§ 795 Public Utility Depreciation Rates

• •The government can make companies like electric or water providers keep track of how their stuff (like pipes or power lines) gets old and wears out over time.
• •These companies must follow rules set by the government on how to record this wear and tear.
• •The government can decide how much money these companies should set aside each year to account for their equipment getting older.

A water company has old pipes that will need to be replaced in 20 years.

The government can tell the water company to save a little bit of money every year so they have enough to replace the pipes when they get too old. This way, the company doesn’t suddenly have to charge customers a lot more money when the pipes break.