Bill stacks the deck against consumers
A state Senate committee is scheduled to begin hearings today on a deeply flawed bill that would remove key consumer protections for utility customers.
The measure, Senate Bill 228, would repeal a 1976 law that prohibits utilities from charging for the cost of building a new power plant until it starts generating electricity.
SB 228 is designed to benefit utility giant AmerenUE, which has applied to build a new nuclear plant in Callaway County. Whether or not you think that new plant is a good idea — whether you favor nuclear energy or oppose it — SB 228 is a bad bill. Let us count the ways:
• Over the plant’s 10-year construction period, SB 228 would increase electric rates between 29 percent and 40 percent, according to an estimate by the Missouri Public Counsel’s office, which represents utility consumers before the state Public Service Commission. And that’s before the plant produces its first watt of electricity. That’s not just a hardship for consumers, it also could drive businesses into bankruptcy and cost good-paying jobs.
• AmerenUE, the regulated utility, wouldn’t directly own the new nuclear plant. Instead, the plant would be owned by a non-regulated entity. That means ratepayers would pay for its construction but wouldn’t share in benefits if it’s later sold.
• SB 228 would shift big economic risks onto consumers while immunizing utility executives from the consequences of bad decision-making. It does that in two ways.
First, SB 228 would stick ratepayers with construction costs even if — like half of all nuclear plants proposed over the past four decades — Callaway 2 is later canceled. Shareholders would pay those costs under existing law.
Second, SB 228 gives regulators and inspectors a relatively short time to find construction problems. Once regulators sign off, any costs of fixing problems that later come to light would be borne by ratepayers. That’s true even if better supervision by the utility would have prevented those expenses.
That’s already happened at other nuclear plants, and it has added significantly to costs. That’s one reason private investors won’t finance them.
Nuclear power may or not be a safe, environmentally sound way to generate electricity. But that’s not the issue here. The issue is consumer protection. There are plenty of reasons for even the most adamant pro-nuke supporters to balk at SB 228.
Missouri lawmakers have a recent history of giving utility companies everything they’ve asked for and more.
That’s what they did in 2005 with a bill that allows utilities to pass along fuel costs to their customers more quickly.
Utility executives said that bill was “fair to everyone.” Rates could just as easily go down as go up, they said. But last week, even before the rule governing fuel surcharges has gone into effect, AmerenUE asked that it be suspended. Why? Because if it goes into effect as planned, Ameren will have to refund about $73 million to consumers.
It seems they’ve hit upon a foolproof way to increase earnings: Heads they win, tails we lose.
Lawmakers ought to be wary about enabling that kind of behavior. Those who do will flip a coin with their own political careers.
Missouri’s voters passed the anti-CWIP statute in response to UE’s announcement it would be building two nuclear power plants in Callaway County (Callaway I and II). Voters and anti-CWIP supporters realized that the inherent risks of potentially billions in construction costs should be born by the folks who owned the plants, not those to whom costs could be just passed along to regardless of their prudency.
UE’s predictions for power consumption were so wrong, it canceled the Callaway II unit and tried to pass the canceled plant costs on to ratepayers. The Missouri Supreme Court held, contrary to the position we successfully argued before the PSC, that the anti-CWIP statute precluded recovery of the Callaway II canceled plant costs. The Supremes did say there was nothing under regular ratemaking priciple which would prevent the PSC from disallowing all the canceled Callaway II plant costs, and sent the case back to the PSC for another hearing. MoPIRG, where I worked at the time, was the only party to the ratecase which continued to argue consumers should bear no portion of UE’s imprudently incurred canceled plant costs, and the PSC agreed and isallowed over $200 million in canceled plant costs on general ratemaking principles. The PSC savaged UE for its poor planning, bad business decisions and rotten power consumption projections which resulted in the decision to cancel the Callawy II plant.
S.B. 228 supporters should read the related decisions by the PSC before jumping back on the galloping horse of nuclear powerplant construction in Missouri.
If the anti-CWIP statute were repealed, the voters’ intent would be turned on its head and AmerenUE would have no incentives to minimize costs or incur costs prudently. If some other entity were to own the production after we all pay for it, there is no way to prevent the rate choas created by such “deregulation” ala the Enron scandals and out of conrol rates as in California and Illinois.
So, if the plant isn’t owned by AmerenUE, why should AmerenUE ratepayers pay dime one for the plant?
Later, AmerenUE would “buy” their power at auctions, including those offered by its separately owned nuclear facility, and we’d have to pay not only the costs of production in our rates but, whatever the rate AmerenUE has to pay to get it’s power from the other corporation not owned by AmerenUE, with no regulation by the PSC except for a “file and use” tariff like AT&T has now.
Consumers aren’t getting a bad deal with this S.B. 228, they are getting shafted.
Every one needs to contact their representatives NOW and put a stop to all this.
It must be sweet to be a utility investor in the state of Missouri. There is only upside and the Republican-controlled legislature has made sure their is no economic downside. It’s now a virtually risk-free investment.
I am a pro-nuke guy for the record, and as this blog says “even the most adamant pro-nuke supporters” should balk at this bill. I understand the need to help get more nuclear plants into design and construction, but this is not the way…
Look.
After two huge power out[r]ages whose cause was undboubtedly the same rampant neglect of the transmission infrastructure more than one out-of-area crew called in to fix the problem reported to by-standers and interminable public hearings by the Public “Service” Commission where they were telling the public that they didn’t see any need for Damneren U.E. to get the rate increase they were begging for then, they’re getting their rate increase anyway.
They’re going to pass the costs of burying lines—something which will benefit the investors because it will relieve them from the costs associated with responsible management of a huge power transmission infrastructure to the extent it’s done. The rate-payers should be able to get relatively uninterrupted power either way–we had previously been getting it for decades before some bean counters decided to see just what they could get away with.
That was at a time when the majority of the transmission lines were on poles.
One of the greatest obscenities in the whole thing was the “power on” advertising money which is nothing really more than a bribe to the “news” agencies which report on what sort of a job these huge monopolisitic utilities are doing on our behalves. There must have been millions if not more spent on those ads. It was spent in venues which also report on this issue. That’s a pure conflict of interest.
After the “power on” ad campaign I started hearing broadcast weather reporting 65mph winds when there were no 65mph winds. I’m half a hundred years old.I’ve heard the sound those kinds of winds make–they make a howling noise.
You’ll hear the bought-off weather reporters howling about the 65mph winds when the power goes out when you never hear those howling winds now.
Power on…
Then they (the powers-that-be in charge of protecting
the public interest) are even considering allowing the same utility which cannot even successfully keep a small impoundment of water on top of a low “mountain” without it rupturing the dike that contains it and scouring out one of the state’s natural treasures in a man-made environmental disaster?
I’m all for more nuclear power generation, but letting Damneren U.E. build and run it?
So, considering all that, why even squawk about this
latest outrage? So they’re going to pass the costs on before the unit cranks out it’s first milliwatt of power. After all the rest of the outrages, what’s one more?
Here’s what you really need to be worrying about–the jerks who almost burnt my house down by allowing a logically-flawed design of power-drop wiring supply power to my home and most of the homes in my tract long after those had become obsolete are going to be allowed to play “Homer Simpson” with the more dangerous end of the curve of binding energy. They’re already doing it–it’s scary. Why double the fright level?
Nobody’s even questioning the idea they should be allowe–just that the method of payment doesn’t seem “fair”. Guess what? You’re going to pay for it one way or another. Get over it. There’s no free lunch–but it’s nice to be able to have a choice between Mom’s Home Cooking Buffet and Ptomaine Pete’s.
We don’t get that choice with electric power generation and distribution. More’s the pity. We should get oversight but those charged with oversight have allowed the power utility to put the burden for making their distribution infrastructure maintenance cost-lowering on the backs of the rate-payers rather than those who need that improvement to receive a benefit. It wouldn’t even surprise me to find out that Damneren U.E. intentionally neglected the distribution infrastructure to create out[r]ages which would get the public all stirred up and “demanding buried wiring and other improvements” just to this end.
And the “news” venues have dutifully taken their “power-on” advertising revenue cheese, just like that big fat rats they are.
Feh!