New plan for nuclear plant could be just the beginning
This article first appeared in the St. Louis Beacon, Nov. 22, 2010 - A new proposal that could restart the process for a second nuclear power plant in Missouri does not necessarily mean that an older plan -- where customers could pay for building the plant before it generates electricity -- is dead.
Ameren spokeswoman Susan Gallagher said Monday that the plan unveiled last week by Gov. Jay Nixon -- where electric customers could pay $40 million of the utility's costs seeking a permit for new plant in mid-Missouri -- is not really connected to efforts last year to overturn a ban on utilities being able to seek reimbursement from ratepayers for construction works in progress.
"A decision on whether to build a nuclear plant would be made years from now, and it would depend on many factors," Gallagher told the Beacon. "It's not material to this announcement."
Ameren says it has already spent $70 million in the permit application process for a second nuclear facility in Callaway County, where its current nuclear plant is located. The proposal unveiled by Nixon last week, backed by a coalition of utilities in Missouri, would let Ameren recover part of that cost from ratepayers. Nixon said the plan is a significant shift for the utilities and a benefit for consumers.
But the new chairman of the Consumers Council of Missouri, retiring state Sen. Joan Bray, D-University City, said Nixon's plan puts the burden of seeking a permit for a new plan precisely where it should not belong -- on customers, not on Ameren shareholders.
"Part of my problem with this deal," Bray said, "is that Ameren has already determined that it can afford to do this because it's already spent the money. I'm assuming that if it thought it couldn't afford to do it, it wouldn't have spent the money. They didn't know they were going to be reimbursed by ratepayers.
"Ameren is a very well run company. They do very well. It's a private company. It's a regulated company, but they have a guaranteed rate of return they can make, and a lot of businesses would love to have their rate of return. This is something that shareholders absolutely should bear. They benefit from all the successes, and they shouldn't be absolved of the risks."
Last year's push by Ameren tried to overturn a ban on charging ratepayers for construction works in progress (CWIP), a prohibition approved overwhelmingly by Missouri voters in 1976. It also would have restricted the ability of the Public Service Commission to review and approve request for rate increases while power plants are being built.
The change fell short in the face of opposition from consumer groups and large utility customers.
Besides the thousands of jobs that a new power plant would bring, Ameren projects that Missouri also will need new sources of power in the coming years. Through 2025, according to its latest planning report, demand for electricity will continue to increase while supply will remain flat, then decline because aging plants will have to go offline.
By 2025, demand is expected to outstrip supply, particularly without any concerted efforts to promote energy efficiency. So by 2018-2020, the utility concludes, "we need to build baseload generation to maintain adequate reserve margins for our customers' demand growth."
Gallagher said a new transmission subsidiary formed earlier this year will operate primarily in Illinois, at least at first, and is not really connected to the issue of capacity in Missouri.
Announcing the latest proposal on Friday, Nixon emphasized that it would provide affordable, reliable supplies of energy and at the same time "keep consumer protections on the books for construction work in progress."
But as Gallagher noted Monday, if the Nixon proposal on partial reimbursement of money for seeking a permit passes, it would allow Ameren to keep its options open on whether to build a second nuclear plant, what kind of plant it would build and how it might be financed.
"This is an entirely different deal," the Ameren spokeswoman said. "This is purely a permit that gives us an option to build. It gives us the opportunity to consider nuclear. This doesn't have any kind of design associated with it. It just says we're going to make this site ready should we ever be able to build a nuclear plant.
"We have no idea when we're going to do it. We have no idea what we're going to build. There are all kinds of technologies available now. Now, we've got a coalition behind us. There's no comparison to the CWIP discussion."
But Bray is concerned that once changes are proposed to one part of the legislation governing utilities, the CWIP portion may be the next target.
"There is massaging to the bill that could make it not as hard on consumers," she said, "but it is still an anti-consumer piece of legislation. We get nothing out of the deal. Maybe it's not as awful as it could be, but we get nothing out of the deal."
One change that could make it more palatable, she said, would be to include a dedicated stream of funding for the office of public counsel, which represents the public in utility rate cases. Bray said the office, which is currently funded by general revenue, is "a mere shadow of what it used to be."
"In the long term," she said, "if this is limited and has real tight restrictions on it, maybe it could be worth getting something that is absolutely essential for consumers to have a real voice here. The utilities have unending armies of lawyers. So if they're going to get something we really want, why can't we get something we really want?"