rate-making process

Broad Transactions1

1. 810-980Regulated Operations810 Consolidation

   This Subtopic provides the consolidation guidance unique to entities with regulated operations. Its core rule is an exception to the normal requirement that intra-entity profit be eliminated in consolidation: profit on sales to a regulated affiliate need not be eliminated if the sales price is reasonable and it is probable that the rate-making process will produce future revenue approximately equal to that sales price from the affiliate's use of the products. Reasonableness is normally presumed when the regulator accepts or does not challenge the price.