construction work in progress (CWIP)

Term used to refer to a fixed facility used for generation, transmission or distribution services which is under construction or not yet in service. This special classification has traditionally been used in energy industry accounting to classify costs associated with CWIPs. Under most conditions, these costs cannot be factored into customer rates until the project is complete or in service.

CWIP rate exemptions are likely to become less common in the future as the nature of the energy industry changes. The enormous cost of plant construction and re-engineering of transmission corridors is likely to force regulators to rethink this policy and allow at least some construction costs to be passed on to consumers prior to completion. The energy industry may, in turn, be required to produce more renewable or pollution-free energy to qualify for the right to charge customers for costs incurred prior to completion of their projects.

See also:

deregulation, stranded costs, renewable energy, green power