State energy policy should be debated openly and honestly
AmerenUE’s plan to build a second nuclear power plant in Callaway County may be in jeopardy. But if so, it won’t have been CWIP that killed it.
CWIP, of course, stands for construction work in progress. It refers to a state law that prohibits utilities from passing along costs of building new power plants until they start generating electricity.
AmerenUE spent much of the last year, including the first four months of the Missouri Legislature’s session, arguing that building a second nuclear plant in Callaway County — estimated to cost $9 billion — would be too expensive without up-front financing from ratepayers.
Repealing Missouri’s anti-CWIP law is a necessary precondition, the company said. Senate Bill 228 would have done just that.
But on April 15, key advocacy groups, including those representing large industrial customers, told AmerenUE they would support CWIP repeal as long as consumer protections stayed in place. Other groups offered similar deals so that the utility could begin recovering its costs immediately.
AmerenUE turned those offers down flat.
From the beginning, the new nuke plant was a long shot.
Company President Tom Voss told legislators in February that even if AmerenUE got everything it asked for, the chance of building Callaway II was only about 25 percent. What the utility was asking for went way beyond CWIP.
SB 228 would have limited the ability of state regulators to “disallow” — exclude from electric rates — wasteful spending during plant construction.
Mr. Voss referred to that as “regulatory certainty.” Ratepayers would have called it a very big bump in their bills.
History is instructive. After the first Callaway plant was completed, the Missouri Public Service Commission disallowed $384 million in construction costs. That amounted to about 54 percent of what the company wanted to include in rate hikes.
Public policy should be set openly and in the best interests of everyone involved. It should be the product of collaboration and compromise. That’s the way debate should move forward about the state’s future electric needs and how best to meet them.
For now, utilities in Missouri generate more electricity than customers use. AmerenUE expects to make about $600 million this year selling power to out-of-state customers. The threat that AmerenUE’s Missouri customers will lose “energy independence” is distant at best.
Yet the debate on SB 228 was marked by misleading claims and fuzzy math — and by AmerenUE’s refusal to release important information to support its key assertion: That repealing CWIP would save ratepayers more than any other alternative. Utility experts for the state questioned that claim.
When opponents of SB 228 raised legitimate concerns, AmerenUE refused to address them. When consumer advocates offered compromises, the utility remained intransigent.
That kind of behavior may — may — work in some corporate boardrooms, but not in a democracy. Last week, the unanswered questions led Senate leaders to shove SB 228 aside, and Mr. Voss said the company is suspending the nuclear project.
But in response to a reporter’s question, he added “we’ll never rule out that something could happen again.”
Count on it if the plant truly makes economic sense.
Still, if the plant is dead, the cause of death will not have been CWIP. The death certificate will read “lack of candor, refusal to compromise and unwillingness to
Editorial: “Mr. Voss said the company is suspending the nuclear project.
But in response to a reporter’s question, he added “we’ll never rule out that something could happen again.” Count on it if the plant truly makes economic sense.”
Nuclear makes economic sense NOW if the goal is sound long-term planning to keep the lights on year round while keeping rates affordable. It makes less economic sense to keep relying on coal for 85 percent of Missouri’s power since carbon taxes are coming and rates will rise. It makes less economic sense to have to buy natural gas, with its price volatility, from deregulated Illinois. It makes less economic sense to endanger the baseload power supply we need on a reliable basis.
The editorial is shortsighted. Missouri loses because Callaway 2 will not proceed. Ameren wasn’t bluffing about pulling the plug. They will still be in business - just selling power to Missourians at higher rates because of carbon taxes on coal and fluctuations in deregulated natural gas. And they will be able to say they told us so …
The problem with Ameren is that once again a for profit company. Is asking the government to help them make larger profits.If any group is going to benefit( i.e. Stock holders) from a new plant being built. Then they, the stockholders ought to foot the bill to build it don’t you think. If something is going to be forced on the voters of Missouri pay to build it by the government that is a tax. If that is the case it is time for the voters to assume ownership of the facilities. Or if they don’t like this socialist solution they the stockholders can always pay to build it themselves.
Missouri does need better energy options for the future. But why do we keep allowing Ameren to set the course? Ameren is a shareholder-owned company with a monopoly on a product that we all need, and yet it can’t seem to operate without asking for one public handout after another.
Missouri’s shortsighted Republican legislators are now proposing to use federal stimulus funds as an unnecessary tax cut. How about we actually put the money to good use and invest in sound, renewable energy sources for our state’s future? And not with big, bloated Ameren, but with smaller, leaner, hungrier companies that won’t waste millions every year just on lobbying and PR.
Why is it assumed that we need a state (and federal) energy policy? If power companies weren’t constantly in choke-holds by the government, we’d be in a very different place these days - probably dozens of nukes in MO.
Really, these many years of intervention are the same as price caps and quotas. All that’s likely to come of it is shortages. Then where will your policy take us: rationing?
I wonder why a MONOPOLY was spending money to ADVERTISE changing a law that protected consumers?? HHMMM.
Of course the public should debate the issue. I opposed SB228 because it looked a rush job thru the Missouri senate and from what I read, it was an attempt to overturn the voters (CWIP referendum) will.
Perhaps it is time to revisit, but the facts should be presented openly and fairly.
My opinion: If this for profit company needs funds, it should look to the Wall street folks first; not their customers or the taxpayers (same group in my mind). Legitimate billing to the consumers is after one builds the utility and not before. That was my feeling when I voted for CWIP and it has not changed.
My understanding last month is that AmerenUE had not even submitted the plans to the propper regulatory authority in any detail. Being at the demonstration against this with AARP, that little fact was discussed among the group.
Our society and economy has excelled on such arrangements. A for profit company getting a Monopoly. Why? because it is much more beneficial to have such an utility on a host of items. Just like we have monopolies for other services from water, sewage and garbage. Is it easy, no. Does a business/or your employer want to rely on their own means of producing electricity, no! Do we want people dumping raw sewage in the nearest river, No thanks! Do we want all roads to be private toll roads, no! If you don’t want these arrangements you can go to any third world country and see the difference.
The reality is that we have cheap electric rates relative to everbody else in this country and Ameren has probably made better decisions then having the government own electricity production outright. We will continue to have cheap rates as long as their is no Cap and Trade on Carbon. When that change comes or carbon fuels run out (France and Japan rely heavily on nuclear because no coal reserves exist in their countries) we will be back on this discussion. Its just a matter of when.