Credits

Federal and State regulations require that, in most cases, credits to the utility adjustment project must be given. Generally, these credits will fall into one of the following categories:
  • Betterment credits due to
    elective
     increases in functional capacity, improvement of utility service, or superior and improved materials in the replacement facility that are not required because of the highway project.
  • Capital Improvements. There may be occasions when, to clear right of way for highway construction, the cost of any required adjustment of buildings and other similar structures of a utility used primarily for the production, transmission, or distribution of the utility’s products is eligible for reimbursement. These include:
    • switching stations
    • power substations
    • pumping stations
    • metering and regulatory stations
    • lift stations
    • storage tanks
    • field offices
    • garages, and
    • other similar structures
When it is not necessary to retain the existing building and/or facilities in service until a replacement is constructed, reimbursement will be limited to the most economical method of adjustment.The reimbursement estimate should indicate the method of work to be accomplished on the building and/or the facilities, to the extent of listing major items of materials, if applicable, and should be limited to the most economical method of adjustment. This will enable the reviewer to determine if any credits should be applied to these costs.Credits to the utility project should be set forth separately and in sufficient detail to show the method used for establishing the amounts. In addition, credits should be included in the summary of costs to arrive at the net cost of adjustment.
  • Accrued Depreciation requires credit for accrued depreciation of a utility facility being replaced, See computation of credit formula below, (i.e., Handy Whitman Index). Credit for accrued depreciation is
    not
     required when any of the above-described facilities are only being relocated and not replaced.
    Equation 7-1.Computation of Credit Formula
    The information for determining the required credit must be furnished by the utility and based on its own records and depreciation schedule.