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

Fundamentals of Utility Depreciation
Building a Functional Framework of Usable Concepts and Best Practices
February 27-28, 2019 | Chicago, IL

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Advanced Utility Depreciation, February 28-1, 2019 in Chicago, IL

This course provides a foundation for understanding depreciation concepts, thinking through ratemaking implications, and making data collection choices that will impact the content and quality of the depreciation study.  This course is intended to be introductory and will provide a framework for the more advanced course, Depreciation Fundamentals.  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.  The goal of the course is that participants will become conversant on basic depreciation issues.

Learning Outcomes

  • Explain the definition of depreciation, the calculation of annual depreciation expense, and the concepts associated with basic plant accounting
  • Discuss the social and financial significance of accurately accruing depreciation and net salvage over the lifespan of the plant assets (i.e. the ratemaking perspective)
  • Introduce the “Depreciation Cube” (Methods, Procedures, and Techniques) with a focus on the methods, techniques, and procedures most commonly used
  • Introduce life analysis, survivor curves, and the concepts behind the methods used to estimate the remaining service life
  • Introduce net salvage analysis and discuss its increasing significance in the development of depreciation accrual rates
  • Identify the “ideal” data that should be tracked within continuing property records.
  • Examine depreciation accounting concepts including capitalization policies, account groupings, individual vs group (mass) asset accounting methodologies, the value of tracking contributed plant, and whether amortization is a better choice for some assets
  • Explore accounting options to record fixed asset retirements and the impact of the choices upon depreciation calculations
  • Examine the connection between actual data available in plant records and the choice of life and net salvage analysis methods and the reliability of the resulting analysis
  • Introduce the steps and identify the useful outcomes of a depreciation study



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 course.


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


Wednesday, February 27, 2019

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

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

12:00 – 1:00 p.m. :: Group Luncheon

What is Depreciation?

  • Historical development
  • Depreciation Expense
  • Salvage Value
  • Cost of Removal
  • Plant in Service
  • Accumulated Depreciation

Why is Accurately Accruing Depreciation Important?

  • Social considerations
  • Ratemaking impacts of over or under accruing depreciation

The Depreciation Cube

  • Methods
  • Procedures
  • Techniques
  • Most commonly used Methods, Procedures, and Techniques and why.

Unit vs. Group (Mass) Property Accounting

  • Advantages to each method
  • Distinct accounting differences

Life Analysis

  • Average Service Life
  • Mortality Curves
    • A general introduction
    • Their many uses
  • Introduction to the Actuarial Method
  • Introduction to the Simulated Plant Record Method

Net Salvage Analysis

  • Understanding salvage value
  • Understanding cost of removal
  • Considering the implications of inflation on net salvage as a percentage of the original investment

The “Ideal” Continuing Property Records

  • Recognizing applicable federal and state requirements
  • Review an ideal data set and how it ties to work orders

Capitalization Policies

  • Identifying the impact of the choice of capitalization threshold
  • Considerations in choosing a threshold

Choosing Account Groupings

  • Identifying assets distinctions that matter
  • Weighing the pros and cons of creating additional sub-accounts

Tracking Contributed Plant

  • Why should contributed plant be tracked?
  • Net salvage and contributed plant

Thursday, February 28, 2019

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

8:30 a.m.- 12:00 p.m. :: Course Timing

Amortization Considerations

  • The distinction between depreciation and amortization
  • Knowing when amortization is a better choice than depreciation

Fixed Asset Retirements

  • Consistently recording the cost of removal: some options
  • Options for recording retirements in mass property accounts:
    • Vintage
    • First in, First Out
    • Last in, Last Out
    • Account Average
  • Pros and cons of the choices for recording retirements

Examination of the Depreciation Analysis Options Based Upon the Data Available in the Continuing Property Records

  • The data required for Actuarial Life Analysis
  • The data required for Simulated Plant Record Analysis
  • The data required for Net Salvage Analysis
  • The impact of data on the results of a depreciation study

Introduction to a Depreciation Study: Steps and Useful Outcomes

  • Data Gathering
  • Data Evaluation
  • Interviews
  • Calculation of Accrual Rates
  • Recommendations (Useful Outcomes)
    • An audit of Continuing Property Records
    • More closely align depreciation accrual with plant life expectations
    • Review the theoretical reserve and revise depreciation accrual to align the theoretical and actual reserve
    • Catch gaps in data collection processes and make practical improvements
    • Recognize and capture realistic costs of removal


James Keen, Utility Consultant, Aldrich CPAs + Advisors

Mr. Keen’s public utility experience totals over 18 years, focusing primary on regulatory matters, depreciation, and rate development.  Mr. Keen is a Certified Depreciation Professional experienced in preparing detailed depreciation studies for utility use and for review and approval by regulatory bodies.  His experience includes analyzing financial and technical information, developing spreadsheet models, preparation of revenue requirement studies and expert testimony, and performing market analysis and economic forecasting.  His expertise includes rate development, preparing utility contractual agreements, tariff modifications, depreciation studies and regulatory planning for electric, natural gas, solid waste, telephone and water and wastewater clients.

Prior to his role as a consultant, Mr. Keen worked for the Regulatory Commission of Alaska for over 15 years, serving as the chief of the engineering section for 10 years.  During his time there, he was involved with managing complex regulatory rulemaking proceedings, developing regulations implementing federal and state programs, and analyzing matters of first impression.  He was also the Commission’s primary depreciation analyst.  He has testified before Alaska Senate and House Committees and taught workshops to utility personnel on regulatory policy, basic ratemaking, and depreciation.

Before entering the utility arena, Mr. Keen was a design engineer at Rolls-Royce North America, specializing in aero gas turbine engines for commercial and military applications.  Mr. Keen has a Bachelor of Science in Mechanical Engineering from Purdue University.


The Millennium Knickerbocker

163 E. Walton

Chicago, IL 60611

Reserve your room:

please call 1-312-751-8100

Mention the 022719 EUCI code

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.

Click Here to Book Online


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