AmerenUE’s fuzzy math
AmerenUE's Callaway nuclear power plant.
AmerenUE is telling lawmakers and ratepayers that financing charges for a new nuclear plant would hike electric rates by 10.5 percent. Or maybe 10.8 percent. Certainly no more than 10.99 percent.
State regulators did the math for themselves. The result, based on data provided by the utility: a 23 percent increase over current rates by 2017 — more than double any figure that AmerenUE is using.
In math class, that would be a problem. But not for Missouri’s largest electric company.
“We’re saying 1 percent to 3 percent (a year),” AmerenUE spokeswoman Susan Gallagher said. She pointed out that 23 percent divided by eight years is 3 percent, more or less.
But AmerenUE says the plant would take just six years to build. So six is the number on which regulators based their calculations — from 2012, when the first increase would occur, to 2017, when the plant would be completed. That makes the average annual increase closer to 4 percent.
Back in February, the utility told legislators that financing costs would add 1.8 percent annually for six years to electric rates, a cumulative average of “10.5 percent” (even though 1.8 times six is 10.8).
Confusing? Yes. But things get worse. Even the expert analysts at the Missouri Public Service Commission found AmerenUE’s numbers confusing.
Wess Henderson, executive director of the PSC, which regulates utilities, said AmerenUE’s figures need explanation “to prevent a less-than-highly sophisticated reader from making the wrong assumptions or reaching the wrong conclusions.”
For example, most folks would assume that the 10 percent figure cited by AmerenUE represents the increase over 2009 rates, Mr. Henderson explained. In fact, AmerenUE’s assumptions are based on unspecified future rate increases that would nearly double its revenue by 2017. Those assumed revenue increases “appear unreasonably high,” Mr. Henderson said.
By assuming higher revenue, Ameren can reduce the percentage of costs attributable to a new nuclear plant. For example, if rates were $2 a month, a $1 finance charge would represent a 50 percent increase. But if you assume future rates have risen to $10 a month, then that same $1 charge becomes a mere 10 percent increase.
By assuming unrealistically higher revenue, AmerenUE makes Senate Bill 228 — the bill it’s pushing in the Legislature — seem far more benign than it actually is.
“They’re trying to put the best spin on it,” Mr. Henderson said. “They’re trying to sell something to the Legislature.”
Senate Bill 228 would change state law so that customers could be billed for financing costs while a second nuclear power plant is built in Callaway County. Charging for what’s called construction work in progress (CWIP) isn’t allowed under a law overwhelmingly passed by voters in 1976.
AmerenUE claims that its calculations — which it has refused to make public — show that repealing CWIP would save ratepayers money. Calculations performed by consumer advocates and utility regulators contradict that claim.
Senate Bill 228 could come to a vote early this week. It should be rejected.
AmerenUE has been pulling out all the stops, launching a television advertising campaign that claims opponents are making “misleading” claims.
In one such ad, former newscaster Karen Foss, now an Ameren vice president, sits at what appears to be a kitchen table. “We believe our customers understand and deserve straight talk,” Ms. Foss says.
We believe that, too. But neither customers nor legislators are getting it from AmerenUE.
This new plant and others should have been part of the stimulus program. Ameren could have allowed the Feds to finance the plant and pay lease payments back to the Fed, owning it after all Federal funds had been returned to the taxpayers. Everyone wins. Jobs created. Cheaper, clean power generated. Lower electric rates. I guess that would be too simple and we’ll be better off with tattoo removal programs.
How about we look a step ahead of the Nucleur debate and start talking about the Cap and Trade and a price that will be set on Carbon Emissions. When Ameren is required to pass the Cost of Burning Coal to their consumers, won’t that mean a much higher percentage increase in our electric rates? Is anyone else realizing that this footprint burns more Coal then anywhere else in the Nation and that there will be a major cost staring us in the face for being the Nations worst Coal Burner to produce our energy hog habits?
Coal was named a pollutant this week by the EPA which now makes this footprint the worst polluter in the US. We need “Straight Talk” from Ameren on what happens in this footprint with a Cost on Carbon Polluting?
Future generations will look back at decisions made during this most important time. Are we going to give the next generation a balanced Ecosystem or are we going to think that cheap, dirty energy is a right and we’ll let our Grandkids figure out how to bring balance back to Mother Earth. Time will tell.
Remember when nuclear power first started????? The American public was told that “NUCLEAR POWER WILL BE SO CHEAP THAT WE WON’T HAVE TO METER IT.” What happened to that promise.
Ameren UE wants its customers to pay up front for a new nuclear power plant by paying additional charges on their monthly utility bills. For some strange reason, the customers think that the Ameren investors should put up this venture capital. Hey, those taking the risk should reap the benefits. Under the Ameren plan the customers receive nothing but a promise of lower bill after the power plant goes on line (yeah, nudge/nudge, wink/wink, we all know how that would work out).
There would appear to be a simple solution to this inequity. If I’m reading the stock value correctly, Ameren stock is now $22.40 a share. If Ameren wants their unwilling customers to supply their venture capital, they could send each customer a share of Ameren stock every time the payments of the added on charge to their monthly bills amount to the price of a share? That way the customers become stock holders and receive dividends–or at least have stock to sell to recoup the money taken from them–instead of trusting in a promise (ha ha) of lower bills.
This would be fair plan, and there would be no reason for Ameren to oppose it. Unless their plan was always to just rip off their customers. Unless it is just a money grab, so they could make mega bucks without any investment of their own. Unless Ameren, and its big time investors, are afraid to actually risk their own money on something that just maybe isn’t that good of an investment after all. There are going to be costly government regulations, labor problems and cost overruns you know. We all remember the Metrolink expansion fiasco.
A stock-shares-to-the-customers plan might work in another way too. If the rip off isn’t allowed, the fat cat investors will dump their stock as soon as they realize their would be huge profits must be shared with the millions of true investors. This stock dumping would drop the price dramatically. Within a few months, after still being forced to buy up this cheap stock, the customers, as a bloc, would be majority stock holders. They could call a stockholders’ meeting and vote to shut the whole project down; hopefully before they lost too much money.
Is anyone stupid enough to think Ameren has our best interest at heart? They want to be able to sell power from that plant to the rest of the country at higher rates.
This is corporate spin at it’s finest (and worst). The shame of it is that we probably need the new plant, and it could be built cost effectively (which is not to say cheap) and safely. And frankly, most missourians, presented with no nonsense facts, would likely agree.
So what happened instead?
Spin, propaganda, and double-dealing. I don’t feel much pity for Ameren; they spun themselves into this hole.
Back in the 1950’s they told the public that Nuclear was the saviour of us all! Sprinkle it on your children’s cereal and it will help them grow big and strong! Encourage your children to play in the fallout clouds, follow the bug spray truck on their bicycles, drink a big glass of DDT to keep away the germans, agent orange is helping to spread democracy!
CHEMICALS! CHEMICALS! CHEMICALS! Without them life itself would be impossible! Hooray! Hooray! Then came the Love Canal, and all the stories about Monsanto, Union Carbid and Bopal, PCBs, Dioxin, DDT killing all the wildlife and poisoning the water, Three Mile Island……. The chemical companies all fell from the mountantop BUT Now! They’re back and the chemical companies and the war machine and the utilities and the borderless corporation…….. they all love mankind and want to save it!