Bill allowing construction work in progress (CWIP) recovery in utility rates advances in House
March 30, 2022 - House Bill 1684, sponsored by Rep. John Black, was perfected today in the Missouri House.
The bill would eliminate a provision adopted by voters through an initiative petition on November 2, 1976, that prohibits recovery of construction costs incurred by a electric utility for facilities until the facility is complete. Because of this provision, the Public Service Commission may evaluate whether such costs are prudently incurred and evaluate whether such costs should be recovered from ratepayers through rates only after the project is completed. This bill would allow recovery of construction costs before the projects are complete for certain nuclear and renewable energy facilities.
Some utility projects involving nuclear facilities in other states have resulted in costs being paid by utility consumers through electricity rates for projects that were never completed.
In 2007, South Carolina passed the "Base Load Review Act," a very similar law containing some of the same language that appears in HB 1684. The bill allowed costs of construction work in progress to be passed on to consumers prior to completion of nuclear project by a utility, just as would be allowed under HB 1684.
Last year, the Department of Justice announced the CEO of SCANA Corporation was sentenced to two years in federal prison after pleading guilty to conspiracy to commit mail and wire fraud. The Department of Justice says evidence showed he had intentionally defrauded South Carolina ratepayers while overseeing the construction of two reactors at the V.C. Summer Nuclear Station so the company could obtain and retain rate increases imposed on ratepayers and qualify for up to $2.2 billion in tax credits.
“Due to this fraud,” said Acting U.S. Attorney DeHart, “...an $11 billion nuclear ghost town, paid for by SCANA investors and customers, now sits vacant in Jenkinsville, S.C. Hopefully, this prosecution will deter other corporate fraud in the future.” Cases against other utility executives continue, and more than $4 billion in ratepayer relief was negotiated by federal prosecutors in the case. Read more about the South Carolina experience HERE.
Missouri's current law would prevent a similar situation in Missouri, but this bill would eliminate that protection for taxpayers.
The bill faces one additional vote before advancing to the Senate for further consideration.