Allowance for funds used during construction
Allowance for funds used during construction includes the net cost for the period of construction of borrowed funds used for construction purposes and a reasonable rate on other funds when so used, not to exceed, without prior approval of RUS, allowances computed in accordance with the formula prescribed in Item in paragraph (c)(17)(i) of this section. No allowance for funds used during construction charges shall be included in these accounts upon expenditures for construction projects which have been abandoned.
(i) The formula and elements for the computation of the allowance for funds used during construction shall be:
(ii) The rate shall be determined annually.
(A) The balance for long-term debt, preferred stock, and patronage capital assigned shall be the actual book balances as of the end of the prior year.
(B) The cost rate for long-term debt and preferred stock shall be the weighted average cost.
(C) The cost rate for patronage capital assigned shall be the entity's incremental borrowing rate.
(D) The short-term debt balances and related cost and the average balance for construction work in progress plus nuclear fuel in process of refinement, conversion, enrichment, and fabrication shall be estimated for the current year with appropriate adjustments as actual data becomes available.