Utility Dive•21 days ago
Rein in CWIP to protect ratepayers from bloated infrastructure costs: report
Key Takeaway
CWIP accounting allows utilities to profit from project cost overruns, directly increasing electricity rates for large consumers and highlighting regulatory risk for future infrastructure development.
AI Summary
- •Utilities leveraging Construction Work In Progress (CWIP) accounting can transform project cost overruns into profit opportunities, rather than incurring financial penalties.
- •This accounting method directly results in inflated infrastructure costs being passed on to ratepayers, leading to higher electricity prices for large power consumers and potentially distorting competitive market signals for new generation.
- •The report advocates for reining in CWIP, signaling potential future regulatory or policy changes aimed at utility cost recovery mechanisms.
- •Georgia Power's Plant Vogtle nuclear expansion is presented as a prime example where CWIP contributed to significant cost overruns ultimately borne by customers.
Topics
capacity-marketdatacenterfinancingpolicytransmission
Article Content
When utilities use “construction work in progress” accounting, “cost overruns become profit opportunities rather than financial penalties,” the authors of a Manhattan Institute brief said. They pointed to Georgia Power’s Plant Vogtle nuclear expansion as a prime example.