WOULD THE CWIP PROVISIONS IN SENATE BILL 3 RETURN RISKS TO THE CUSTOMERS?
The CWIP provisions in Senate Bill 3 allow construction costs to go into the rate base, so that the utility gets cost recovery plus a rate of return on the money. This makes CWIP both a direct subsidy by the ratepayers for new plant construction and a strong incentive for the utilities to build those plants. We, and not the stockholders, would pay even if the plants are abandoned. The CWIP provisions in Senate Bill 3 shift much of the risk for plant construction back onto the ratepayers. Once the N.C. Utilities Commission were to approve a plant, there would be an annual review of construction costs and financing charges. At the next rate case point, those costs and AFUDC would go into the rate base and the utilities would make profit on them. Given the costs of the plants, we would expect rate cases to happen more frequently, if not annually. WHAT HAPPENS WHEN A POWER PLANT IS CANCELED? Another major change sought by utilities in Senate Bill 3 seeks to limit their losses in the event
