MO Senators Consider Bill to Pay for Power Plants

February 11, 2009

(The Associated Press) By CHRIS BLANK

Senators grilled AmerenUE leaders during a hearing Tuesday on
legislation allowing utilities to charge electric customers for the costs of new power plants before they come online.
Missouri law bars investor-owned utilities from passing the
expenses of building a power plant to their customers before the
facility starts producing electricity.
Ameren is considering construction of a second nuclear reactor at
its Callaway County power plant and says repealing the 1976 state law
is critical to financing the estimated $6 billion project.
A large crowd attended Tuesday's Senate Commerce, Consumer
Protection, Energy and the Environment Committee hearing on the
legislation, which would apply to new plants powered by nuclear
energy, renewable sources or new coal technology.
State regulators would be required to approve a construction
project and the possible quarterly increases in electric rates
authorized by the bill.
Democrats and Republicans have signed on as sponsors of the
Senate bill, which supporters say could yield an economic boon from
construction of the reactor while answering a need for energy
production that would not increase carbon dioxide emissions.
But the measure also drew bipartisan criticism from the committee
Tuesday, mostly focused on protecting consumers. The committee's
chairman, Republican Sen. Brad Lager of Savannah, said the bill needed
revision.
"I don't think I can get the bill out of committee, let alone out
of the Senate," Lager said.
Utility regulation is a top legislative issue this year, and more
than two dozen witnesses lined up to testify at Tuesday's hearing.
Observers
stood in the aisles and sat on window sills of the Senate's largest
committee room as the session stretched into the evening.
Thomas Voss, AmerenUE's president and chief executive officer,
broke little new ground in his testimony. He reiterated that the
company could not build a second Callaway reactor if the Legislature
doesn't allow cost recovery during construction.
"We think we need to keep this option open. We think it's good
for the state to have this option open," Voss said.
Voss said AmerenUE already has spent tens of millions of dollars
to apply for the license, buy forgings and for other engineering
costs.
In an interview after the hearing, Voss said he believes nuclear
power is in the state's best interest but that there needs to
certainty with the financing to attract investors. He said the bill
concerns a "financing method" and that some critics seemed to believe
the legislation was about endorsing a second nuclear reactor.
Supporters of the legislation include environmental lobbyist Irl Scissors, who worked to help pass a 2008 ballot measure that requires
utilities to use more renewable energy sources.
Scissors now is the executive director for a coalition backing
the bill. In written testimony submitted to the committee, he said
lawmakers should support efforts to expand nuclear power production
because it's needed for a "balanced energy portfolio."
"Nuclear is the cleanest workhorse, baseload energy source
available today," Scissors wrote.
Although some - particularly environmentalists - oppose building
a nuclear power plant, much of the opposition centered on how
residential and industrial customers would be protected.
Noranda Aluminum Inc., which has a plant in New Madrid that is
Ameren's largest retail customer, said it expects to pay more than
$200 million extra for electricity if rates are allowed to increase
for a new plant. Noranda chief executive officer Kip Smith urged
senators to bolster consumer protections.
"We're not anti-nuke," Smith said. "We're just convinced there
are elements of this bill that need modification."
Voss said consumers are protected because state utility
regulators would need to sign off on increases.
It's not entirely clear how much electric customers would pay if
utilities are allowed to charge during the construction of power
plants.
The Missouri Energy Development Association, a trade group for
investor-owned utilities such as Ameren, estimates that residential
customers would pay 1 percent to 3 percent more per year and just over
10 percent for the entire project, if AmerenUE builds a second nuclear
plant in Callaway County. Those assumptions are based on a six-year
construction project with rural electric cooperatives and municipal
utilities partially buying into the plant.
But some critics of the legislation estimate that electric rate
increases could be significantly higher. Missouri Public Counsel Lewis
Mills, who advocates for consumers before state utility regulators,
said he expects rate increases will be at least double Ameren's
estimates.
John Coffman, a consumer advocate who represents Missouri AARP
and the Consumers Council of Missouri, said the legislation is an
attempt to shift risk for the building of new power plants from a
utility and its private investors to electric customers who cannot get
electricity from anyone else.
"We're talking about a bailout for a company that does not have
to compete for customers, and already has an opportunity to earn a
healthy return," Coffman said.
The committee did not vote on the bill Tuesday and plans to meet
next week to get more information from state regulators.
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Power plant funding bill is SB228
On the Net:
Legislature: http://www.moga.mo.gov