Why millions of Americans pay for unfinished electricity projects

At least 40 U.S. states now allow Construction Work In Progress (CWIP) financing, letting utilities charge customers before projects are completed and lifting household bills by several dollars per month. Reuters says U.S. power prices are already up about 40% over five years, with double-digit increases in data-center hubs, while projects like Virginia’s offshore wind farm have collected about $2 billion in charges before entering service. The policy is supporting a $1 trillion utility capex cycle, but it is also increasing regulatory and political backlash risk for utilities and ratepayers.

Analysis

The market is still underpricing how CWIP changes utility economics from a traditional asset-yield story into a de-risked, quasi-regulated cash flow model. The real beneficiary is not just the headline utility, but the balance sheet: earlier cash collection lowers funded capex, compresses equity dilution risk, and should support higher allowed leverage over time. That creates a second-order winner in utility debt and preferred capital, while also advantaging firms with strong regulatory relationships and large project pipelines versus smaller peers that lack political scale.

The flip side is that this is a latent affordability shock, not a one-time rate increase. Bill pressure accumulates before service benefit arrives, so the political risk compounds with every quarterly rate filing and becomes most acute in states where data center growth is visible and households are already stretched. That makes the risk window months to years, not days: the near-term catalyst is regulatory pushback or election-cycle backlash, while the longer-term catalyst is project slippage, because any delay converts a "lower financing cost" narrative into a pure transfer from captive customers to utilities.

For Dominion, the market likely already prices the growth narrative but not the rising chance of adverse regulatory optics in Virginia if bills continue to step up while the project remains unfinished. Berkshire Hathaway is the cleaner relative winner because its utility exposure benefits from the same capital-spending super-cycle without the same single-project headline risk. The contrarian miss is that CWIP may be structurally bullish for utility equity multiples in the short run, even as it worsens the public-policy backdrop; investors are likely to focus too much on margin accretion and too little on the probability that some states eventually cap or unwind the most aggressive versions after the next affordability flare-up.

Key Decisions for Investors

• Short D into the next 1-3 months on regulatory/affordability headline risk; use rallies as entry. Risk/reward favors downside if Virginia billing pressure becomes a political issue again, with a stop on a clean break to new highs.
• Long BRK.B vs short D as a relative-value pair over 6-12 months. Berkshire captures utility capex upside through a more diversified, less politically exposed earnings base; D carries higher project-specific and election-cycle risk.
• Buy utility debt / preferreds selectively, not common equity, in names with CWIP-backed capex. The model improves cash conversion and may tighten spreads even if equity remains headline-sensitive.
• For event-driven accounts, consider D put spreads 3-6 months out rather than outright puts. The thesis is slow-burn regulatory compression, so defined-risk downside exposure is better than paying full premium for a timing mismatch.
• Monitor Missouri / North Carolina / Virginia for legislative or PSC backlash; if any state moves to narrow CWIP, reduce utility-overweight exposure immediately because the market will likely de-rate the entire regulated cohort on policy contagion.