Accounting Requirements for RUS Electric Borrowers

<RULE> DEPARTMENT OF AGRICULTURE <SUBAGY>Rural Utilities Service</SUBAGY> <CFR>7 CFR Part 1767</CFR> <DEPDOC>[Docket #: RUS-24-ELECTRIC-0038]</DEPDOC> <RIN>RIN 0572-AC70</RIN> <SUBJECT>Accounting Requirements for RUS Electric Borrowers</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Rural Utilities Service, USDA. <HD SOURCE="HED">ACTION:</HD> Final rule; request for comment. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Rural Utilities Service (RUS or the Agency), an agency of the Rural Development (RD) mission area within the U.S. Department of Agriculture (USDA), is issuing a final rule with comment to update the accounting requirements for RUS Electric Program borrowers. These changes include adding new accounts to the Uniform System of Accounts (USoA), deleting obsolete accounts and clarifying instructions and definitions for the new and some existing accounts. In addition, new accounts and general instructions are being added for partially extinguished or forgiven debt. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> <E T="03">Effective date:</E> September 16, 2025. <E T="03">Comment date:</E> Comments must be submitted on or before August 18, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Comments may be submitted by going to the Federal eRulemaking Portal, <E T="03">regulations.gov/.</E> In the “Search for dockets and documents on agency actions” box, enter the docket number, RUS-24-Electric-0038, and click “Search” button. From the search results: click on or locate the document title: “Updates to the RUS Electric Program Uniform System of Accounts” and select the “Comment” button. To submit a comment: Insert comments under the “Comment” title, click “Browse” to attach files (if available), input email address, select box to opt to receive email confirmation of submission and tracking (optional), select the box “I'm not a robot,” and then select “Submit Comment”. Information on using <E T="03">Regulations.gov</E> , including instructions for accessing documents, submitting comments, and viewing the docket after the close of the comment period, is available under the site's “FAQ” link. All comments will be available for public inspection online at the Federal eRulemaking Portal. <E T="03">Other Information:</E> Additional information about RD and its programs is available on the internet at <E T="03">rurdev.usda.gov/index.html.</E> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Cecelia Allorto, Technical Accounting Review Branch, External Compliance Division, Rural Development, U.S. Department of Agriculture, 1400 Independence Avenue SW, Washington, DC 20250, Telephone: (202) 692-4945, Email: <E T="03">compliance.tarb@usda.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> RD is a mission area within the U.S. Department of Agriculture (USDA) comprising the RUS, Rural Housing Service, and Rural Business-Cooperative Service. RD's mission is to increase economic opportunity and improve the quality of life for all rural Americans. RD meets its mission by providing loans, loan guarantees, grants, and technical assistance through numerous programs aimed at creating and improving housing, business, and infrastructure throughout rural America. RUS loan, loan guarantee, and grant programs act as a catalyst for economic and community development. By financing improvements to rural electric, water and waste, and telecommunications and broadband infrastructure, RUS also plays a significant role in improving other measures of quality of life in rural America, including public health and safety, environmental protection, and cultural and historic preservation. The RUS Electric Program provides funding to maintain, expand, upgrade, and modernize America's rural electric infrastructure. The loans and loan guarantees finance the construction or improvement of electric distribution, transmission, and generation facilities in rural areas. A Uniform System of Accounts (USoA) provides a unified definition for how transactions are recorded so that accounting records are uniform across companies, thus ensuring that similar transactions are recorded similarly. When all borrowers follow the same USoA, the Agency has a uniform way to review and monitor the financial conditions of its borrowers. The RUS USoA is codified in this part and is based on the USoA promulgated by the Federal Energy Regulatory Commission (FERC). The last revision to 7 CFR 1767 was published May 27, 2008, at 73 FR 30277. FERC will occasionally issue new or revised accounting guidance for electric utilities. The Agency must review the guidance and determine how it applies to the RUS Electric Program borrowers. Since Electric Program awardees can be subject to FERC requirements, RUS must incorporate the new plant categories and accounts for consistency. The Agency is proposing to issue a final rule with comment to update 7 CFR 1767, subpart B to add new accounts to the USoA for electric borrowers based on revised guidance that was included in FERC order 898, Accounting and Reporting of Certain Renewable Energy Assets, that was issued June 29, 2023, and became effective January 1, 2025. In addition to the new accounts being added, the changes will also include deleting obsolete accounts as well as clarifying instructions and definitions for the new accounts. The Agency will also be adding new accounts and general instructions for partially extinguished or forgiven debt. The Administrative Procedure Act exempts from prior notice rules, any actions, “relating to agency management or personnel or to public property, loans, grants, benefits, or contracts” (5 U.S.C. 553(a)(2)). <HD SOURCE="HD1">II. Summary of Changes</HD> A. Section 1767.10 is being updated to add the following definitions, in alphabetical order, Amortization of gain on extinguished RUS long-term debt, Awardee, Partially forgivable loan and Unamortized gain on extinguished RUS long-term debt. The addition of these terms and definitions will provide additional clarity for Awardees. B. Section 1767.15 is being updated as follows: 1. The heading for paragraph (q) is being changed from “Long-term debt: premium, discount and expense, and gain or loss on reacquisition” to “Long- term debt: premium, discount and expense, and gain or loss on reacquisition or extinguishment.” The title change is being made to provide clarity to the awardees. 2. A new paragraph (q)(4), Partial extinguishment of debt, will be added and the accounting treatment guidance will be added as paragraph (q)(4)(i), (ii), and (iii) to provide relevant guidance to awardees regarding the accounting of RUS extinguished or forgiven debt to ensure the amount is segregated from other debt. 3. The prior paragraph (q)(4) and the remaining paragraphs will be redesignated as (q)(5) through (q)(11). 4. Paragraph (u) will be revised in its entirety to provide clarity, to account for gains and losses from the disposition of environmental credits and to provide relevant guidance to the awardees. C. Section 1767.16 will be updated by adding a paragraph (q). The paragraph heading will be “Integrated computer hardware, software, and communication equipment.” This new paragraph is being added to provide relevant guidance related to new accounts specifically related to computer hardware, software, and communication equipment. D. Section 1767.18 will be updated as follows: 1. In the Table of Contents (TOC), the Utility Plant section will be updated to add four (4) new account numbers, 108.11 through 108.14, for the Accumulated Provision for Depreciation for the new plant categories of Solar, Wind, and Other Renewables Production Plant and Energy Storage Plant to the list of accounts. 2. In the TOC, the Current and Accrued Assets section will be updated to revise the title of account 158.2 to Allowances and Environmental Credits Withheld and to add two new accounts numbers, 158.3 Bundled Environmental Credits Inventory and 158.4 Unbundled Environmental Credits Inventory to the list of accounts. The title of 158.2 is being updated to correspond with the new accounts and definitions being added. The new accounts provide a greater level of detail of the environmental credit inventory. Definitions will also be added in the account entries following the TOC. Account 159 will be added and reserved. This account was part of a memorandum to borrowers but was not previously updated in the regulation. 3. Paragraph C of accounts 108 and 111 will be revised to include the accounts listed in paragraph D.1. 4. Paragraph A of account 158.1 and paragraphs A and B of account 158.2 will be revised to include “or any authoritative agencies” directly following “Environmental Protection Agency” to provide clarity and inclusion of allowances provided from other agencies. 5. Accounts 158.3 and 158.4 will be added along with the full account definitions. The changes in D.1 through D.5 are being made to account for new USoA accounts specifically related to bundled and unbundled environmental credits inventory and to provide relevant guidance to the Awardees. Showing account 159 being reserved as it is no longer necessary with the addition of accounts 158.3 and 158.4. E. Section 1767.19 will be updated as follows: 1. In the TOC, the heading Deferred Credits will be updated to add account 257.1, Unamortized Gain on Extinguished RUS Long-Term Debt to the list of accounts. 2. The list of accounts following the TOC will be updated by adding Account 257.1 and its definition under Deferred Credits. This account and definition are being added to account for new USoA accounts specifically related to segregation and accounting for forgiven debt and to provide relevant guidance to the awardees. F. Section 1767.20 will be updated as follows: 1. New accounts will be added to the TOC, in ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 155k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━