A new blistering report from the Manhattan Institute targets the growing use of CWIP — Construction Work in Progress — and takes the policy to the woodshed. The report argues that CWIP laws allow utilities to “gold plate” projects, stretch out construction timelines, and shift financial risk from investors to ratepayers.
Three principal authors drafted the 38-page report, “The Hidden Tax on Your Power Bill,” and two of them — professors Eric Olson and Jason Walter — work at the University of Tulsa. They joined a third author, Prof. Jack Dorminey of West Virginia University, in citing Georgia Power’s majority- owned expansion of the Vogtle nuclear power plant as a central example of how CWIP exposes customers to escalating costs. Oklahoma adopted CWIP this year Oklahoma adopted a CWIP law this year after lawmakers passed Senate Bill 998, which became law without Gov. Kevin Stitt’s signature. Utilities already have attempted to use the law. Oklahoma Gas and Electric and Public Service Company of Oklahoma submitted early efforts to activate CWIP for upcoming projects.
The bill was authored by Rep. Trey Caldwell, R-Faxon, and Sen. Grant Green, R-Wellston. Caldwell carried the water in the House and staunchly defended it, contending it would lower costs for utilities and ratepayers. However, he and his bill were also heavily criticized by Oklahoma Corporation Commissioners as the measure worked its way through the Legislature.
At one point, Commission Chairwoman Kim David commented, “My concern about this all along is the constitutionality of it… it isn’t our job to make sure the utility company can make a profit.”
The Manhattan Institute’s report urges federal and state regulators — including the Oklahoma Corporation Commission — to rein in the use of CWIP to protect ratepayers from inflated costs tied to long-term energy construction. Authors issue strong warning The report states: “Under CWIP, utilities face little pressure to control costs or timelines because every additional dollar spent and every month of delay expands their rate base and increases their guaranteed returns. Cost overruns become profit opportunities rather than financial penalties.”
The report explains that CWIP allows utilities, with regulatory approval, to bill customers during construction, long before the project ever delivers electricity.
During debate earlier this year, one OCC commissioner warned that some elderly customers would never see a project completed before they died, yet they would still pay for it. Lawmakers also questioned the constitutionality of CWIP, though the law includes requirements that regulators review requests involving the use of natural gas.
Manhattan Institute gives policymakers three choices The report outlines three policy paths:
• End CWIP entirely, forcing utilities to use traditional debt/equity financing.
• Allow CWIP only under strict budget caps established before construction, with no change orders.
• Make CWIP’s rate of return performance- based, rewarding projects that finish on time and on budget while penalizing overruns.
The authors state: “CWIP is the most influential energy policy term that never appears on a household utility bill.”
They note that CWIP does appear on a regulated company’s ledgers but still adds real dollars to what families pay every month. CWIP changes utility financing The report explains that ordinarily, major utility projects follow a standard business sequence: a company raises debt and equity, builds the facility, and begins earning revenue only after the facility becomes operational. Investors normally shoulder the risk of cost escalation, schedule delays, or lower- than-expected demand. Customers begin paying after they receive service.
CWIP reverses that process. State commissions and the Federal Energy Regulatory Commission have allowed utilities to move CWIP into the rate base. The rate base forms the pool of assets on which utilities earn a guaranteed rate of return. Once CWIP enters the rate base, households no longer serve solely as consumers — they become financiers, covering the carrying costs of projects still under construction.
The report argues that the policy was originally pitched as a solution to encourage construction, helping investor- owned utilities tackle expensive nuclear plants or extra-high-voltage lines.
But in practice, CWIP has created inflated budgets through undisciplined spending, shifting risk from investors to ratepayers.