83 STAT. ]
PUBLIC LAW 91-172-DEC. 30, 1969
627
method) with respect to any public utility property in a timely application for change of accounting method filed before August 1, 1969, or in the computation of its tax expense for purposes of reflecting operating results in its regulated books of account for its July 1969 accounting period, such other method shall be deemed to be its applicable 1968 method with respect to such property and public utility property of the same (or similar) kind subsequently placed in service. " (F) SUBSECTION (1) METHOD.—The term 'subsection (1) method' means any method determined by the Secretary or his delegate to result in a reasonable allowance under subsection (a), other than (i) a declining balance method, (ii) the sum of the years-digits method, or (iii) any other method allowable solely by reason of the application of subsection (b)(4) or(j)(l)(C). " (G) NORMALIZATION METHOD OF ACCOUNTING.—In order to use a normalization method of accounting with respect to any public utility property— " (i) the taxpayer must use the same method of depreciation to compute both its tax expense and its deprecia' tion expense for purposes of establishing its cost of service for ratemaking purposes and for reflecting operating results in its regulated books of account, and "(li) if, to compute its allowance for depreciation under this section, it uses a method of depreciation other than the method it used for the purposes described in clause (i), the taxpayer must make adjustments to a reserve to reflect the deferral of taxes resulting from the use of such difi^erent methods of depreciation. " (H) FLOW-THROUGH METHOD OF ACCOUNTING.—The taxpayer used a 'flow-through method of accounting* with respect to any public utility property if it used the same method of ,• depreciation (other than a subsection (1) method) to compute its allowance for depreciation under this section and to compute its tax expense for purposes of reflecting operating results in its regulated books of account. "(T) J U L Y 1009 ACCOUNTING PERIOD.—The term 'July 1969 accounting period' means the taxpayer's latest accounting period ending before August 1, 1969, for which it computed its tax expense for purposes of reflecting operating results in its regulated books of account. For purposes of this paragraph, different declining balance rates shall be treated as different methods of depreciation. " (4) SPECIAL RULES AS TO FLOW-THROUGH METHOD.— " (A) ELECTION AS TO NEW PROPERTY REPRESENTING GROWTH
IN CAPACITY.—If the taxpayer makes an election under this subparagraph within 180 days after the date of the enactment of this subparagraph in the manner prescribed by the Secretary or his delegate, in the case of taxable years beginning after December 31, 1970, paragraph (2)(C) shall not apply with respect to any post-1969 public utility property, to the extent that such property constitutes property which increases the productive or operational capacity of the taxpayer with respect to the goods or services described in paragraph (3)(A) and does not represent the replacement of existing capacity. "(B)
CERTAIN PENDING APPLICATIONS FOR CHANGES IN
METHOD.—In applying paragraph (1)(B), the taxpayer shall
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