RHODE ISLAND William Titter Narragansett Elec Ltg Co SOUTH CAROLINAF B Lasher Secy & Treas South Carolina Lt Pwr & Rys Co CHAIRMAN INSULL: Is there any discussion of this report or are there any questions that you want to ask Mr. Hall, the Editor of the Accounting Section. E. J. FOWLER, Chicago: I think Mr. Smith and Mr. Hall deserve a great deal of credit for the ability and faithfulness with which they have handled the subjects dealt with in this paper. CHAIRMAN INSULL: Any further discussion? H. M. EDWARDS: I would like the members, and particularly those representing some of the smaller companies, to tell us what difficulties, if any, they have found in applying the N.E.L.A. system to the work of their companies. I have heard a great deal about the system being too elaborate for use in a smaller company, and I would like to know just exactly where the shoe pinches. If there is anybody in this room who can give us some information on that point, I am sure it will be appreciated and will be helpful to the Committee. W. A. JONES, Joplin, Missouri: I do not represent one of the smaller companies, but in some work I have been doing the past year in connection with the preparation of a uniform system of accounts for electric utilities operating in the State of Kansas, I have been associated with the representatives of some of the small companies operating in that State. I have tried to get their views concerning the N.E.L.A. accounting system as outlined in the classification of accounts, with the idea in mind of recommending its adoption by the Utilities Commission. I find that it is the general impression among the smaller companies that the N.E.L.A. classification was prepared for the exclusive use of large companies and is not practicable for the small operator. I am sure that this opinion is due entirely to lack of familiarity with the system. Many of these small companies are members of the National Electric Light Association but have not taken the trouble to familiarize themselves with the Association's classification of accounts. Many of them are operating without any well-defined system of accounting. A few of them have systems which they have devised themselves to meet their own peculiar needs. It seems to me that the Association could render such com panies a real service during the coming year by conducting an educational campaign, with the idea in mind of explaining in detail the use of the system of accounts as prescribed by the N.E.L.A. classification. I believe the work could be done to best advantage by a representative sent out from headquarters, or through a series of letters carefully prepared by some one entirely familiar with the system. I am sure that the present classification would meet the requirements of the small companies if they but understood its use. I am equally sure that very few of them are aware of its value at the present time. HERBERT SILVESTER, Monroe, Mich.: The letter from Mr. Rex. H. Fowler, of the Iowa Section, was referred to the Michigan Geographic Section, of which I am secretary. We endeavored to find a man who would go to Iowa to take up the matter of presenting to the Iowa convention a paper on "The N.E.L.A. System of Accounting as Applied to Small Plants." We sent out approximately ten letters, but could get no affirmative response. It seems as though there is need of a man directly associated with the N.E.L.A. to assist the smaller companies in this work. In Michigan we have been operating for over five years under the N.E.L.A. classification, as approved by the Railway Commission. CHAIRMAN INSULL: Is there any further discussion of the matter? Are there any other representatives of small companies here who could give some information to Mr. Edwards? F. E. WEBSTER, Portsmouth, N. H.; I think I can give Mr. Edwards a little interesting information. Before I became identified with the industry, I was associated with the New Hampshire Public Service Commission as assistant clerk, just at the time it was promulgating the classification. In order that its arrangements might be most effective, we called a meeting of the representatives of the companies throughout the State, and there were possibly some 35 or 40 present. At that time the classification had been tentatively offered by the New Hampshire Commission. It dealt with the matter in a manner somewhat too elaborate, and it was finally so modified as to bring it to a level that the ordinary small utility could grasp and operate under. That has worked out very successfully. I have a wide acquaintance throughout the State and I know of no instances where there is any appreciable trouble. Most of the operators of utilities understand that the New Hampshire classification is based, which is a fact, on the N.E.L.A. classification, and I think that the only matter that is really bothersome in that locality is the very subject which was touched on when I came into the room, and that is the matter of additions and withdrawals of property. That has been troublesome and perhaps a great deal of good work could be done through the circulation of literature dealing with that phase of the situation; but aside from that particular condition they are getting along very nicely in that part of the country. They all feel that the N.E.L.A. classification has worked out greatly to their benefit. C. R. PRICE, New Bedford, Mass.: Mr. Edwards is probably familiar with the fact that in Massachusetts we have a very comprehensive system of accounts in our public service work and a special sort of bookkeeping is prescribed. May I ask if he can tell us any differences between this system laid down for us and the full classifications adopted by the N.E.L.A.? MR. EDWARDS: Is there anyone here from the Boston Edison Company or any of the Massachusetts companies who is familiar with the classification in that State, whether it follows along the lines of the N.E.L.A. classification? FRANKLIN L. HALL, Providence, R. I.: I come from the State of Rhode Island, and I am not particularly familiar with the Massachusetts classification. I think it follows in principle the N.E.L.A. classification, but in the application of its details. there is a wide divergence among the various companies. MR. EDWARDS: When this N.E.L.A. system of accounts was adopted some years ago, we had before us the accounting systems of the larger companies. We were lead to go into this question because the different Public Service Commissions of the states were authorized by law to prescribe systems of accounts, and it seemed to us that it would be of benefit to the Commissions and possibly of benefit to ourselves if there were a standard system of accounts devised by those interested in the business, which could serve as the basis of Commission action. The Wisconsin and the New York Commissions were the first to adopt systems of accounts. The basic operating and construction systems of accounting of these two Commissions are founded on the N.E.L.A. system. These Commissions, to be sure, have adopted some accounts which might be called of purely commission origin and purpose, which we, as a business Association, would not think of or would not attempt to take care of. As the time has gone on other State Commissions have adopted systems of accounting, which systems not only differ from the N.E.L.A. system, but also differ from each other; therefore in the 47 or 48 different classifications of accounts there are 47 or 48 systems of nomenclature, definition, arrangement, etc. There is not a business that lends itself to standardized accounting more perfectly than does our business. There is no difference in the manner of doing business between Maine and California. We all have about the same problems to meet, our rate schedules do not differ very much, and there is only one way of putting coal under the boiler; therefore everybody would reasonably account for all these matters in practically the same way. Where Commission statisticians have attacked the subject, however, they seem to have taken the N.E.L.A. system and then gone as far apart from it as they possibly could. Such a result is not a credit to the accountant as a professional man. It seems to me that what we want to do is to agree among ourselves on how our accounts should be kept. We should set forth the fundamental principles upon which we base our action, and then when we go before the Public Service Commissions, with the hope and intention of getting standardized accounting, we will at least start with a unanimous opinion among ourselves. The N.E.L.A. system, in my opinion, met the needs of the small companies just as well as it did the needs of the large companies. The schedule was drawn out in fine detail for the use of the larger companies, but the smaller companies could copy simply the main accounts. If a small company did not care to go into all the details of the Production Account, such as a large company might feel called upon to do, it could keep the bare cost of production; the same way with transmission and distribution, general expense and commercial expense, it could keep |