§ 65.820   Included items.

   (a) Telecommunications plant. The interstate portion of all assets
   summarized in Account 2001 (Telecommunications Plant in Service) and
   Account 2002 (Property Held for Future Use), net of accumulated
   depreciation and amortization, and Account 2003 (Telecommunications
   Plant Under Construction), and, to the extent such inclusions are
   allowed by this Commission, Account 2005 (Telecommunications Plant
   Adjustment). Any interest cost for funds used during construction
   capitalized on assets recorded in these accounts shall be computed in
   accordance with the procedures in Sec. 32.2000(c)(2)(x) of this
   chapter.

   (b) Material and supplies. The interstate portion of assets summarized
   in Account 1220.1 (Material and Supplies).

   (c) Noncurrent assets. The interstate portion of Class B Rural
   Telephone Bank stock contained in Account 1410 and the interstate
   portion of assets summarized in Account 1410 (Other Noncurrent Assets)
   and Account 1438 (Deferred Maintenance, Retirements and Deferred
   Charges), only to the extent that they have been specifically approved
   by this Commission for inclusion (Note: The interstate portion of
   assets summarized in Account 1410 should not include any amounts
   related to investments, sinking funds or unamortized debt issuance
   expense). Except as noted above, no amounts from accounts 1406 through
   1500 shall be included.

   (d) Cash working capital. The average amount of investor-supplied
   capital needed to provide funds for a carrier's day-to-day interstate
   operations. Class A carriers may calculate a cash working capital
   allowance either by performing a lead-lag study of interstate revenue
   and expense items or by using the formula set forth in paragraph (e) of
   this section. Class B carriers, in lieu of performing a lead-lag study
   or using the formula in paragraph (e) of this section, may calculate
   the cash working capital allowance using a standard allowance which
   will be established annually by the Chief, Wireline Competition Bureau.
   When either the lead-lag study or formula method is used to calculate
   cash working capital, the amount calculated under the study or formula
   may be increased by minimum bank balances and working cash advances to
   determine the cash working capital allowance. Once a carrier has
   selected a method of determining its cash working capital allowance, it
   shall not change to an optional method from one year to the next
   without Commission approval.

   (e) In lieu of a full lead-lag study, carriers may calculate the cash
   working capital allowance using the following formula.

   (1) Compute the weighted average revenue lag days as follows:

   (i) Multiply the average revenue lag days for interstate revenues
   billed in arrears by the percentage of interstate revenues billed in
   arrears.

   (ii) Multiply the average revenue lag days for interstate revenues
   billed in advance by the percentage of interstate revenues billed in
   advance. (Note: a revenue lead should be shown as a negative lag.)

   (iii) Add the results of paragraphs (e)(1) (i) and (ii) of this section
   to determine the weighted average revenue lag days.

   (2) Compute the weighted average expense lag days as follows:

   (i) Multiply the average lag days for interstate expenses (i.e., cash
   operating expenses plus interest) paid in arrears by the percentage of
   interstate expenses paid in arrears.

   (ii) Multiply the average lag days for interstate expenses paid in
   advance by the percentage of interstate expenses paid in advance.
   (Note: an expense lead should be shown as a negative lag.)

   (iii) Add the results of paragraphs (e)(2) (i) and (ii) of this section
   to determine the weighted average expense lag days.

   (3) Compute the weighted net lag days by deducting the weighted average
   expense lag days from the weighted average revenue lag days.

   (4) Compute the percentage of a year represented by the weighted net
   lag days by dividing the days computed in paragraph (e)(3) of this
   section by 365 days.

   (5) Compute the cash working capital allowance by multiplying the
   interstate cash operating expenses (i.e., operating expenses minus
   depreciation and amortization) plus interest by the percentage computed
   in paragraph (e)(4) of this section.

   [ 54 FR 9048 , Mar. 3, 1989, as amended at  60 FR 12139 , Mar. 6, 1995;  67 FR 5703 , Feb. 6, 2002;  67 FR 13229 , Mar. 21, 2002]

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