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PSC approves Delta Mississippi Gas request to capitalize cloud computing costs
Summary
The Mississippi Public Service Commission approved Delta Mississippi Gas’s petition to capitalize certain cloud computing arrangement (CCA) costs to FERC account 391.2, allowing recovery over the assets’ service lives; staff said the change promotes stable rates and aligns accounting with multi‑year benefits.
The Mississippi Public Service Commission on May 2026 approved Delta Mississippi Gas’s petition to capitalize certain implementation and subscription costs for multi‑year cloud computing arrangements (CCAs).
Ms. Marek, presenting the item for commission staff, said the petition requests authority to capitalize costs for cloud‑based systems under contracts longer than one year where project costs exceed $25,000 and to record those costs in FERC account 391.2. “Capitalizing CCA implementation and subscription costs in FERC account 391.2 will align the accounting treatment of these cloud‑based systems with historically capitalized technology assets and allow the related costs to be recovered over their expected service lives,” she said.
Staff recommended approval, arguing that treating long‑term cloud contracts as capital investments rather than immediate operating expenses better matches costs with the period in which customers receive benefits and helps mitigate near‑term rate pressure. The presentation noted that any CCA costs tied to a previously established transition plan regulatory asset (docket 2024 UA 42) would be treated separately and subject to prudence review in the company’s first general rate case.
Commissioner Carr asked staff and company representatives to clarify why Delta used FERC account 391.2 rather than account 303 and when the company will file its next formal rate plan. Staff and company representatives said the coding choice was made for consistency with historic treatment inherited from assets coded by a predecessor (CenterPoint) and that the company’s next rate filing would be no sooner than roughly 33 months after the sale (around Jan. 2028), with typical amortization for similar assets of about five years.
The commission approved the staff recommendation by voice vote. The commission’s action allows Delta to spread qualifying CCA costs over their expected service lives and to seek recovery through annual RRA filings or a future general rate case, subject to prudence review.
