{"id":1027,"date":"2012-03-10T08:00:00","date_gmt":"2012-03-10T13:00:00","guid":{"rendered":"http:\/\/www.l-a-k-e.org\/blog\/2012\/03\/can-georgia-ban-construction-work-in-progress-cwip.html"},"modified":"2012-03-10T08:00:00","modified_gmt":"2012-03-10T13:00:00","slug":"can-georgia-ban-construction-work-in-progress-cwip","status":"publish","type":"post","link":"http:\/\/www.l-a-k-e.org\/blog\/2012\/03\/can-georgia-ban-construction-work-in-progress-cwip.html","title":{"rendered":"Can Georgia ban Construction Work in Progress (CWIP)?"},"content":{"rendered":"Georgia Power\n\ncharges its customers\nConstruction Work in Progress (CWIP)<\/a> for the nuclear plants\nit is constructing at Plant Vogtle on the Savannah River.\nThis while \nclaiming a solar energy commodity market would raise rates for its customers.<\/a>\nIf nuclear is so great, why does it need to be pre-funded by customers?\nCan Georgia ban CWIP?\nOther states have.\n

\nThis interesting\n\nsurvey by Wisconsin<\/a>, courtesy of\n\n<\/a>\n\nNational Association of Regulatory Utility Commissioners (NARUC)<\/a>,\nsays Illinois, Montana, New Hampshire, Ohio, and Oregon\nban CWIP (except in certain cases for some of those states)\nand North Carolina and Washington in practice do not use it.\n

\nAppended below is the first question from the survey and the answers.\nThe entire survey is\non the LAKE website<\/a>.\n

\nHere’s \nwho in the Georgia state government\nyou can contact about CWIP.<\/a>\n

\n-jsq\n

\n

\nCURRENT RETURN ON CWIP\n
\nVERSUS AFUDC [Allowance for Funds Used During Construction]\n
\nREGULATORY SURVEY RESULTS\n
\nMarch 2006\n<\/center>\n<\/H3>\nThe Wisconsin\nCommission is relooking at its current practice for allowing a\ncurrent return on construction work in progress (CWIP). We\nwould appreciate it if you or someone else from your agency could\nrespond to the following questions.\n<\/blockquote>\n\n\n
\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
AGENCY<\/TH>RESPONSE<\/TH><\/TR><\/THEAD>\n
\nQuestion #1: Does your agency allow a\ncurrent return on CWIP?<\/B>\n<\/TD>\n<\/TR>\n
\nAL\n<\/TD>\n\nCWIP is included in Rate\nBase while AFUDC income is included as a deduction from interest\nexpense and a credit to Other Income. Theoretically, the\ntwo items nearly offset one another.\n<\/TD>\n<\/TR>\n
\nCA\n<\/TD>\n\nRegulated water utilities receive\na current return on CWIP of projects that are one-year or less in\nduration. For CWIP of greater than one year, the utility\nearns AFUDC (this long-term CWIP and associated AFUDC are not\npart of rate base until in-service).i<\/SUP><\/A><\/FONT><\/SUP>\n<\/TD>\n<\/TR>\n
\nFL\n<\/TD>\n\nSee attached rulemaking.ii<\/SUP><\/A><\/FONT><\/SUP>\n<\/TD>\n<\/TR>\n
\nID\n<\/TD>\n\nCWIP is not included in rate\nbase. We use an historical test year or a 6 month historical\nand 6 month forecast where the forecast is know before the\nhearing. We also have known and measurable changes that\ncan include plant provided it is an unusual or extensive addition\nsuch as a water treatment plant or generating facility. The\nadjustment must also reflect additional revenues and reduced\nexpenses (maintenance) associated with the addition.\n<\/TD>\n<\/TR>\n
\nIL\n<\/TD>\n\nNo \u2013 except for certain\nconditions noted below.\n<\/TD>\n<\/TR>\n
\nKY\n<\/TD>\n\nThe Kentucky Commission routinely\nincludes CWIP in the determination of the utility’s rate base.\nWe normally determine the revenue requirements based on\ncapitalization rather than rate base, but are required by statute\nto consider the return on rate base approach as well. While\nwe generally determine the revenue requirements using an overall\nrate of return on capitalization, the equivalent rate\nof return on rate base is usually stated in the rate\nOrder. Therefore, we do allow a current\nreturn on CWIP. <\/FONT><\/FONT>\n<\/TD>\n<\/TR>\n
\nMI\n<\/TD>\n\nYes, but it is offset by\ninclusion of the AFUDC in operating income.\n<\/TD>\n<\/TR>\n
\nMN\n<\/TD>\n\nMinnesota generally includes\nCWIP in the rate base where it will earn the allowed rate of\nreturn, but the return is offset by bringing the related AFUDC\nearnings above the line and capitalized. There have\nbeen isolated circumstances where a current return was allowed in\ncases where the investment was so substantial as to potentially\nimpair the financial integrity of the utility while the project was\nunder construction. Also, Xcel’s Emissions Reduction Program\nis allowed to pass return on CWIP through the\nspecial rate rider.\n<\/TD>\n<\/TR>\n
\nMT\n<\/TD>\n\nMontana does not allow CWIP in\nrates. It has been a very long time since AFUDC has been an\nissue, we just have not been seeing utility construction.\n<\/TD>\n<\/TR>\n
\nNV\n<\/TD>\n\nA current return on CWIP is\ndependent on if the project is designated as a critical facility or\nnot. If not, the utility will accrue AFUDC. I will mention\nthat Nevada will allow CWIP into rate base if the utility is\nsuffering from financial stress. But this provision has\nhad limited application.\n<\/TD>\n<\/TR>\n
\nNH\n<\/TD>\n\nCWIP is prohibited from inclusion\nin rates until the asset is completed and providing service\nto customers. RSA 378:30-a.\n<\/TD>\n<\/TR>\n
\nNY\n<\/TD>\n\nYes.\n<\/TD>\n<\/TR>\n
\nNC\n<\/TD>\n\nThe\nallowance of CWIP in rate base is governed by the provisions of\nNorth Carolina General Statute 62-133(b)(1), which states, in\nrelevant part, “[R]easonable and prudent expenditures for\nconstruction work in progress … may be included [in rate base],\nto the extent the [North Carolina Utilities] Commission considers\nsuch inclusion in the public interest and necessary to the\nfinancial stability of the utility in question[.]”\n

\nNo\nCWIP has been included in rate base of any electric utility\nregulated by the Commission since at least the early 1990s. No\nnatural gas local distribution company (LDC) has requested that\nCWIP be included as a component of rate base since at least the\nlate 1980s.\n<\/TD>\n<\/TR>\n

\nND\n<\/TD>\n\nWe typically use a projected test\nyear where plant-in-service includes long-term CWIP projects\nexpected to be completed during the test year. Short-term\nCWIP not eligible for AFUDC is also included in rate base.\n<\/TD>\n<\/TR>\n
\nOH\n<\/TD>\n\nNo return on CWIP used in Ohio.\nThere has never been a situation where an Ohio\ncompany recovered the cost of constructing an asset before it\nwas placed in\nservice.\n<\/TD>\n<\/TR>\n
\nOR\n<\/TD>\n\nNo, except for water\nutilities. This is mandated by Oregon statute.\nORS 757.355 states:iii<\/SUP><\/A><\/FONT><\/SUP>\n

\nIf the utility is able to\ndemonstrate that the plant will be in service by the effective date\nof revised rates, Staff will allow the plant in rates.\nAdditionally, many utilities are using a future test year\nand if a utility has a major project coming online shortly\nafter rates are scheduled to go into effect, then the Commission\nmay allow the company to track the investment into\nrates. As shown above, we have a "used and\nuseful" law that doesn’t allow any investment into rates that\nis not being used. For water utilities, we will allow CWIP during a\nrate review if the utility can demonstrate that the plant will be\nin service within a reasonable amount of time after approval of its\nrates, approximately 6 months.\n<\/TD>\n<\/TR>\n

\nSC\n<\/TD>\n\nThis is looked at on a case by\ncase basis but normally yes.\n<\/TD>\n<\/TR>\n
\nTN\n<\/TD>\n\nYes.\n<\/TD>\n<\/TR>\n
\nVA\n<\/TD>\n\nYes.\n<\/TD>\n<\/TR>\n
\nVT\n<\/TD>\n\nDuring a rate proceeding, a\nreturn is allowed for that portion of CWIP that will be placed into\nservice during the "rate year" and is accomplished by\nincluding that portion of CWIP in the rate base. Those amounts that\nare not be placed into service (and which are not included in rate\nbase) during the rate year and where the construction period is\nestimated to be greater than one year accrue an AFUDC charge that\nis calculated based on the FERC formula that includes\nshort and long term cost of capital.\n<\/TD>\n<\/TR>\n
\nWA\n<\/TD>\n\nNo, not recently. It had been\nincluded on a case-by-case basis in rate base sometimes in some\n1980’s cases during the heavy nuclear\/coal construction and high\ninterest rate periods as a means to provide additional cash flow.\nIn addition, we have recently "pro formed" large\ntransmission\/production plant that would be in service in the\nrate year into rate base, with savings offsets.\n<\/TD>\n<\/TR>\n
\nWI\n<\/TD>\n\nGenerally, the Commission’s\ncurrent practice has been to allow a current return on 50 percent\nof CWIP. For major projects, a current return on 100 percent of\nCWIP has sometimes been allowed.\n<\/TD>\n<\/TR>\n
\nWY\n<\/TD>\n\nNo.\nWe do, however, update Plant in Service to incorporate plant that\nis expected to be in service at the time rates are to go into\neffect.\n

\nThis is an adjustment that is\nmade to recognize as much plant as possible, without going to a\nfuture test year.\n<\/TD>\n<\/TR>\n

\nTCEQ\n<\/TD>\n\nYes.\n<\/TD>\n<\/TR>\n<\/table>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"Georgia Power charges its customers Construction Work in Progress (CWIP) for the nuclear plants it is constructing at Plant Vogtle on the Savannah River. This while claiming a solar energy commodity market would raise rates for its customers. If nuclear is so great, why does it need to be pre-funded by customers? Can Georgia ban […]","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_links_to":"","_links_to_target":""},"categories":[97,142,14,17,8,18,2,104,21,22,23,24],"tags":[2903,1323,8746,8701,8708,2935,2934,8861,8737,107,8714,2937,2936,60],"class_list":["post-1027","post","type-post","status-publish","format-standard","hentry","category-activism","category-cwip","category-economy","category-ga-psc","category-georgia","category-georgia-power","category-government","category-nuclear","category-planning","category-politics","category-renewable-energy","category-solar","tag-commodity-market","tag-construction-work-in-progress","tag-cwip","tag-georgia","tag-georgia-power","tag-naruc","tag-national-association-of-regulatory-utility-commissioners","tag-new-hampshire","tag-nuclear","tag-plant-vogtle","tag-solar","tag-subsidize","tag-subsidy","tag-tax"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p585fK-gz","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts\/1027","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/comments?post=1027"}],"version-history":[{"count":0,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/posts\/1027\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/media?parent=1027"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/categories?post=1027"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.l-a-k-e.org\/blog\/wp-json\/wp\/v2\/tags?post=1027"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}