(a) Except as provided in subdivision (b) following, the cost of initial improvements (including rearrangements, additions, and betterments) to property leased from others made in the course of preparing the property for electric operations, and the cost of any subsequent additions to and betterments of such leased property, not including replacements, shall be charged to the operating property accounts (see note under accounts 101-109, Operating Property) appropriate for the class of property leased. Amortization and depreciation on such expenditures shall be provided for in the manner set forth in paragraph (2) of subdivision (b) of section 197.7.

(b) When the alterations to leased electric property otherwise chargeable to the property accounts are of relatively minor cost or the period of the lease is less than one year, the cost shall be charged to the accounts chargeable with the cost of repairs to such property.