for review to be on the “end result” instead of looking at specific property value or a formula for rate base. Despite this change, the used and useful test remained part of the rate base evaluation. Exceptions Construction Work In Progress (CWIP) In 1967, predictions for energy demand and nuclear capacity were given through the year 2000. Construction began on many nuclear reactors based on these predictions but due to the length of time to build the reactors, high inflations rates and the Middle East oil boycott of 1973 many of these projects were canceled in various stages of completion. It was during this time that CWIP was introduced. When CWIP is included in the rate base, the used and useful test is bypassed. The utility is allowed to collect recovery costs before the project is completed. In 1976 the Federal Power Commission announced a policy change stating that CWIP could only be included in the rate base when the utility was, “in severe financial distress.” This reduces the total cost of the project and is seen to benefit the consumer. This perceived benefit is controversial due to the fact that it is usually the future ratepayer that receives the benefit while the customers who paid during construction have moved on. Construction costs not allowed in the rate base may still be eligible to accrue interest through Allowance for Funds Used During Construction (AFUDC). This interest is added into the rate base when the project is completed. References Public utilities of the United States