Michael Berg
02/17/11

The Trojan CWIP

Presently being considered in the Missouri Legislature are House Bill 124 and Senate Bill 50, which if successful would allow Ameren Missouri to increase utility ratepayers fees in order to pay for part of the cost of their proposed new nuclear reactor at Callaway. This is known as Construction Work in Progress, or CWIP. Under this arrangement, the utility company attempts to justify the rate increase by claiming that once the new plant is complete the company will reduce the ratepayers' bill by an equal or greater amount. The ratepayer is being asked to make a loan to the utility company - except there is no guarantee that the plant will ever be built and the money will be paid back.

In the 1970s, Missouri voters passed a referendum prohibiting CWIPs. House Bill 124 and Senate Bill 50 would modify the provisions of this referendum without taking it to the voter a second time.

Ameren Missouri wants the CWIP because it knows that it will be unable to obtain sufficient private loans for its project. Although the present bills in question would allow Ameren Missouri to raise only $40 million, we can be sure that if passed there will be a push for larger and larger CWIPs to allow the utility to raise $6 billion or more from Missouri ratepayers for their proposed new nuclear power reactor. These bills are a Trojan CWIP. It needs to be stopped before it enters the gates.

Below is recent testimony before the Missouri House Utilities Committee from Missouri Sierra Club Legislative Committee Chair Ginger Harris. The Missouri Sierra Club opposes the legislation and opposes the construction of new nuclear power plants in Missouri.


Callaway Nuclear Power Plant

Testimony to the Missouri House Utilities Committee on HB124 during hearing on February 15, 2010
Submitted by Virginia Harris, Chair of Legislative Committee of Missouri Chapter of Sierra Club
7164 Manchester Road, Maplewood, Missouri 63143

In a fact sheet about the Senate counterpart to HB124, which appears on Senator Kehoe’s website, there are 4 assertions I’d like to discuss with you:
(1) “SB50[/HB124] preserves the option of nuclear power for Missouri.”
(2) “SB50[/HB124] will allow Missouri to secure clean, reliable power at the lowest possible cost.”
(3) “SB50[/HB124] is the critical first step toward the largest economic development project in Missouri’s history [which] …will create thousands of good-paying jobs…”
(4) “SB50[/HB124] raises no taxes and asks for no subsidies…”

If you are thinking of voting in favor of HB124, I would like you to consider the following:

(1) The CWIP proponents’ statement here acknowledges that HB124 is just the beginning of a series of CWIPs to finance the entire Callaway II. In 2009 when the legislature chose not to overturn the 1976 citizen-enacted law prohibiting CWIP, Ameren re-grouped and decided to try to sell their $6 billion CWIP package in smaller, bite-sized pieces. The first of those smaller pieces is this tiny CWIP that we call microCWIP. At 0.67% of the price tag of a “full CWIP,” this microCWIP allows the proponents to advertize its cost as “less than $2/year for the typical residential ratepayer.” Assuming that statistics haven’t been manipulated to low-ball this amount, and assuming no cost over-runs, the typical residential ratepayer will end up paying out $300 extra per year for 20 years once the legislature falls in line to approve the subsequent parts of this program. And you know Ameren and its consortium will expect you to approve all subsequent CWIPs, because:

  • if you approve this one, you are giving up the principle that people and institutions are less careful with other people’s money than they are with their own money, and

  • if the consortium cannot finance 0.67% of the total cost of Callaway II by relying on bonds and loans, then it certainly cannot finance the full cost by relying on these investment bankers.

(2) We don’t understand why people continue to imply that nuclear energy is clean, reliable, and the lowest cost option.

  • It is not clean. Its wastes are more toxic, for longer, than any other energy source available to us.

  • It is not the most reliable. It is more dependent on the grid than virtually all other current energy sources because it is so highly centralized. (For this reason, it also wastes a higher percent of the energy it produces.) It is also more likely to be a target of terrorism.

  • It is not even the cheapest. It is 3 to 10 times more costly than the acknowledged best energy investment, which is energy efficiency. It is commonly acknowledged that new energy efficiency investments cost $0.025 to $0.03/kWhr compared to new nuclear at $0.11 to $0.30/kWhr.

(3) By “largest economic development project in Missouri’s history,” the proponents are of course referring to Callaway II. Yes, its construction will employ 1,000 to 2,000 workers, for a period of perhaps 10 years. Then what happens? In moving to Callaway County, those few thousand workers will cause a mini housing boom in the center of the state while creating micro housing busts wherever they moved from. And the process will be reversed when the project is built, because only about 200 workers will end up with permanent jobs. Compare that with the prospect of investing in energy efficiency:

  • Research indicates that for every 7 jobs that are created per million dollars of investment in all other forms of energy production, 17 jobs are created by the same amount of investment in energy efficiency.

  • Energy efficiency jobs are distributed throughout the state, wherever people now live and work. Therefore, investing in energy efficiency will cause no economic or family disruptions. And the investments will be multiplied within every community where energy efficiency is done, thus reinforcing economic vigor throughout our state.

  • Combine the above advantages with the fact that energy efficiency achieves each saved kilowatt at a far smaller price than the price to produce a kilowatt of another type of energy source, and especially compared to new nuclear. And remember the saying attributed to Ben Franklin: a penny saved is a penny earned.

(4) HB124 will use tax revenues and will rely on subsidies. …at the federal level:

  • Since 1957 huge federal subsidies have sheltered commercial nuclear energy from insurance liabilities and risks. Would Ameren and its consortium be considering Callaway II without these liability limits?

  • $18.5 billion in federal loan guarantees have been available since 2007. Congress is discussing tripling that. Would Ameren and its consortium be considering Callaway II without these current and anticipated loan guarantees?

  • The federal government subsidizes nuclear technology research. …and more.

  • And we are all federal taxpayers. At least, virtually all Sierra Club members pay federal taxes. I don’t know how much Ameren or its consortium members pay in federal taxes.

But, you ask, can energy efficiency (EE) provide enough savings to preclude the need for huge investments in new energy production on the order of a 1,600 megawatt nuclear reactor, for example?
Answer: YES !!

  • Research shows that if investments are made over a period of 8 to 10 years, starting with a 0.3% increase in energy efficiency and ramping up to a 1.9% increase in energy efficiency, the cumulative energy efficiency that would be gained by the end of that 8 to 10 year period would equal 9.9% of Missouri’s total energy consumption by 2020. That amount of energy is far more than 1,600 megawatts. Other states have achieved even faster increases in EE.

  • The benefits of EE would be achieved beginning with the first dollar invested.

  • Because many of the investments would be in small increments, the cost of financing these gains would be minimal compared to a new nuclear reactor which takes at least 10 years to build, optimistically assuming no delays.

  • Energy efficiency gains would be permanent, at virtually no cost after the initial investment.

  • The people who make the investments would be the same as those who benefit. We would avoid the inequity of charging some people for CWIP who subsequently move out of state before “benefitting” from the supposedly lower-cost electricity.

Given all of the above, why would you want to preserve the option of nuclear power for Missouri?

Please contact me at 314-644-1011 if you have questions or want any clarification.