All clean energy sources are large initial investments with low or zero fuel costs. Accordingly, a utility rate structure that allows the cost of fuel to be passed on to ratepayers but does not allow a surcharge to cover the cost of initial investments is a major disincentive to all clean energy projects. Construction Work In Progress (CWIP) surcharges were once commonplace, but “electric rate reform” groups staffed by anti-nuclear activists eliminated CWIP surcharges nationwide as a tactical move to kill off nuclear power in favor of natural gas. Power plants that burn natural gas are cheap to build, meaning that a utility that builds a natural-gas-powered generator does not go as deeply into debt as one that invests in clean energy. Unfortunately, natural gas is expensive and insecure–and pollutes. Furthermore, when the occasional clean energy project comes online, anti-CWIP statutes require that the cost of construction be recovered only when the plant operates–resulting in a sudden spike in rates when the plant comes online. Ultimately, anti-CWIP statutes result in volatility, high rates, and pollution.
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This page was written by Stewart Peterson on May 28, 2009
