Electricity bills in the United States are rising for a reason many consumers are unaware of: millions of homes and businesses are already paying for energy projects that haven’t been completed. The mechanism, known as Construction Work in Progress (CWIP), has expanded rapidly in more than 40 states as electric utilities accelerate investments to bolster a grid under increasing pressure from artificial intelligence and data centers.
What is CWIP?
Traditionally, electric utilities had to build a power plant or transmission line before passing the costs on to customers. However, CWIP policies allow them to recover those expenses during the construction phase. This means consumers begin paying additional charges on their bills even before the infrastructure generates electricity or provides service.
Regulators and utilities defend this model because it reduces financing costs and prevents sharp increases in rates once projects become operational. However, consumer organizations and industry groups argue that the system shifts financial risk from electric companies to taxpayers.
Artificial intelligence is driving up electricity demand
The explosive growth of data centers dedicated to artificial intelligence is changing energy forecasts in the United States. After years of moderate growth in electricity consumption, grid operators now project increases of over 2% annually until 2045. This surge necessitates the development of new power generation plants, transmission lines, and backup systems to prevent blackouts.
States like Missouri, Arkansas, Kansas, Oklahoma, and North Carolina have recently passed new CWIP provisions to accelerate energy investments linked to the technology boom. Virginia represents one of the most emblematic cases, being the state with the highest density of data centers in the world and facing significant strain on its electrical infrastructure.
Dominion Energy and NV Energy drive major investments
Dominion Energy has already raised nearly $2 billion from its customers to finance a offshore wind farm, valued at 11.5 billion, the project is still under construction. The company maintains that the model will allow for long-term cost savings thanks to lower financing costs.
Currently, some customers are paying monthly fees exceeding $11 related to this project. In Nevada, NV Energy is also charging CWIP fees to finance high-voltage transmission lines scheduled to come online in 2028.
Consumer advocates question these projections. Some analyses argue that the economic benefits could take more than five decades to offset the costs borne by consumers today.
The Vogtle nuclear project intensified public opposition
He Vogtle nuclear project, in Georgia, it became the most frequently cited example by critics of the CWIP system. The Vogtle 3 and 4 reactors accumulated seven years of delays and ended up costing more than $35 billion, well above the originally budgeted $14 billion.
As construction progressed, Georgia households paid approximately $1,000 each in fees associated with financing the project. In November, two Republican state utility commissioners lost their positions amid discontent over cost overruns and electricity rates.
Several analysts warn that this case could become a national benchmark as the debate grows over who should bear the financial risk of the American energy transition.
Utilities are experiencing an investment “supercycle”
Wall Street believes that US electric utilities are experiencing one of the largest investment cycles in their history. Projected spending in the sector will exceed one trillion dollars over the next five years, driven by:
- The expansion of data centers.
- The modernization of the electrical grid.
- The growth of renewable energy.
- Industrial and transport electrification.
- New nuclear and transmission projects.
Utilities earn regulated returns on these investments that typically range between 9% and 12%, making infrastructure expansion a key source of corporate profits.
Meanwhile, the debate continues to grow among regulators, companies, and consumers about the balance between energy security and electricity affordability.
Source: Reuters