorded in Account 362
- Service lines recorded in Account 369
- Routine maintenance, testing, and oil sampling expense
- Meters recorded in Account 370
- Customer-premise installations recorded in Account 371 when separately classified there
Why Account 368 matters
- Line transformers are a major class of depreciable distribution plant
- Proper classification helps distinguish substation equipment from field distribution assets
- Transformer replacement programs can materially affect capital budgets and rate studies
- Accurate balances support continuing property records and retirement accounting
Utilities should apply their own capitalization policy, retirement procedures, and continuing property record practices when determining the final accounting treatment for a specific project or transaction.
Examples
Pad-mounted transformer addition
A utility installs a new pad-mounted transformer to serve a growing commercial area. The installed cost would generally be capitalized to Account 368.
Pole-top transformer replacement
An aging pole-top transformer is replaced as part of a capital reliability project. If capitalization criteria are met, the installed replacement cost would generally be recorded in Account 368.
Routine maintenance
Normal transformer inspections or minor maintenance would generally be charged to expense rather than Account 368.
Related FERC distribution plant accounts
- Account 362 – Station Equipment
- Account 369 – Services
- Account 370 – Meters
- Account 371 – Installations on Customers’ Premises
Learn more about electric utility accounting and construction accounting
Explore these courses and learning paths to build a stronger understanding of FERC accounting, RUS accounting, electric utility accounting fundamentals, and construction cost accounting.
Russ Hissom is a nationally recognized utility accounting and rate expert with deep hands-on experience in FERC and RUS accounting, regulatory accounting, cost-of-service studies, and rate design for electric utilities and cooperatives across the United States.
Utility Accounting and Rates Specialists, LLC is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: NASBAregistry.org.
Disclaimer: The material in this article is for informational purposes only and should not be taken as legal or accounting advice provided by Utility Accounting & Rates Specialists, LLC. You should seek formal advice on this topic from your accounting or legal advisor.