Serving the energy industry for over 30 years
By - Jon Brown

Advanced Utility Depreciation
A Comprehensive Analysis of Deprecation Studies and Practical Applications
February 28 - March 1, 2019 | Chicago, IL

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Fundamentals of Utility Depreciation, February 27-28, 2019 in Chicago, IL

This course guides utilities and energy personnel through the strategies necessary to achieve accurate and meaningful data to provide to consultants doing depreciation studies. The material that will be covered in the course will include, but will not be limited to, a discussion of company historical source data used for depreciation study purposes; development of a depreciation study database; how and why historical information is analyzed; other factors considered in life and salvage analysis; a discussion of depreciation methods, procedures, and techniques for depreciation rate development; and what is included in a depreciation study report. The course is not simply a lecture, but is intended to be interactive with the goal of addressing to the greatest extent possible, questions from the attendees, to maximize the participants’ understanding of the depreciation study process, results, and the application in revenue requirements.

Learning Outcomes

  • Driving factors for completion of depreciation study
  • Review depreciation principles for regulated entities
  • Discuss primary components of depreciation study
  • Depreciation expense is a significant component of revenue requirement
  • Review the importance of historical investment data records
  • Basic plant investment records required to complete historical analysis
  • Identify underlying depreciation study concepts
  • Assembling life and salvage depreciation database
  • Depreciation Life Analysis Methods
  • Deprecation Salvage Analysis
  • Application of depreciation parameters-Depreciation rate development
  • Depreciation reserve adequacy analysis
  • Summarizing depreciation study results



EUCI has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET).  In obtaining this accreditation, EUCI has demonstrated that it  complies with the ANSI/IACET Standard which is recognized internationally as a standard of good practice. As a result of their Authorized Provider status, EUCI is authorized to offer IACET CEUs for its programs that qualify under the ANSI/IACET Standard.

EUCI is authorized by IACET to offer 1.1 CEUs for this event.


Requirements for Successful Completion of Program

Participants must sign in/out each day, be in attendance for the entirety of the course

Instructional Methods

Power Point presentations and open discussion will be used


Thursday, February 28, 2019

12:30 – 1:00 p.m. :: Course Registration

1:00 – 5:00 p.m. :: Course Timing

Depreciation Definition

  • 1996 NARUC “Public Utility Depreciation Practices”

Depreciation Study Drivers

  • Rate Making
    • Cost Allocation—Not Valuation
  • Book Depreciation Rates
    • Varies by Rate Jurisdiction
  • Tax Depreciation
    • IRS Life and Rate Schedules

Depreciation Principles (Regulated Entities)

  • Matching Principle
    • Depreciation Expense Drives Revenue Requirement
    • Ratable recovery of cost over useful life of property used to provide customer service
  • Property Consuming Customer (Cost Causing) pay fair share of property cost
  • Depreciation Parameters (e.g., ASL/Survivor Curve)
    • Based Upon Age/Life Relationships

Key Depreciation Terms

  • Life
    • ASL (aka) Whole Life
    • ARL
  • Salvage
    • Gross
    • COR
    • Net

Primary Components of Depreciation Study

  • Analysis Phase
  • Application Phase-Depreciation Rate Development

Depreciation Life Parameters

  • Recovery Period
  • End of life costs

Accumulated Depreciation/Depreciation Reserve

  • Book
    • Cost Recovery
  • Theoretical
  • Adequacy Test
    • Variance and Reasons

Depreciation Rate Development

  • Depreciation Cube
    • Methods
    • Procedures
    • Techniques

Depreciation Expense

  • Rate Making Depreciation Rates and Expense
    • Revenue Requirement—(Period Cost)
    • Straight Line Cost Allocation—Not Valuation
  • Book Depreciation Rates and Expense
    • Requirements Varies by Rate Jurisdiction
  • Tax Depreciation
    • Tax Schedules—
      • Economic Drivers

Depreciation Expense in Rate Making

  • Large Revenue Requirement

Depreciation Study Information Requirements

  • Knowledge of Basis and Range of Historical Investment Data
  • Plant Accounting Record Systems
    • Adequate Records Critical for Historical Study Results
      • Historical Activity—Basic Working Tool
      • Surviving Assets (By Install Vintage)
        • At Depreciation Study Date
  • Developing and Maintaining Plant Record Depreciation Database
  • Importance of Historical Plant Record Continuity
  • Do not get ensnarled in mechanics of the historical analysis results

Plant Accounting & Depreciation Guidance

  • Uniform System of Accounts-Various Plant/Reserve Records
    • FERC
    • NARUC
    • FCC
    • Others
  • Plant Accounting
    • Plant assets
    • Property retirements
      • Impact on Depreciation Study Results
        • Appropriate Retirements
        • Unrecorded retirements
        • Under-recorded retirements

Friday, March 1, 2019

8:00 – 8:30 a.m. :: Continental Breakfast

12:00 – 1:00 p.m. :: Group Luncheon

8:30 a.m. – 5:00 p.m. :: Course Timing


Depreciation Concepts

  • Group depreciation concepts
  • Unit depreciation concepts   

Completing a Depreciation Study

  • Group Accounting Concepts/Study Basis
  • Analysis of Historical Data—
    • Start Point—Not End
  • Planning a study
    • Stages of a Study
  • Goals/objectives
  • Study procedures 
  • Data collection phase
  • Depreciation database
    • Building a database
    • g., “Power Plant” source info
      • Dependent upon available company data
        • Life
        • Salvage
  • Using the Depreciation Life Database
    • Audit
    • Life Information Statistics
  • Using the Depreciation Salvage Database
    • Audit
    • Salvage Information Statistics
    • Net Salvage Trend Analysis

Completing a Historical Life & Salvage Analysis

  • History a tool that is not necessarily representative of the future—Do not get ensnarled in mechanics of the historical analysis results
  • Use as a starting point to forecast depreciation parameters
    • Giving consideration to future plans

Depreciation Life Analysis Methods

  • Tools to study historical life data
    • Actuarial life analysis
      • Basic data requirements
      • Creating a Step Table (Exposures & Retirements)
      • Creating an Observed Life Table
      • Historical Band Analysis
        • Why Different Bands
        • Range of Data—Quantity & Level of Data
        • Quantity/Level of Exposures and Retirements
          • Impact on Life Indication
        • Data Trends
      • Purpose of Standard Survivor Curve (e.g. Iowa)
        • Curve Parameters (Mode & Sub-scripts)
          • Anatomy of a Curve
        • Curve Fitting & Life Forecasting (ASL/Curve Parameters)
          • Life Indications
            • Historical Life Analysis—Not necessarily the future
          • Curve shape versus anticipated life characteristic
          • Average life versus max life of ASL/Curve
    • Simulated plant analysis (semi-actuarial)
      • Balance Method
      • Period Retirements Method
      • Basic data requirements
        • Total Gross Additions By In Service Year
        • Total Retirements By Activity Year
        • Balances By Activity Year

Life Span –(Depreciation of power plants and other life span/forecast accounts)

  • Interim Retirement Curve
    • Truncated Survivor Curve—Parameters
    • Varying Average Service & Average Remaining Lives By Vintage

Salvage Analysis

  • Book accounting transactions
  • Historical net salvage analysis
    • Net Salvage Versus Age of Retirements
      • Standard Net Salvage Analysis
      • Salvage divided by Original Cost of Retirements
        • Analysis Shortfall
          • Retirement Age Routinely Significantly Less Than Account ASL
  • Prospective net salvage in depreciation rates
  • Forecast salvage analysis
    • Net Salvage Trend Analysis
    • Net Salvage Trend Fitting Detail Calculations

Application of Estimated Depreciation Parameters—Rate Development

  • Developing Depreciation Rates by Asset Class—Full Mortality Type Property
    • Whole Life (WL) depreciation accrual amount
    • Whole Life (WL) depreciation rate
    • Average Remaining Life (ARL) depreciation accrual amount
    • Average Remaining Life (ARL)depreciation rate
    • Equal Life Group (ELG)s depreciation rate
  • Life Span –(Depreciation of power plants and other life span/forecast accounts)
    • Interim Retirement Curve
      • Truncated Survivor Curve Parameters
      • Generation Arrangement

Depreciation Reserve Analysis

  • Comparison of Book Depreciation Reserve Versus Theoretical Reserves

Summarizing Depreciation Recommendations

  • Depreciation rates by asset recovery component
  • Understanding Recovery Rates by Component


Earl M. Robinson, CDP, Principal and Director, AUS Consultants

Mr. Robinson is a nationally recognized Certified Depreciation Professional (CDP) and a principal and director of AUS Consultants. As a CDP, he provides services to the firm’s clients with regard to depreciation and cost-based valuation issues. With more than 40 years of experience, Mr. Robinson began his career as a staff member of the plant accounting department of United Telephone (now Embarq) Eastern Group Headquarters subsequent to which he has spent more than 35 years as a consultant preparing depreciation and valuation studies for gas, pipeline, electric, telecommunications, water, and wastewater utilities. In conjunction with the provision of these services, Mr. Robinson has testified on many occasions before numerous regulatory agencies including state, federal, and property tax agencies

throughout the U.S., Canada, and the Caribbean in support of the many studies completed for his diverse list of clients. Mr. Robinson is a founding member and past president of the Society of Depreciation Professionals. He is also a member of the American Gas Association (AGA) accounting services committee and past chairman of the statistics, bibliography, and court regulatory sub-committee of the AGA depreciation committee.


The Millennium Knickerbocker

163 E WaLton

Chicago, IL 60611

Reserve your room:

please call 1-312-751-8100

Mention the 022719 code

Click Here to Book Online

Room Block Reserved For:

Nights of February 26 – 28, 2019

Room rate through EUCI:

$85.00 single or double plus applicable taxes
Make your reservations prior to February 20, 2019.


Event Standard RateAttendees

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