Last week, Missouri governor Mike Kehoe signed into law a bill that packaged together dozens of reforms to utility regulations. Among them was a provision called “construction work in progress,” or CWIP, which allows power companies to bill their customers for the costs of building power plants during their construction phase, rather than after they are completed and generating electricity. The law repeals an earlier ban on CWIP passed via a ballot referendum that Missouri voters, concerned about the then-mounting costs of nuclear plants, initiated in 1976.
In states with traditional, vertically integrated energy markets, the utility companies that distribute electricity to homes and businesses also build the power plants that supply them. Their profit models are based on collecting a return on their capital investments at a fixed rate set by state commissions, paid for through customers’ electricity bills.
Where CWIP comes in is in answering the question of when this money should be collected: during construction, or only after the project is “used and useful.”<... Read more
