Abstract
This paper proposes an alternative treatment of Contribution in Aid of Construction within the Investor-Owned water and wastewater utility industry. This study analyzes the impact of CIAC on funding utility aged assets by comparing the current amortization (credit) treatment to an alternative depreciation (debit) treatment of CIAC. This paper demonstrates the establishment of a reserve account with a recovery of plant asset usage through depreciation can fund Investor-Owned utility plant asset replacement. Recommended viability financial ratios and related CIAC ratios are used to predict the funding of the reserve account. The results suggest an inverse correlation between the current credit treatment and aged plant assets and a positive correlation between the proposed debit treatment and financing of donated plant assets.
