Allowance for Funds Used During Construction

Allowance for Funds Used During Construction

Allowance for Funds Used During Construction

02/13/22

“How can utilities be compensated for costs incurred while building new facilities?”

Utilities spend money to create new facilities all the time. However, these processes can be very expensive and will not produce a return until the asset is completed. So what can we do to ensure that utilities earn enough return to keep operations going? Well, what if we were to compensate a utility for the amount of loans and equity they use to create the project and multiply it by the amount spent during construction monthly? Well, this concept is called Allowance for Funds Used During Construction and is applied to utilities to make sure that they are able to complete projects on time.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s