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Putin says to Fico that Russia will meet Slovakia’s energy needs
At a meeting at the Kremlin, Vladimir Putin told Robert Fico, Slovakia's Prime Minister on Saturday that Russia would do all it could to meet Slovakia’s energy needs. Slovakia is one of the few European countries that still buys?Russian oil and gas. The Druzhba Pipeline, built by the Soviets, is used to transport Russian oil into Slovakia. TurkStream is used to deliver natural gas from Russia. Fico arrived at Moscow for the celebrations to mark 'the Soviet Union’s victory over Nazi Germany during World War Two. In comments broadcast by?national television, Putin said that he would do "everything" to meet Slovakia's energy needs. Fico had chosen not to attend the Victory Parade at Moscow's Red Square. The Russian state media reported earlier that Fico would be attending the parade. Slovakia, a member of the EU, has "sought to keep political ties" with Russia. It has also argued that it is "too expensive to wean ourselves?"off Russian supplies after building their infrastructure around them. Reporting by Dmitry Antonov, Vladimir Soldatkin and Guy Faulconbridge; Editing by Aidan Lewis, Guy Faulconbridge
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US Postal Service suffers $2 billion loss in a quarter as cash shortages increase
The U.S. The U.S. USPS reported that mail volume fell 6.3% during the quarter ending March 31, while operating revenues rose 2.3%, to $20.2 billion, compared with the same period last year. USPS announced last month that it would suspend payments to employers for a federal pension plan to save cash. It also plans to increase the price of first class?mail stamps by 82 cents per stamp, from 78 cents. This will take effect on July 12. USPS reported total net losses of?$120 billion since 2007, as the volume of its most profitable product - first class mail - has dropped to its lowest level since?late 1960s. Postmaster General David Steiner stated that "we are in a financial crisis and are taking serious steps to conserve funds for our operations." "To avoid disruption, and to maintain our role in supporting American commerce and public opinion, we need urgent Congressional action. We must expand our borrowing power and remove outdated restrictions on the organization." USPS said that the suspension of employee pension contributions would save $200 million every two weeks or $2.5 billion by September 30. USPS received approval last month from the Postal Regulatory Commission to impose a 'temporary 8% increase in price for priority mail and packages deliveries. This was done to address 'rising?transportation costs and fuel prices. USPS intends for the surcharges to remain in place until January 17, 2027. Steiner stated on Friday that the developments with customers such as Amazon and DHL are encouraging. Steiner announced in March that the Postal Service would be hiring restructuring advisors to address its growing financial problems. (Reporting and editing by Nick Zieminski, Matthew Lewis, and David Shepardson from Washington)
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Azul Brazil faces a $200 million fuel loss this year. Restructuring to cushion the blow
Azul, the Brazilian airline, expects to take a hit of about $1 billion ($204.15m) from higher jet fuel prices in this year, but believes that it is better placed than its peers to absorb the effect after a recent restructure, according CFO Antonio Carlos Garcia. Garcia, who came to Azul from Embraer in April, just as the airline was exiting Chapter 11 bankruptcy proceedings noted that fuel accounted for about 30% of Azul's costs. The sharp rise in oil prices has also affected the firm quickly. Since the Iran War disrupted traffic along the 'Strait of Hormuz', global airlines have been dealing with soaring prices. This is the worst crisis the industry has faced since the COVID-19 Pandemic. Azul is facing its first major test after restructuring. Azul's rival?LATAM Airlines estimates a $40-million hit to its first quarter results and an additional fuel expense of $700 million for the second quarter. Garcia stated that Azul could offset half of the hit due to its adjusted capacity and revenue growth. As part of its restructuring, the carrier already reduced capacity. This is a trend that has been seen in other industries as costs rise. AZUL'S MITIGATION STRATEGY Garcia, in an interview with Azul on Friday, said that the airline faces lighter aircraft delivery obligations than other competitors. The airline expects to deliver four Embraer E2 aircraft this year, and seven Airbus widebodies. Garcia stated that the prices would be more favorable than previous twin-aisle agreements. In February, the airline emerged from Chapter 11 after a'sweeping restructuring' that reduced obligations by $2.5billion and included a United Airlines investment. The airline also received an investment from American Airlines, which is currently being reviewed by the antitrust watchdog CADE. NEW CFO'S FOCUS ON DISCIPLINE Garcia stated that the company intends to relaunch its American Depositary Receipts program by late may or early juin. Azul's executive director said that his primary focus would be on improving cash generation and cost discipline. Analysts welcomed his appointment to replace Alex Malfitani, Embraer's long-time predecessor. He helped Embraer recover after the COVID-19 Crisis and a failed commercial aircraft deal with Boeing. Embraer shares increased by more than fourfold under his CFO tenure.
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Spirit Airlines' grounding may help to ease shortages of engines in a tight market
Analysts and industry executives say that the recent grounding by 'Spirit Airlines', a U.S. low-cost carrier, could ease shortages of RTX next-generation spare engines required to keep Airbus single aisle jets in service. Spirit Airlines ceased operations of its 'all-Airbus' fleet on May 1, due to high fuel prices. ?Its bankruptcies are leading to new cases of A320neos that were dismantled and sold for parts. This trend had been happening in the industry because of a severe shortage of RTX Pratt & Whitney Geared Turbofan Engines. Fuel-efficient GTF engines often make the A320neo aircraft more attractive than their aircraft. Austin Willis of Willis Lease Finance Corp said that some GTF engines are being removed from Spirit A320 airframes to be leased to customers for support of aircraft on the ground. He added that the leasing rates of GTF engines had not decreased. This is a temporary measure to reduce the imbalance between supply and demand. Hundreds of A320neo aircraft have been grounded due to long wait times for engine repairs and inspections. A manufacturing problem at Pratt & Whitney also put pressure on GTF's engine production. GTF engines are used in at least 40 percent of A320neos and compete with CFM International’s LEAP engine for airline contracts. Airbus has complained about GTF shortages in new jets as part of a tug-of-war over who gets priority for scarce engine supplies: assembly lines for new aircraft, or airlines awaiting repairs. Lars Wagner, Airbus Commercial Aircraft's CEO, declined to comment during an interview with Wednesday on the GTF. Aircraft Parts Provide Relief Dick Allewelt, the founder and owner in Germany of Allewelt Aviation Consulting GmbH, said that teardowns on some Spirit aircraft could "have an effect going forward" on the market for spare engines. Sumisho Air Lease has declined to comment. AerCap, the lessor of late-model jets to Spirit, declined to comment. RTX declined to comment but said that the number of A320neos grounded is decreasing due to increased capacity in repair shops. KP Aviation, an Arizona-based supplier of aftermarket parts and components, said that several Spirit Airlines aircraft are currently being offered for disassembly. Scott Butler, Chief Commercial Officer at KP Aviation, said that there is a lot money to be made in engines. He said that as more Spirit aircraft hit the market, "the airframes" may not have as much demand. The Dublin-based EirTrade 'Aviation' and Chicago-based Aviation and?raillessor RESIDCO announced in February that they will dismantle and sell two nearly-new Spirit A320neos. KP Aviation plans to disassemble planes that are five to six years old from an earlier batch of yellow Spirit aircraft which returned to the market at the end of 2025. Butler stated that there was also a demand for landing gear, auxiliary power units and flight controls. BANKRUPTCY?COURT EXPEDITES SALE Spirit Airlines was granted permission by a U.S. court of bankruptcy to expedite its liquidation plan earlier this week. This included the sale of aircraft. Spirit's fleet as of May consisted of 114 aircraft of the Airbus A320 family, 66 of which are leased. According to court filings, 17 GTF engines are owned by lessors. According to a filing in court, lessors own 30 planes that have GTF engines. Butler stated that these planes won't be available for sale until at least several months as lessors gather technical data about the assets.
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European stocks fall as Middle East tensions escalate
European?shares fell on Friday, with broad losses, as a flare up in the Middle -East conflict impacted risk sentiment at the end of a geopolitical week. The pan-European STOXX 600 ended down 0.7%, at 612.14, but it recorded a small second consecutive weekly gain. The major regional markets also fell, led by Germany's DAX which dropped 1.3%. Washington expects an Iranian response to its latest proposal for ending the Gulf conflict as early as Friday, despite the fact that U.S. forces and Iranian forces are clashing and the United Arab Emirates is being attacked again. Richard Flax is the chief investment officer of Moneyfarm. He said that investors "understand?that the path to peace will not be smooth, linear, or clean. There?will be disagreements and setbacks on the way." European stocks are sensitive to geopolitical headlines. The region's dependence on energy fuels concerns about inflation and economic growth. The?U.S. Donald Trump warned that the European Union could face "much greater" tariffs in July if they failed to meet their trade commitments. Financials and Industrials were the two biggest losers, falling 0.7% and 1.5 % respectively. Rheinmetall's shares fell 9.2% after JPMorgan lowered the defense group from "overweight" to "neutral". The company's first-quarter results, released this week, showed revenue that was below analyst expectations. Defence sector fell 3.6%. IAG, the owner of British Airways, shed?2,8% after forecasting a lower annual profit due to rising jet fuel prices. The travel index dropped 1.4%. Commerzbank announced that it will cut 3,000 positions to increase profits and ward off an Italian UniCredit takeover. The stocks closed down by 3.9% and 1.3% respectively. Amadeus climbed 1.9% after the Spanish company of travel technology reported a quarterly core profit that was above market expectations. It also maintained its guidance. While Executive Board member Isabel Schnabel has warned about the increased inflation risks associated with the Iran War, President of the European Central Bank Christine Lagarde stated that the central bank was well positioned to react to any increase in inflation. The markets are pricing in at least two ECB rate increases this year. Employment in the United States increased more than anticipated in April. This indicates a robust labour market, and reinforces expectations that Federal Reserve will maintain rates for some time. Reporting by Twesha Dhikshit and Avinash p in Bengaluru. (Editing by Eileen Soreng, Mark Potter and Eileen Soreng)
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Price hikes and outlook cuts are used by airlines to combat the fuel price surge.
The aviation industry was blindsided by the sudden increase in jet fuel costs from $85 to $100 to $150 to $200 per barrel during the U.S./Israeli war on Iran. Fuel accounts for as much as a quarter or more of the operating costs, which has forced airlines to raise their fares and revise financial forecasts. Here is an alphabetical list of the ways airlines are responding to this issue: AEGEAN AIRLINES The Greek airline anticipates that the suspension of Middle East flights, as well as the spike in fuel costs will have "a significant impact" on its first-quarter earnings. AIRASIA X Malaysian Airlines executives announced that the company has cut 10% of its flights in the group and imposed a fuel surcharge of around 20%. AIR CANADA The volatility in jet fuel prices has caused the largest Canadian carrier to suspend its full-year forecast. The company announced plans to cut four of its daily flights from New York to New York because fuel prices were higher. AIR CHINA, CHINA SOUTHERN AIRLINES, CHINA EASTERN AIRLINES China's "big three" airlines have reduced surcharges for domestic flights to 60 yuan (8.78 dollars) for flights less than 800 kilometers and 120 yuan (about $13.80) for those more than 800 kilometers, from respectively 10 yuan or 20 yuan. AIR FRANCE-KLM The airline group?said that it expects a fuel bill increase of $2.4 billion this year. It also downgraded the capacity outlook from 2025 to a rise between?2% and 4%. It had previously predicted an increase between 3% and 5%. The group announced previously that it would increase the price of long-haul tickets to reflect rising fuel costs. Cabin fares will rise by 59 euros (50 euros) for a round-trip. KLM, the Dutch subsidiary of the group, announced on April 16 that it would cancel 160 flights across Europe in coming months due to rising fuel prices. AIR INDIA Bloomberg News reported that the Indian carrier had discussed furloughing employees who were not technical and reducing flight capacity more than 20% in the next three month. The company said that it will also revise the fuel surcharge, moving from a flat surcharge for domestic travel to a grid based on distance. The company said that surcharges for international routes do not compensate the steep rise in fuel costs. AIR NEW ZEALAND On April 7, the airline announced that it would cut flights in May and June, and raise fares. It was one of the first airlines to announce a large increase in ticket prices after the conflict erupted. The airline also suspended its earnings forecast for the full year due to volatility in the fuel markets. AIR TRANSAT The Canadian airline announced that it would reduce its planned capacity by 6 percent from May to October of this year. Cuts are expected to be made on routes to Europe, the Caribbean, and Cuba. AKASA AIR Akasa Airlines, based in India, announced that it would be imposing a fuel surcharge on both domestic and international flights ranging from 199 to 1,300 Indian Rupees ($2 - $14). ALASKA AIR Fuel prices are rising sharply, putting pressure on airline margins. The carrier had previously withdrawn its profit forecast for the full year and warned that earnings would be severely affected in the second quarter. The carrier has also reduced capacity in certain markets. AMERICAN AIRLINES The U.S. airline slashed their 2026 profit projection, pushing the lower end of expectations to a?loss, and stated that it expects its jet fuel bills to increase by over $4 billion this fiscal year. The government has increased the fees for checked bags on domestic flights and short-haul flights by $50 for the third bag and $10 for each of the first two bags. It also reduced certain benefits to economy passengers. It said that higher fuel costs would increase its costs by approximately 140 billion yen (890 million dollars) this year. However, the airline expects to reduce the impact of these increases to 60 billion yen through hedging and cost reductions. It has said that it will consider introducing an internal fuel surcharge for the fiscal year starting April 2027. ASIANA AIRLINES Newsis reported that the South Korean airline would cut 22 flights from April to July because of fuel price increases. CATHAY PACIFIC Hong Kong Airlines will reduce fuel surcharges on most flights starting May 16 as part of its "agile" response to the volatile jet fuel price. CEBU AIR The Philippines-based carrier said that the sharp increase in fuel prices is a major concern. It will continue to review its pricing and network strategy to minimize the impact. DELTA AIR LINES Delta announced that it would reduce capacity by around 3.5 percent points from its initial plan, and increase fees for checked baggage in order to offset the rising costs of jet fuel. The increase will be $10 for first and second bags, and $50 on third bags. The U.S. carrier pulled all planned growth in capacity for the current quarter, and forecast profits below Wall Street expectations. EASYJET EasyJet has warned that it will suffer a larger half-year loss before tax of between 540 and 560 millions pounds ($732 and $759million), which includes 25 million pounds of extra fuel costs for March. The Wall Street Journal reported that a group of U.S. low-cost airlines, including Frontier Airlines, has proposed a $2.5 billion plan for relief to the U.S. Government. The report stated that the figure was based on the amount of jet fuel the group is expecting to spend this year in comparison to previous forecasts. Fuel prices have increased dramatically since the carrier's forecast, and it has stated that it will be reviewing it. GREATER BAY Airlines The Hong Kong-based firm said that it would increase fuel surcharges for most routes on April 1 and keep them the same on routes to mainland China and Japan. HONG KONG?AIRLINES The airline announced that it would increase fuel surcharges up to 35% starting March 12. The biggest increases would be on flights between Hong Kong, Bangladesh, and Nepal where the charges would go from HK$284 to HK$384. British Airways' owner IAG has warned that the annual profit will be lower than expected, due to rising jet fuel prices and supply disruptions. It had previously announced that it would increase ticket prices in order to reflect the higher costs of jet fuel. Despite its fuel hedges it was still "not immune" from the wider fallout caused by fuel price volatility. INDIGO India's largest airline announced that it will introduce fuel charges for domestic and international flights starting March 14. The charge for flights into the Middle East is 900 rupees and for flights into Europe, 2,300 rupees. JETBLUE AERWAYS JetBlue announced that it would reduce hiring, reduce capacity, and raise fares in order to mitigate the impact of the rising jet fuel prices. CEO Joanna Geraghty stated on a earnings call that the airline had suspended its outlook for the full year. Sources with knowledge on the subject have confirmed that KOREAN will be entering emergency management mode in April as oil prices continue to rise. LATAM AIRLINES The Chilean carrier has cut its core earnings forecast for 2026 after rising jet fuel costs pushed up costs. LUFTHANSA The German airline group has said that it will be hit by jet fuel prices of 1.7 billion euros in 2026. Its subsidiary ITA Airways announced that it would increase ticket prices by between 5% to 10% in 2026, to compensate for rising fuel costs. The group announced in April a new low-cost "Economy Basic", which limits free carry-on luggage to a "laptop or small backpack". The group had previously announced that 20,000 short-haul flight would be removed from their schedule until October, which is equivalent to approximately 40,000 metric tonnes of jet fuel. PAKISTAN INTERNATIONAL FLIGHTS Fuel surcharges are cited as the reason for raising domestic fares up to $20, and international fares up to $100. QANTAS AIRWAYS Qantas, an Australian airline, said that it has delayed a planned A$150-million ($108-million) buyback. It also increased its fuel estimate for the second half 2026 from A$2.5-billion to A$3.1-3.33 billion. Scandinavian Airlines announced that it would cancel 1,00 flights in April due to high jet fuel and oil prices. In March, the airline had cancelled "couple hundred" of flights. SPIRIT AIRLINES U.S. Low-Cost Carrier shut down abruptly due to financial pressures. Fuel costs rose sharply because of the Iran War. SPRING AIRLINES Budget Chinese airline announced that it will increase fuel surcharges for domestic flights starting April 5. Details to be announced in due course. SOUTHWEST SOUTHWEST SOUTHWEST SOUTHWEST SOUTHWEST SOUTHWEST SOUTHWAST AIRLINES The U.S. airline forecast a second-quarter profit that was below the market's expectations. Its CEO also warned of the impact the spike in jet fuel would have on the airline. The first and second bags were now charged $45 and $55 respectively. The Portuguese airline claimed that its price increases would partially offset the impact of fuel prices changes on its revenues. THAI AIRASIA The Thai low cost carrier announced that it would reduce its overall seat capacity between May and July by 30% on average to offset the impact of rising aviation fuel costs and a softening of demand. THAI AIRWAYS The Thailand-based airline said that it would increase fares between 10% and 15% in order to combat rising fuel prices. The European airline, tour operator and travel agency cut their full-year profit forecast and suspended revenue guidance. They said they had incurred extra costs of about 40 million euro due to the March war, including repatriation and operational disruptions. LUFTHANSA, TURKISH AIRLINES SunExpress is a joint venture of Turkish Airlines and Lufthansa. It announced that it would charge a temporary fuel fee of 10 euros for each passenger traveling between Turkey and continental Europe. The fuel surcharge will be applied to all bookings made after April 1, for departures after May 1. Turkish Airlines announced on April 10, that it would not be distributing any dividends from its 2025 net profits, choosing to keep the earnings in order to conserve cash. T'WAY AIR As part of the measures taken to combat the effects of war, the South Korean low-cost airline said that it would furlough cabin crew in May and/or June without pay. UNITED AIRLINES Scott Kirby, CEO of the U.S. airline, said that ticket prices could need to increase by up to 15% or 20% in order to offset an increase in jet fuel costs. The company has already implemented five fares increases in late first quarter along with increased baggage fees that it says have begun to offset rising fuel prices. The carrier's second-quarter profit and full-year earnings are also below Wall Street expectations. It is expected to recover just 40-50% of fuel prices through fares in the second quarter. This will improve to 70-80% by the third, and up to 85-100% in the fourth. VIETJET Due to possible fuel shortages, the Vietnamese budget airline has adjusted flight frequency on certain routes. VIETNAM Airlines Vietnam's Aviation Authority announced that the carrier will cancel 23 flights per day on domestic routes starting in April after it requested assistance from the government to remove an environment tax on jet fuel. VIRGIN ATLANTIC Corneel Kster, the CEO of the airline, told The Financial Times that despite adding fuel surcharges on fares this year it will struggle to achieve profitability. VIRGIN AUSTRALIA Virgin Australia has said that it expects an increase of jet fuel costs of between A$30 and A$40 million in the second half of the fiscal year. It also anticipates a 1% decrease in capacity for the fourth quarter. VOLOTEA The Spanish low cost airline has introduced a new pricing strategy that links ticket prices with fuel costs. This could add an additional surcharge after purchase of up to fourteen euros per passenger per flight. WESTJET Globe and Mail reports that the Canadian airline has reduced seat capacity in June. The Canadian Press reported previously that the airline would add C$60 ($44.50) to certain bookings, and combine flights due to rising costs.
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Cycling-Magnier wins opening stage of Giro d'Italia by sprinting and avoiding a crash
Paul Magnier of France (Soudal Quick-Step), beat Tobias Lund Andresen of Denmark (Decathlon CMA CGM), to win the first stage?of Giro d'Italia on Friday in Burgas after a 'crash' near the finish line marred the bunch sprint. Magnier won his first Grand Tour Stage after a 'crash' occurred around 600 metres before the finish. Briton Ethan Vernon of the NSN Cycling Team came in third. Magnier stated, "I am so proud of my team and performance." It was very?hectic because everyone was fresh, and we knew that the narrow road would be difficult in the final so we tried to get into good?position." The flat 147 km ride from Nessebar was relatively calm until the chaotic finish. The peloton kept a two-rider early breakaway consisting of Italian Manuele Tarozzi, and Spaniard Diego Pablo Sevilla under control and reeled them in with just 22 km to go. Jonas Vingegaard, the pre-race favourite and his Visma Lease a Bike team chose to play it safe at the back of the peloton. This allowed others to fight for the top spot in the final kilometre. Magnier and two teammates were at the front when several riders fell just behind the leaders. The rest of the group was blocked behind these fallers, which included Australian Kaden Grosves who would have been expected to be in the race. Jonathan 'Milan, of Italy, was one the favourites for the sprint. He had Lidl Trek colleague Max 'Walscheid in front but he was unable respond and ended up fourth. Magnier will be wearing the leader's shirt for Saturday's second stage, which covers 221 km from Burgas towards Veliko Tarnovo. Trevor Stynes is reporting, Toby Davis and Christian Radnedge are editing.
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US launches probe into Avride crashes in Texas
The National Highway Traffic Safety Administration announced Friday that it is launching an investigation into a number of crashes involving Avride’s autonomous vehicles. These crashes raised concerns about the?performance?of these vehicles. NHTSA said that the behavior of vehicles may be indicative of excessive assertiveness or insufficient capabilities, which "may also constitute violations of traffic safety". Several of the crashes caused property damage, and there was one minor injury. NHTSA stated that the vehicles failed to avoid vehicles or objects on the road and had performed lane changes. NHTSA stated that Avride operated?some of their AVs on Uber’s platform and offers passenger services in Dallas, where many incidents occurred. NHTSA identified 16 accidents as being of concern. Avride welcomed the opportunity to "provide the agency with an in-depth understanding of our safety protocol and technology." It added that "in?all cases, the vehicle was under supervision by a trained safety officer on board." The vehicle was usually traveling at a low speed and most of the incidents were caused by other road users. The company has said that it has "implemented specific technical and operational mitigations to address our findings in each reported incident." Avride uses Hyundai's Ioniq 5 platforms and said it had a fleet of 200 vehicles last month. It is also adding dozens each month. In recent years, NHTSA opened "several investigations" into self-driving vehicles and advanced driver assist systems. According to the agency, a preliminary analysis of crash?videos revealed instances where vehicles changed lanes and into other's path, failed to slow down or stop in time for traffic, and struck stationary objects that partially blocked lanes. The investigation will evaluate the extent and severity of any potential problems or risks to passengers and other road users. This includes technical and operational factors as well as safeguards. Uber and Hyundai didn't immediately respond to comment requests. Reporting by David Shepardson, Editing by Chizu nomiyama and Mark Potter
Why Americans are paying for unfinished power projects
Unknowingly, millions of Americans finance electric grid projects without realizing any benefits.
According to an analysis of regulatory disclosures, policymakers are allowing utilities to charge customers for transmission lines and power plants long before they have been built. This increases bills for the near future in exchange for the promised savings decades down the line. Incentives are being offered to boost grid upgrades in a time when artificial intelligence data centers demand a lot of power. However, they also increase power bills for businesses and households.
In the past, utilities that wanted to invest in expensive infrastructure projects had to obtain loans from investors and banks, and were only allowed to pass on those costs to their customers once the projects were completed.
These projects can also be financed ahead of time under the Construction Work In Progress (CWIP), a benefit which boosts cash flow for electric utilities and reduces their borrowing costs. These fees can amount to several dollars per household, multiplied by millions of customers.
According to a review involving several thousand pages of rate disclosures from electric utilities, at least 40 U.S. States now offer some form of CWIP incentive. This is twice as many states as a decade earlier, when a study by the economic consultant Brattle Group revealed fewer than twenty states had CWIP provisions.
Until now, there have been no reports on the extent to which CWIP policies spread over the last five years in tandem with the explosion in construction of data centers. Two dozen analysts, industry officials and consumer watchdogs were also interviewed to understand the impact these policies have on the repair and buildout of the grid, as well as the electricity bills for American households.
CWIP policies were used to fund a variety of large energy - and infrastructure projects. These included the Vogtle reactors in Georgia which had significant cost overruns. Another project in Nevada is raising bills for benefits that will be realized decades from now. And a Virginia offshore farm has collected around $2 billion before it even began operations.
The?U.S. After decades of relatively low demand for electricity, the 'U.S. According to U.S. regulators, the electric grid's buffer reserve has become dangerously thin across several regions. This increases the likelihood of rotating blackouts. Grid operators expect electricity demand to increase by more than 2% annually through 2045 after an average annual growth rate of 0.5% between 2009 and 2024.
Reporting indicates that many of the state CWIP policies were introduced only in the last few years as grid tightness increased.
Missouri Governor Mike Kehoe reversed a ban on CWIP incentives in Missouri that had been in place for 50 years to address the rising demand of power from data centres. Arkansas, Kansas Oklahoma and North Carolina all have CWIP provisions in place since 2024.
In a press release, the Governor's?office stated that "Governor Kehoe is convinced CWIP encourages new energy generation and reduces long-term financing cost passed on to ratepayers." Without CWIP, utility bills would increase dramatically when a new plant is brought online. CWIP allows for these costs to be recouped more slowly, reducing the price shocks that customers experience.
The National Governors Association (NGA), which represents state Governors, has stated that it doesn't take a stance on if CWIP would be appropriate for specific states or projects.
Business and consumer groups have criticized?CWIP, claiming that it has increased power costs to fund projects which may not benefit them.
Paul Cicio is the president of Industrial Energy Consumers of America (a trade group representing large manufacturers). "The average ratepayer doesn't know this is happening."
WHY WAIT DECADES for a payout?
According to the U.S. Energy Information Administration (EIA), U.S. electricity prices have already increased by 40% in the last five years in order to pay for massive investments in an aging electric grid. In hotspots such as Virginia, Maryland and Pennsylvania, data center prices have risen double-digits in the past year. Ben Inskeep is the program director of Citizens Action Coalition of Indiana in Indianapolis, a consumer watchdog organization. He said that "huge rate increases have created a massive affordability crisis for electric power." "CWIP incentives add insult to injury for customers."
Utilities, states and other stakeholders say that CWIP incentives can be crucial to kick-starting the types of projects required to shore up the grid and meet the growing demand after decades of underinvestment. They also claim that these provisions will lower the costs for ratepayers in the long run by reducing the financing costs.
According to Berkshire Hathaway's disclosures, NV Energy, a utility owned by Berkshire Hathaway, charges an average customer $4 a monthly to cover financing costs for long-range high-voltage lines that are scheduled to come into service in 2028.
Utility says that using CWIP as a way to finance the project will be cheaper than borrowing money from Wall Street. This will save money for ratepayers.
Mark Garrett, consultant at Nevada's Bureau of Consumer Protection, said that the benefit calculated - as lower rates – could be as low as 0.1%. It would take a half-century to see the benefits. Garrett stated that a ratepayer must stay with the CWIP for at least 52 years to receive any benefit. This means that a 40-year-old average ratepayer will be 92 years old before they see any benefits from the CWIP model.
NV Energy has not responded to messages seeking comment about Garrett's analysis.
According to regulatory disclosures, in Virginia, the state with the largest concentration of data centres, Dominion Energy has already collected about $2 billion from electric customers for a $11.5 billion offshore farm that is still under construction. This amounts to an average monthly charge of around $11.23, which is the peak amount. Dominion executives claim that the CWIP structure is expected to save ratepayers about $2 billion in the 30-year life of the project.
Wall Street analysts have described the capital expenditure by U.S. utilities as a super-cycle of investment that will surpass $1 trillion over the next five year period. According to financial results, utility companies earn a rate of return that ranges between 9% and 12% on their capital expenditures.
Are Georgia's nukes a cautionary tale?
CWIP incentives often come with provisions that protect utilities from delays and cancellations as well as cost overruns. Ratepayers are left to pay the bill, according to Jason Walter, a University of Tulsa economist.
This is a concern because there has been a long history of projects that have failed, were delayed or over budgeted in the U.S.
Walter stated that "if a project - particularly one involving nuclear energy - cannot attract private investment without a government backstop, this is a clear indication that it may not be an economically responsible investment." "Forcing captive ratespayers to serve as a 'bank' for speculative project serves no clear public benefit."
In some cases, the structure has already triggered a public backlash.
Georgia voters ousted two?Republican Public Service Commissioners in November. This was a result of a referendum against CWIP, which was sparked by massive cost overruns on the construction of two Vogtle reactors.
Georgia regulators report that the project was seven years late and cost $35 billion, which is more than twice as much as the initial estimate of $14 billion. Georgia regulatory documents show that households in the state have paid an average of $1,000 in CWIP costs since 2009, as electricity rates rose sharply.
Patty Durand is the director of Georgians For Affordable Energy. She said that Georgia's nuclear quest should be seen as a warning across the nation for the nuclear hype currently underway. "Georgia's ratepayers suffered a severe blow, and any elected officials who support these high-risk projects could suffer the same fate as the two commissioners, who lost their seats, due to consumer anger."
(source: Reuters)