Why millions of Americans pay for unfinished electricity projects

U.S. states are expanding Construction Work In Progress (CWIP) rules, letting utilities charge customers before projects are completed, with at least 40 states now offering some form of the incentive. Reuters says households are already paying several dollars per month in many cases, including about $4 monthly in Nevada and roughly $11.23 at Dominion Energy's Virginia offshore wind project, while Georgia ratepayers absorbed about $1,000 each tied to Vogtle. The policy is designed to accelerate grid buildout for rising AI-related demand, but consumer groups warn it shifts project risk and cost overruns onto ratepayers.

Analysis

The market is underpricing how CWIP changes the utility business from a steady compounding model into a quasi-project-finance model with higher political beta. Front-end cash collection lowers equity duration and supports near-term EPS, but it also increases the probability of future rematches with regulators and consumers if projects slip, which is where the real risk sits for capital-intensive names. That makes the apparent earnings uplift less durable than headline allowed-ROE expansion suggests, especially for utilities leaning hardest into large, single-asset builds.

D is more exposed than the sector average because it sits at the intersection of data-center load growth and multi-year capex needs in jurisdictions where affordability politics are already boiling. In the near term, CWIP is a financing positive, but over 12-24 months it likely intensifies scrutiny on rate-base growth, undermines multiple expansion, and raises the odds of incremental disallowance risk if inflation or construction delays re-accelerate. BRK.B benefits indirectly through regulated utility cash flow visibility, but the market may be overstating the quality of that cash flow if regulators and voters eventually force a lower allowed return or tighter cost recovery.

The second-order winner is not the utilities themselves but the ecosystem that sells “speed to power” solutions: transmission, substations, gas peakers, grid automation, and equipment vendors with pricing power. The biggest loser is industrial load growth if affordability backlash becomes a rate-case issue; higher bills can slow marginal data center siting and push hyperscalers toward captive generation or states with lighter CWIP rules. The contrarian point is that CWIP may actually extend the life of legacy thermal assets and raise the value of existing grid-connected generation more than it helps greenfield renewables, because the cheapest political path is often repowering and incremental expansion, not speculative new builds.

Key Decisions for Investors

• Short D vs. long XLU or SO utilities with lighter political exposure for 3-6 months; thesis: D has more CWIP/reinvestment intensity and more visible consumer backlash risk, while sector beta can stay supported by rates.
• Reduce or hedge BRK.B utility-related exposure via downside collars for 6-12 months; reward is limited upside from incremental rate-base growth, but risk is a left-tail reset if regulators become less permissive on CWIP recovery.
• Long grid-capex suppliers on pullbacks for 6-18 months, especially names with transmission/substation exposure; preferred structure is a basket long versus D/regulated utilities short to isolate the capex cycle from rate-case politics.
• If owning utility longs, buy put spreads into summer rate-case season; catalyst window is 3-9 months, when affordability headlines and election pressure tend to sharpen and can compress multiples before earnings reflect CWIP benefits.
• Avoid chasing data-center utility beneficiaries after recent run-ups; the market may be paying for growth that is increasingly capped by higher bills, slower interconnection, and political pushback over the next 12 months.