The obscure policy that financed many of the last decade’s riskiest energy investments is back

Last week, Missouri Governor Mike Kio signed a law a invoice Which – which Fill it together Dozens of reforms for benefit regulations. Among them was a ruling called “construction work under progress”, or CWIP, which allows energy companies to win their customers with the costs of building power plants during the construction phase, instead of completing them and generating electricity. the law It eliminates a ban In CWIP, through a polling referendum, voters in the state of Missouri, who are interested in the costs of moving at that time to nuclear factories, began in 1976.

In countries with traditional integrated energy markets vertically, facilities that distribute electricity to homes and companies also build the power stations that provide them. Their profit models depend on collecting a return on their capital investments at a fixed price determined by state commissions, driven through electricity bills for clients.

When CWIP comes to answer the issue of when this money must be collected: during construction, or only after the project is used and useful. “

It seems that the new Missouri Law is part of a wave of similar policies approved or presented in many legislative bodies of the state. Last month, the neighboring state of Arkansas passed a law that guarantees CWIP policy. Last year, the legislative body in the state of Mississippi passed law This included CWIP provisions (although they did not use this name for politics). last law Last year, CWIP allowed the cost of gas cost recovery. and invoice It is currently moving through the Legislative Council in North Carolina to the use of CWIP for the new nuclear and natural gas stations.

Missouri Bell’s sponsors, Senator Mike Cyrebito and actor Josh Herleber, Justified CWIP rulings in interviews with Beacon, which is a non -profit port in Kansas, on the basis that they do not apply to nuclear plants, but only to generate gas – thus will be less dangerous. Herlebert said that CWIP “will not be used in anything nuclear as we saw with some projects in Georgia and South Carolina,” although the invoice language leaves room for the possibility of financing a nuclear factory by CWIP under certain circumstances.

Cierpiot told a lighthouse that the Clawback item in the draft law, according to which to cancel what forces companies to pay customers with their interest, and CWIP nuclear energy disorder. “This is good for gas turbine, because gas turbines are not canceled,” he said. “But for the nuclear factory, if they spend four or five billion dollars on a nuclear factory, then they cancel it, all of these money belongs to consumers. I think this means that any company will carry these risks with the Clawbacks that we have.”

The argument is sometimes presented in favor of CWIP, if things go well, then shipping the price perpetrators for the cost of building the power plant during its construction provides them with money in the long run, because it avoids the scenario in which customers must pay the interest of the loan if the rate is postponed until the project is completed. CWIP opponents contradict that even if the financing structure reduces costs in the scenario when things go well, it gives energy companies simultaneously enough of the guaranteed capital to make more dangerous choices about planning and spending. Under the CWIP agreements, customers not only pay construction costs, but also secure facilities companies in exchange for the risk of delay or cancellation.

CWIP laws appeared for the first time in the 1970s, during a period in which the facilities companies clarified the issue of the legislative bodies that they need an alternative financing model in order to face the costs of energy building at that time and the expected growth in the demand for power, according to Ary Peskoy, an expert in the Harvard Electricity Law of the Law. “After that, it became clear that the demand was not achieved, for several reasons.

This is the status of the cases in which nuclear projects were destroyed and then abandoned in the position of having to answer the difficult question about whether a fee will be imposed on the price perpetrators on incomplete work. However, those states where CWIP laws were passed in a different position: “If you already have CWIP, if you already collected a large amount of these costs, they change the calculus account and integration, because the price motives now will not regain this money. They have already paid a billion dollars.”

A later wave of CWIP policies occurred in the early first decade of the twentieth century. 2017 investigation Through the mail and the quick mail found that CWIP and similar policies that were approved in 11 states “set the fires of risky spending” and financed three of the last decade in Boondoggles: The Kemper, 7.5 billion dollars failed to attach “clean coal” In Mississippi, the Summer expansion project, a failed nuclear factory, $ 9 billion in South Carolina; Unit 3 and 4 in Vogly – a pair of nuclear reactors in Georgia that It was already builtBut seven years after the deadline and $ 17 billion on its original budget.

Daniel Tate, a researcher at the Energy and Policy Institute, said, when the CWIP financing project goes south, the price perpetrators do not have a little practical guarantee that they can recover their money. “In the case of Mississippi, with Kimber, they ended up returning the money and directing fees on shareholders, only after the lawsuits were mainly documented.

In the midst of the current crop of CWIP bills, all in the legislative councils dominated by Republicans, one of the state provides something of a warning story: invoice The legislative council in Ohio aims to reflect the previous CWIP policy. The bill comes in huge aftermath Bribery scandal is useful Which fell former spokesman in the House of Representatives in Ohio in prison.

Dave Anderson, a researcher at the Institute of Energy and Politics, said that the bribes paid for politicians in this scandal found that the energy company “benefited from these funds from this money as a construction work, although it has nothing to do with building things.” “It is a kind of still sitting on their books, waiting for them to be collected from the price motives.”

Some modern CWIP invoices are more protection for price motives than others, and are applied to different generation methods. But despite their differences, all bills come at a time when the demand for electricity in America is expected to grow dramatically over the next few years due to the expansion of artificial intelligence. Many countries are competing to attract data centers with tax exemptions (and with policies such as CWIP), while there are many databases that are already planning to dismantle them so that energy networks in their states are enhanced in a desperate manner to absorb the demand that the facilities say is coming.

It is important, that there is a state of great uncertainty about the amount of pregnancy growth that will actually be achieved from artificial intelligence. Energy companies have an insightful design about the amount of electricity generation they will actually need, and if it exceeds or lasts, then someone will be suspended with the bill. Whoever pays for the danger of such a costly error is a subordinate question.

“If you have a set of potential pregnancy growth, there is a risk on two fronts: one, it appears and you use mechanisms like CWIP that mainly uses captive price motivations as a factory for varieties for the benefit of others who do not pay their fair share.” The interests raised It is passed to the price motives. “The second is, what happens if the pregnancy does not appear, the customers have already paid for that, and there is no way out?”

CWIP policies can also close plans that some environmental defenders say may not be the best way to meet growth in electricity demand. “From an environmental point of view, we want to be flexibility,” said Joshua Basic, a professor at the University of Toleen, who studies the energy and climate policy at the state level. “We don’t just want gas plants; we want to get MicroGRIDS and respond to demand and batteries and all of these things. But as soon as you pass CWIP and then start assembling a factory that has not been operated yet, it is a kind of other capabilities to meet this pregnancy in other ways.”

These other possibilities will be less profitable for power companies than just building dense capital power plants of CWIP policies. On many observers, these friendly bills are not a surprise in light of the political power and the vast pressure of these companies in their states. The governor of Missouri received about 400,000 dollars of donations for campaigns from utility companies, according to the Energy and Policy Institute analysis. The legislator, who sponsored the CWIP bill in North Carolina, and which the Senate approved the state shortly before, is a former executive of Duke Energy.