Environmentalists reject both competing CWIP bills in hearings
An overflow crowd packed two Missouri Capitol committee rooms Wednesday to hear testimony on bills that could pave the way for a new nuclear reactor in Callaway County.
Legislative action is needed because of a construction work in progress (CWIP) law approved by voters in 1976: It restricts utility companies from passing on plant construction costs to consumers. The two pieces of legislation before the Senate Committee on Veterans' Affairs, Emerging Issues, Pensions and Urban Affairs would allow Ameren and a consortium of energy companies to make ratepayers pay for a site permit for a potential nuclear reactor.
One bill sponsored by Sen. Jason Crowell, R-Cape Girardeau, would, among other things, authorize a ratepayer-funded stream of roughly $3 million to the Office of Public Counsel. That entity represents utility customers and the public during rate cases before the Public Service Commission.
Consumer groups, big corporations and Senate President Pro Tem Rob Mayer, R-Dexter, endorsed Crowell's bill. But that measure received a chilly reception from utility company representatives; they support legislation by Sen. Mike Kehoe (right), R-Jefferson City, which does not include a funding for the public counsel.
Crowell said earlier this month that keeping that agency well-funded could be beneficial for consumers. He repeated that message after presiding over a six-and-half hour hearing over the issue.
"Most of the people who were for [Kehoe's bill] don't pay Ameren rates," Crowell said. "Most of the people with concerns over the bill pay Ameren rates. That's what it boils down to."
Representatives from environmental groups rejected both bills, saying that it would give Ameren a "foot in the door" to come back and have ratepayers fund the cost of a nuclear plant.
Clash Over Counsel Funding
After the effort to repeal CWIP faltered in 2009, Gov. Jay Nixon announced support for Ameren and the consortium to recover costs related to a site permit. While Ameren says it has no plans to construct a plant, the company is behind Kehoe's bill because it preserves the option to build in the future.
Boosters of Kehoe's bill -- including utility companies, labor unions, Chambers of Commerce and a bevy of legislators on both sides of the political aisle -- argue that constructing another reactor in Callaway County would create thousands of jobs as well as provide abundant energy. Obtaining a site permit, they said, could start the process toward that goal.
"Importantly, [a site permit] gives us the opportunity to have access to federal incentives, which could save our customer and our state millions of dollars, should we have the ability to have that," said Ameren CEO Warner Baxter.
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Kehoe's legislation would cap the permit recovery costs at $45 million and mandate that if the plant is not built or if the permit is sold to another company, then all the money collected must be refunded. The Public Service Commission would have to deem the expenditures "prudent" to be collected.
But Kehoe's bill does not include funding for the public counsel. Crowell's bill does, and it subsequently received support from groups such as the Consumers Council of Missouri, and big ratepayers such as Noranda Aluminum, Anheuser-Busch and Monsanto.
"If Ameren is going to get what it wants, then we need to make sure the ratepayers get what we want and we need," said Joan Bray, a former state senator who chairs the Consumers Council of Missouri.
Lewis Mills, the state's public counsel, said the office's current budget, which is $700,000 means that it is typically "outgunned" by utility companies seeking rate increases.
"Every year hundreds of millions of dollars are at stake in utility cases at the PSC," Mills said. "Utility companies always have more lawyers and experts than the public counsel at the PSC."
Supporters of Kehoe's legislation described Crowell's funding proposal for the public counsel as a "tax increase." Kehoe said the governor had provided a general revenue increase for the public counsel, which Mills later told the committee was "adequate" for his office.
"There's still seems to be some concerns that that may or may not be the right amount," Kehoe said. "And I've told both sides of this thing that I would continue to have conversations to find out where we can [provide] that funding mechanism that's not just automatically passed on to the ratepayers. Because I think everybody in here doesn't want to see a tax increase passed on to the ratepayers as an itemized piece on their bill."
Baxter said one reason he opposed Crowell's funding mechanism was that it could sink the bill when it gets to the Senate floor. Sen. Kevin Engler, R-Farmington, for instance, said the funding stream was a "poison pill." And state Rep. Jeanie Riddle, a Republican from Callaway County who is sponsoring site permit legislation in the Missouri House, said she did not want to "blow the bill out of the water" because of funding for the public counsel.
"I think everybody here is onboard with making sure we have consumers protected," Riddle said. "But to put a piece in there that has a large price tag is a killer for the bill because people are not going to vote for it in this economy."
Crowell said during the committee hearing that utility companies have no limit on the money they can spend to propose a rate increase.
Sen. John Lamping, whose St. Louis County district includes Monsanto, suggested capping the public counsel's funding stream at around $1.4 million. That could increase, he said, once construction begins on the plant.
"Why don't we do an assessment to $1.4 million until they start digging a hole?" said Lamping, R-Ladue. "And then when they start digging a hole, then go to the $3.2 million assessment. That's when we'll really need OPC (Office of Public Counsel) to do a heck of a lot more."
Lamping also said if the OPC budget goes from $700,000 to $3 million, it's only "logical" that utilities would feel the money would go to "fight other fights."
"You're assuming that fighting all those other fights is a bad thing," Crowell said.
"No, I'm just understanding their perspective," Lamping said.
Crowell said after the hearing he'll talk to individual committee members to figure out the best way to proceed. He said he hasn't "thought that far ahead" about whether to go with his legislation or Kehoe's bill.
Keeping Cwip -- And Kicking The Can
While consumer groups and corporations were willing to tie an exception to the CWIP law to OPC funding, other witnesses weren't willing to accept such a deal.
Ed Smith, who testified for the Missouri Coalition for the Environment, said the 1976 initiative was one reason Missouri's utility rates are lower than other states. He also said nuclear power had a problematic history, including cost overruns for construction.
"Around the United States, where energy markets are competitive, new nuclear construction has failed as an energy option due to the billions of dollars in construction costs and the incredible high risk of cost overruns," Smith said. "While construction of a nuclear reactor is sure to create jobs in Missouri, no state has improved its economic well-being by building an electric system that chooses the highest cost option."
Jean Blackwood, who spoke for the Sierra Club, said "energy efficiency" and "renewable energy" could create more jobs than a nuclear plant. She said such a boom could be done immediately and could have an impact on all corners of the state.
"CWIP is wrong in principle," Blackwood said. "It transfers risk from investors to customers in violation of market principle. Do not allow this. We have better, cleaner, cheaper, more job-creating ways to meet our energy needs."
Mark Haim, chairman of the group Missourians for Safe Energy, said the site permit effort amounted to a "foot in the door" for coming back and asking ratepayers to fund a reactor's construction.
"What they want is a seal of approval from you all," he said. "And I urge you not to give them that. I urge you not to give them a seal of approval that would essentially [provide] the political capital behind a subsidized form of energy."
But Kehoe said the fact that Ameren is teaming up with other energy companies provides plenty of financing opportunities.
"Now, you're right, CWIP could be one of the things they look at," Kehoe said. "But there are also other opportunities they can take to the market. Some of these members have different resources and different abilities to produce funding and funding mechanisms."
Still, Crowell maintained that Kehoe's legislation is a "step to repeal CWIP."
"I think everyone agrees that the additional $15 million Ameren could do all by itself," Crowell said, adding his bill was aimed at fulfilling Ameren's goals and providing consumer protections. "That's a drop in the bucket for Ameren. In fact, Ameren's already spent $25 million already in that direction. So maybe the broader debate we need to have after having this hearing is do we want to repeal CWIP outright?"
Jason Rosenbaum, a freelance writer in St. Louis, covers state government and politics. To reach him, contact Beacon issues and politics editor Susan Hegger.