Audit Issue # 2: Allocation of Return of Common Assets Sample Clauses

Audit Issue # 2: Allocation of Return of Common Assets. The Audit Staff included a finding that PWW’s calculation for Return on Common Assets allocated to its affiliates included five deferred accounts relating to post-retirement benefits, and that these same five deferred accounts were included in the same calculation relating to PWW’s determination of “Unfunded FAS 106 and FAS 158 Costs” relative to the income tax effect of certain post-retirement costs. The overall calculation resulted in the determination of a return on certain common assets held by PWW and its affiliates, which was to be allocated amongst the affiliates. The Audit Staff concluded that, with regard to the post- retirement accounts, the costs related to which were being double-counted, thus resulting in a potential over-allocation of expense. Staff made further inquiries of PWW through discovery with regard to this Audit Issue. Based on the Company’s responses, Staff concluded that the inclusion of the five deferred post- retirement accounts in the first instance was to ensure that the return on the full pre-tax value of these accounts was properly allocated to the Company’s affiliates. With regard to the second instance relative to the calculation of “Unfunded FAS 106 & FAS 158 Costs”, Staff concluded that the purpose of this calculation was to ensure that the tax effect associated with these post- retirement accounts was also properly incorporated within the return allocated to PWW’s affiliates. Therefore, the Settling Parties agree and recommend the Commission find that PWW’s computation of Return on Common Assets allocated to its affiliates as it specifically pertains to the Company’s post-retirement accounts is just and reasonable.