This article first appeared in the St. Louis Beacon, March 2, 2009 - AmerenUE says it isn't even sure whether it will actually apply for a license to operate a second nuclear power plant in mid-Missouri, but debate on the issue is already generating sparks among several traditional antagonists - and some historical friends.
At issue is how a new plant - with a cost estimated at up to $9 billion - would be paid for and what effect it would have on rates for AmerenUE's customers. The discussion centers on a bill in the Missouri Legislature, SB228, that would overturn a proposition approved by voters more than 30 years ago by a wide margin. Without that reversal, the utility says the plant is not likely to be built.
In 1976, by a vote of two-to-one, Missouri voters barred utilities from financing ongoing construction projects by collecting money from its customers. Ratepayers could only be charged when the juice began flowing. Despite the utility's opposition to that restriction, the state's first - and only - nuclear plant was built in Callaway County and continues to operate.
Now, AmerenUE is looking at building Callaway 2 on the same site near Fulton, but first, it wants lawmakers to let it pay for the plant with money collected from current customers - a practice known as construction works in progress, or CWIP.
The basic financial arguments are these:
AmerenUE says it can save on interest payments by paying for the project as it is built with help from ratepayers rather than having to put the entire burden of the borrowing on shareholders now or on ratepayers when the project is complete. Opponents of the change say customers should not have to pay now for the power that won't be generated until the future - and possibly not generated at all, if the plant never gets built but costs to that point still must be covered. Instead, shareholders should bear the risk.
But the battle over CWIP has far more than just two sides. At times, it seems as complex as the grid that power companies use to share electricity, a series of interconnected arguments and alliances that makes for anything but politics as usual in Jefferson City and beyond.
What the Bill Says
The legislation, sponsored by Sen. Delbert Scott, R-Lowry City, isn't specifically limited to nuclear plants. It would cover any facility that produces energy from "clean" or low-carbon producing sources. But everyone involved knows it is designed to help AmerenUE's efforts to build a second Callaway plant.
The bill specifies that once the Public Service Commission is satisfied with the plan to build the plant, it could issue an order that would allow construction costs to be recovered through electric rates. That order would stay in force as long as the utility sticks with a building schedule that would be regularly reviewed by the PSC.
If construction of the plant is canceled, costs up until that point could be recovered from ratepayers if the cancellation is deemed prudent. If the CWIP legislation is modified in the future to limit or prohibit the use of rates to recover costs, any costs up until that time would still be recoverable.
Further, any area that the PSC is given control of in the legislation would be beyond review by the courts or by any entity of state, regional or local government.
As introduced, the bill has prompted lengthy legislative hearings that are sure to produce revisions before it comes to a vote - if it even makes it out of committee.
Even if it passes the House and Senate, Gov. Jay Nixon has signaled strongly that the economic times are not right for such an ambitious project. In a carefully worded statement released last week, he said:
"It is premature at this time to saddle ratepayers with potential construction costs before regulators have awarded a permit and Ameren has made the decision to build."
What the Debate is About
One of the biggest questions the legislation has raised concerns financial risk and who should bear it. If raising the money for a new nuclear power plant is not a good bet for AmerenUE and its shareholders to shoulder, critics ask, why should ratepayers be asked to take on the burden?
Another question about the finances deals with the long lead time for the plant. The utility has said that even if the process goes as smoothly as it hopes - and it decides to build the plant in the first place - construction would not begin until 2011 at the earliest and could take a decade or more. So, customers at that point would be paying for power that could be generated at a time when they may not even be getting their electricity from AmerenUE.
Finally, there is the debate over rates. Consumer advocates say that if the bill passes, forces that have kept the cost of electricity reasonable for AmerenUE customers would be wiped out, leaving few limits on future rate hikes.
But the financial questions are not the only ones surrounding the plant and the legislation. Others include:
- With the passage of Proposition C in November, dealing with renewable sources of energy, should AmerenUE be concentrating on nuclear power, or should it shift its priorities to wind, solar and other "clean" sources of electricity that it must increase? Or can those other sources only ease the reliance on coal-powered plants to a limited extent, and nuclear would still be needed?
- Is nuclear power safe? Where will spent fuel and other nuclear waste go?
- Can a reasonable balance be struck that would let AmerenUE raise the money it needs to build Callaway 2 without subjecting its customers to rate hikes that may not undergo the same scrutiny that increase requests get now?
- In these tough economic times, can the state afford not to aid financing of a project that promises to create thousands of jobs? Or are hard times a good reason to put the project off until the economic future becomes rosier?
- If voters had the direct say over the CWIP issue in 1976 and voter overwhelmingly to disallow it, shouldn't they be able to decide the issue this time around as well?
- If the federal government enacts so-called cap and trade provisions to try to cut down on emissions from coal-fired power plants, what effect would that have on AmerenUE's future economic situation?
The bill received a hearing in mid-February, where these issues and more were presented and debated by a parade of witnesses on all sides. Since that time, the parties with a stake in the outcome have been jockeying to forge legislation that can please as many sides as possible - or as necessary - to get it passed.