Sec. 20.07.04.08. Rate Making — Revenues and Expenditures

A. Revenues and expenditures credited or charged to Accounts 415 through and including 418 of the Uniform System of Accounts, as prescribed by the Federal Energy Regulatory Commission, relating to merchandising, jobbing, and contract work will not be allowed for rate making purposes in rate matters.

B. Charitable contributions, penalties, and lobbying expenses recorded in Account 426.1, 426.3, and 426.4, respectively, of the Uniform System of Accounts as prescribed by the Federal Energy Regulatory Commission will not be allowed for rate making purposes in rate matters.

C. Expenditures for advertising and promotion other than that classified as informational will not be allowed for rate making purposes unless it is demonstrated to the satisfaction of the Commission in a subsequent rate proceeding that the expense is of direct benefit to the rate payer and in the public interest. Informational advertising is presumed to be in the public interest unless otherwise demonstrated in a subsequent rate proceeding.

D. For the purposes of determining whether these expenses shall be borne by the rate payer or stockholders, all advertising and promotion shall be divided into the following classifications:

(1) Promotional;

(2) Informational;

(3) Community affairs;

(4) Institutional.

E. Definitions. In this regulation, the following terms have the meanings indicated:

(1) "Promotional" means directed toward selling services or promoting the addition of new customers or seeking additional use of utility service.

(2) "Informational" means directed toward informing customers of charges and conditions of service, safety precautions, energy conservation, temporary or emergency conditions, employment opportunities, rate cases, annual reports, legal and financial matters.

(3) "Community affairs" means directed toward influencing public opinion on a controversial issue, or the result of any legislative or administrative matter that would justify the utility civic and community position.

(4) "Institutional" means directed toward establishing a favorable image of the utility company or its employees and which serves to identify the sponsor.

F. Unless a utility company demonstrates during a rate case proceeding before the Commission that a particular item of advertising or promotional expenditure was directly beneficial to the ratepayer and in the public interest, expenses classified as promotional, community affairs, and institutional shall be excluded as an expense for rate making purposes.