Construction Work in Progress Issue Needs Improved Regulatory Response for Utilities and Consumers

Federal and state policies on allowing privately owned electric utilities to include construction work in progress (CWIP) in their rate bases were reviewed. GAO was specifically asked to address the following: total CWIP nationwide and the amount allowed in the rate base; estimated effect on utility bills of CWIP in the rate base during the past 3 and next 5 years; conditions under which the Federal Energy Regulatory Commission (FERC) allows CWIP in the rate base; number of utilities seeking permission at the federal and state levels to put CWIP in the rate base; and whether allowing CWIP in the rate base shifts the burden of paying for new construction from investors to customers.