Construction [TABULAR DATA FOR TABLE II OMITTED] duration was excluded from the model because the data has converted to overnight costs and adjusted for the interest costs associated with construction (e.g., Allowance for Funds Used During Construction
or AFUDC), as was done by the authors.
* Requires recognition of a deferred tax liability for the equity component of the allowance for funds used during construction
The concept of an allowance for funds used during construction
(AFUDC) results from a regulatory belief that today's utility customers should not pay for the costs of financing construction that will benefit only future users; that is, current customers should pay a return only on assets currently performing a useful service.
The purchase price reflects ConocoPhillips' capital contributions to date and includes an allowance for funds used during construction
. TransCanada will also assume responsibility for ConocoPhillips' share of the capital investment required to complete the project resulting in an incremental commitment of US$1.7 billion through 2012.