For decades, the Average Life Group procedure has been the predominant method for calculating utility depreciation, valued for its simplicity and familiarity.
In a new publication, Amanda Nori examines the Equal Life Group procedure as an alternative that may better align depreciation expense with the actual consumption of asset value. Against the backdrop of the energy transition and compressed planning horizons for certain asset groups, the paper explains how a straightforward procedural change can reduce stranded cost exposure without changing the total amount ultimately recovered from ratepayers.
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