news feature
February 6, 2009

 

 

 

Expert speaks against
proposed CWIP bill

by Bruce Rodgers

 

Groups opposed to having Missouri legislators overturn a 1976 CWIP (Construction Work in Progress) law preventing utilities from charging ratepayers prior to having a new power plant operating bought Peter Bradford to the state to help make their argument.

Bradford, a former member of the U.S. Nuclear Regulatory Commission and former chair of the New York State Public Service Commission and Maine State Public Utility Commission, is considered an expert in utility financing and regulation. He visited St. Louis, Columbia and Kansas City recently, outlining arguments against Senate Bill 228, introduced by Republican Delbert Scott from the 28th District in southwest Missouri.

The proposed law is called — “cynically,” say opponents — the Missouri Clean and Renewable Energy Construction Act. Passage of the legislation would allow another nuclear power facility to be built in the state. Disposal of nuclear waste and the recycling of spent commercial-reactor nuclear fuel remain problems for the utility industry.

Despite a lack of a permanent solution to nuclear waste disposal, St. Louis-based AmerenUE and other utility companies believe a nuclear renaissance is at hand because of concern for climate change and increased future power demands. Passage of SB 228 would allow AmerenUE to more easily finance the building of a second nuclear plant in Callaway County by overturning the prohibition of CWIP charges by utility ratepayers. Missouri voters banned CWIP by a 2-to-1 majority in 1976.

“The question is, who will underwrite a nuclear renaissance?” asked Bradford before a small crowd at All Souls Unitarian Universalist Church on Feb. 3.

“In Missouri, these are desperate times for them (utilities). The reason is they can’t get private financing for nuclear power plants.”

High construction costs, large financial risks and the length of time it takes to get a plant operating dampen the private capital market’s willingness to finance nuclear plants. Also, said Bradford, federal loan guarantees likely aren’t forthcoming from the Obama administration at this time.

“But at the state level,” Bradford said, “they are seeking the other deep pocket available — the customers.

“With CWIP, it uses the state’s power to redirect the flow of customers’ money, making it easier for the utility to finance the plant and helps alleviate the credit crunch.”

Bradford added that because of provisions in SB 228, the financial risk shifts from shareholders and investors in the utility company to ratepayers, with investors protected even if the plant gets cancelled. According to Bradford, one-half of the permits issued for nuclear plants are cancelled.

“Page 24 of the bill insures that if anything goes wrong, the customers will pay for it,” including the full cost of cancelled plants, said Bradford.

Bradford also believes having a utility like Ameren receive ratepayer money prior to a plant’s operation, “gives them (the utility) the incentive to take risks” to try and achieve net savings during construction. The bill weakens, he said, the process of reviewing the “flow of funds” or prudence review process in determining where and how money is spent during construction. He called the lack of oversight in SB 228 “way above other CWIP laws in other states.”

Craig Volland, with a local chapter of the Sierra Club, also spoke. That group along with AARP, Missouri Coalition for the Environment, Midwest Coalition for Responsible Investments, Missouri Association for Social Welfare and others are loosely formed under an umbrella organization opposing CWIP called Missourians for Fair Electric Rates.

Volland contends the proposed legislation for CWIP would affect investment in alternative energy. “It establishes an unfair bias against alternative energy, an unfair economic bias and discourages investment,” he said.

In comparing wind farms to large electrical plants, Volland said a wind farm can be operating in 18-24 months and is more economical because capacity can be added as power demand changes. He challenged statements from utilities about increasing electrical demand, noting that because of the switch from incandescent lighting, a significant power requirement is lessening. He called conservation and energy efficiency construction, like weatherization efforts, more economical that building nuclear power plants.

“It makes absolutely no sense to invest $10 billion in a new centralized plant,” Volland said.

About a half-dozen advocates for SB 228 attended the meeting. One individual challenged the benefits of weatherization, basing his remarks on his experience in weatherizing his home. A man identifying himself as a union boilermaker lamented the lost of experience in building nuclear plants among his union ranks, saying such a “brain trust” can be regained through support of CWIP. Ameren claims up to 2,500 contractors would be employed during the five-year construction period for a new Callaway nuclear plant.

Ameren was also called a “great business partner” by what is assumed to be a union member.

“I trust them,” he said.

A hearing has been scheduled on SB 228 before the Commerce, Consumer Protection, Energy and the Environment Committee for Feb. 10 in Jefferson City. Greater Kansas City legislators on the committee include Matt Bartle, Dist. 8, Jolie Justus, Dist. 10, Brad Lager Dist. 12 and Luann Ridgeway, Dist. 17.

Bruce Rodgers can be contacted at publisher_editeKC@kcactive.com.


              
              
                 

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