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One-time enrollment · 12-month access
Enroll NowGroup pricing available →Learn how utilities and cooperatives capitalize the cost of funds used during construction. Compute the cost of capital AFUDC rate for borrowed and other funds, accrue it monthly on construction work in progress with semiannual compounding, and support the balance in a regulatory or audit review.
Every major construction project ties up money before the plant serves a customer. AFUDC capitalizes the net cost of borrowed funds plus a reasonable rate on other funds used for construction. The amount moves from construction work in progress to plant in service, and then through depreciation and return into rates.
This course starts with what AFUDC is and where it is recorded, then compares how FERC, RUS, NARUC, FASB and GASB treat the cost of funds. You will compute the AFUDC rate for short and long-term debt, capital structure and cost rates, accrue it monthly with semiannual compounding, and prepare the journal entries through the transfer to plant in service. This approach is applicable to investor-owned and municipal electric, gas, wastewater, and water utilities and electric cooperatives.
The course also shows what GASB 89 does to recovery in rates when interest is expensed instead of capitalized, and closes with the eligibility, in-service timing, annual rate update and documentation items that regulators and auditors ask for.
Describe the purpose of AFUDC, its borrowed-funds and other-funds components, and when capitalization begins and ends.
Why AFUDC matters, how the course is organized, and the Maple Hill substation example that runs through every module.
The definition, the borrowed-funds and other-funds components, where each is recorded, when AFUDC starts and stops, and where it appears in the financial statements and rates.
The accounting standards that govern AFUDC - FERC Electric Plant Instruction 3(17), RUS 7 CFR Part 1767 and patronage capital, ASC 980 and ASC 835-20, and GASB 89 and GASB 62, with a side-by-side comparison.
The FERC formula for short and long-term debt, capital structure weights and cost rates, calculating the rate, and the funding sources format.
Applying AFUDC to a substation project: the AFUDC base, monthly accrual, semiannual compounding, journal entries through in-service, contributions, and what GASB 89 does to recovery in rates.
Eligible and ineligible CWIP for AFUDC treatment, in-service timing by unit of property, the annual rate update, the documentation to retain, and what regulators and auditors ask.
Key takeaways, review checklist, and the final exam. A passing score of 70% is required for CPE credit. Your certificate of completion is available for download upon passing.
