Federal Energy Regulatory Commission Needs To Act on the Construction-Work-In-Progress Issue

Gao ID: EMD-81-123 September 23, 1981

GAO reviewed the overall financial environment under which the utility industry is presently operating.

The financial indicators of the electric utility industry have deteriorated due to high inflation, high interest rates, accelerating construction costs, decline in demand, and a less than adequate rate of return. This has led to uncertainty about the industry's ability to attract investment capital needed to complete ongoing and planned construction programs. GAO sees the real issues as being whether companies need rate relief to maintain financial integrity and whether construction programs which depend on such relief are needed to meet future electric energy demands. There are differing views on the extent of these problems and how they should be solved. Industry and the financial community have proposed immediate rate relief options; some States believe more can be done through improved load forecasting, conservation, load management, and use of alternative sources. Some companies have adopted many of these methods to alleviate their financial burdens.


Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: John W. Sprague Team: General Accounting Office: Energy and Minerals Division Phone: (202) 512-7783

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