Which of the following is not true for a regulated electric utility that has construction work in progress?
a. The political climate of the utility commission that will be ruling on the construction work in progress costs is not an issue to be considered.
b. Most utility commissions allow no construction work in progress or only a small amount in the rate base.
c. In the long run, everybody pays for inefficiency and excess capacity because disallowed costs are a risk that can drive the stock price down and interest rates up for the utility.
d. Costs related to construction work in progress that are disallowed are, in effect, charged to the stockholders.
e. Future income will not include a return on disallowed costs.
A
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