FERC ORDER ON ACCOUNTING FOR PIPELINE INTEGRITY MANAGEMENT COSTS

On November 5, 2004, the Federal Energy Regulatory Commission (Commission) published a notice of a proposed accounting release, which would require that an entity recognize costs incurred in performing pipeline assessments that are part of a pipeline integrity management program as maintenance expense and would apply to all entities under the jurisdiction of the Commission.
This order expands on the accounting guidance in the proposed accounting release and addresses the proper accounting for costs that pipeline operators will incur in implementing all aspects of a pipeline integrity management program, not just pipeline assessment activities. This order concludes that certain costs incurred related to a pipeline integrity management program should be capitalized, while others should be expensed.