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The AUS Telephone Plant Index

The AUS Telephone Plant Index is a standard index, published for telephone operating companies for use in developing the reproduction cost of the company’s property at a selected test year date. Published on a semiannual basis, the index, used together with a company’s own accounting records, supplies the reproduction cost value of the company’s construction investment.

The telephone plant index addresses a very specific function - to enable companies to produce trended original cost values relative to the historical original cost of plant in service on the company’s books and records.

The index provides critical information for the following:

		Determining customer tariff prices: Due to the implementation of price cap regulation, in which (under some regulations) customer tariff prices are adjusted to give consideration to productivity improvements, the development of the construction costs and investments will have a direct bearing on the company revenue requirements
		Determination of trended original cost in fair value rate jurisdictions and current cost pricing for FASB-33 financial accounting disclosures.
		Insurance valuations, property tax valuations, retirement accounting and cost forecasting.

Divided into six geographic regions (North Atlantic, South Atlantic, North Central, South Central, Plateau, and Pacific Coast), The AUS Telephone Plant Index was designed around thirty-six component indexes representing the basic items of material and labor, which make up the elements of the various telephone plant accounts. The components include such items as Buildings, Switching Equipment, Circuit Equipment, Poles, Cable, Wire, Vehicles, Tools, Furniture, Installer Labor and Lineman Labor, etc. The components are composited together into account level indexes based upon material and labor weights derived from a study of independent telephone construction cost experience.

The AUS Telephone Plant Index does not reflect replacement cost inasmuch as it was designed to produce the reproduction cost (the cost in today’s dollars to reproduce the company’s embedded plant in service).

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