It's back! State legislator introduces bill to repeal CWIP; similar measure died in '09
This article first appeared in the St. Louis Beacon, April 21, 2010 - After losing a high-profile, high-powered effort last year to let utilities charge ratepayers for construction projects before they generate any power, a state representative from southwestern Missouri is trying again.
But this year, Rep. Ed Emery, R-Lamar, is carrying on the campaign without one of his biggest backers: AmerenUE.
Introduced just last month and heard in committee on Tuesday, Emery's bill, HB2343, would overturn a vote by Missourians from 1976. Then, by a ratio of nearly 2 to 1, voters barred utilities from charging customers for the costs of construction works in progress, or CWIP.
That vote came at a time when Union Electric was building the state's first -- and, so far, its only -- nuclear power plant, in Callaway County in mid-Missouri. The prohibition still stands.
But Emery thinks it is outdated. His bill would overturn the ban and also change how the Public Service Commission is allowed to rule on requests for rate increases while power plants are being built. Further, it would sharply limit how those decisions could be revisited once they are made.
Emery admits that given the state's financial crunch, which is taking up most of the Legislature's time in a session scheduled to end on May 14, his bill may not stand much of a chance to pass; he gives it about 30 percent. Still, he said, times have changed a lot since 1976, and Missourians deserve a friendlier regulatory climate for any future plant construction.
SAME ISSUE, NEW POLITICS
Last year's bills in the House and Senate became lightning rods for people on both sides of the issue, particularly because AmerenUE was tying the effort to plans to build a second nuclear plant on the site of its current one.
In public debate and TV commercials, it raised the specter of huge rate increases for electricity if the utility was not allowed to pass construction costs for a plant -- estimated at $6 billion, plus another $3 billion for financing -- on to ratepayers as the facility was being built.
On the other side was a coalition of consumer advocates, environmentalists and others who did not like the prospect of a second nuclear plant and opposed any change that would ask customers to help pay for it before they saw any benefit. Such costs, they said, should be born by Ameren shareholders, not ratepayers.
Eventually, backers of the bill stepped away, and Ameren officials said they were suspending plans for a second nuclear plant as well. But they kept alive their application to the Nuclear Regulatory Commission for a second plant although they told the agency essentially to take it out of the queue and stop active consideration of it.
This time around, says AmerenUE spokesman Mike West, the utility has nothing to do with the legislation to overturn the ban on CWIP.
"The cost of the infrastructure is an important issue for our business," he said, "but we did not seek this bill and have not taken a position on it. We welcome the debate, but the bill is not really a legislative priority for AmerenUE."
Emery, who testified on behalf of his bill at a committee hearing Tuesday, puts the point a little more strongly.
"They didn't ask me not to introduce it. But when we first discussed this with Ameren months ago," he said, "I could tell it made them nervous. They were afraid people would think they were behind it again. They asked me days ago, in your testimony, would you say we did not ask you to do it?"
West says the application for a second nuclear plant remains in the same position as it was last year -- still on file but essentially inactive.
"We didn't withdraw it because it costs a lot to get in line," he said, "but we just asked them to suspend review of it."
To Emery, the issue is no longer a second nuclear plant as much as it is the fact that down the line, Missourians are going to need more sources of electricity, and the state shouldn't have regulations that make it harder for a utility to find the money to pay for it.
"If you go back and look at history, the 1976 vote was tied in to a knee-jerk reaction over the nuclear issues of the day," he said. "Part of that was safety concerns and part of that were serious cost overruns at Callaway. Virtually 100 percent of those overruns were due to changes in government regulations.
"What I am trying to do is rewrite some of those regulations so we don't have so much cost overruns that are attributable to government."
In today's economic environment, he said, companies that want to build a new power plant need to be able to show potential lenders that they could repay loans in a timely manner.
"If we are going to be able to do anything to reduce the costs to Missouri consumers," Emery said, "it's going to be in the area of financing a plant at the lowest possible cost. That is what this bill is all about."
With the economic downturn leading to lower electricity usage, nuclear may no longer be the most likely option for a new plant, Emery said. Instead, plants that run on natural gas would be smaller, cheaper and easier to finance.
Still, eventually the need for CWIP is likely to arise again, and he wants Missouri to be ready.
"I am not trying to describe the apocalypse," he said. "There will be electricity we can buy off the grid. But in states that are doing that, customers are greatly disadvantaged because they have no control over costs.
"If we could bring some stability into the marketplace, that would benefit everyone. No one benefits from instability except trial lawyers."
One big criticism of last year's bill was the fact that besides overturning CWIP, it also imposed restrictions on the Public Service Commission and the courts. Emery said he thought of submitting streamlined legislation limited to CWIP alone, but then he heard that opponents who might have favored such an approach last year would withdraw their support this time around.
"When we found out we couldn't even do that without opposition," he said, "we went back to the drafting table and reworked the bill."
The result isn't palatable to Lewis Mills, Missouri's public counsel, who represents ratepayers in utility cases. He testified against the bill in committee and says the ban on CWIP should remain in place.
Noting that demand for electricity is down, he questions the need for more capacity or the nuclear power plant that would be easier to build if utilities could charge for construction works in progress.
"The idea that we need to change the law drastically to build a new nuclear power plant any time soon is crazy," he said.
And he is particularly bothered by the other provisions of the bill.
"For somebody like me" Mills said, "who does utility regulation for a living, it gets frustrating when people say the bill would repeal CWIP. That's about 10 percent of it. Then there's all the other stuff that would happen, and that's all still in there."
Emery said the first step the bill needs is to get out of the Utilities Committee, which heard it on Tuesday but took no action. Given the shortness of time, and the list of financial and other priorities, he isn't optimistic.
"We're going to have to work real hard," he said, "and some other things are going to have to fall away. I won't push to take a lot of floor time unless we can see a clear path."