New Nuclear Plant & CWIP Changes?
by Mark Haim, Missourians for Safe Energy

Clean energy is central to creating a sustainable future. The reality of climate change, the finite nature of fossil fuels, and the pollution of mining, refining and burning, all make it imperative to transform our economy as rapidly as possible. Today, we get 85 percent of our energy from fossil fuels. Efficiency improvements and renewables are the two keys to creating a carbon-free future.

Some argue that we should also invest in nuclear power, as it’s a low-carbon option. But aside from all its obvious drawbacks—waste, safety, security, weapons proliferation, etc.—nuclear is just too expensive and takes too long to put in place. We can be investing in efficiency at a cost of roughly three cents or less per kWh saved. Wind power costs a little more than twice this much but is still a bargain compared to nukes, which are estimated to provide power at about 12 to 15 cents per kWh.

Rather than argue over whether or not nuclear waste can be safely isolated from the environment for tens of thousands of years, it seems prudent for us to advocate a least-cost approach to energy that invests first in the most affordable options. Happily, these are also the greenest.

Who Will Finance Callaway 2?
In Missouri, AmerenUE is proposing to build a very large (1,600 MW) and extremely expensive (likely $9–12 billion) new nuclear plant at their Callaway site. The hitch is that the investment community views nuclear power as too risky. Here in the United States, and around the world, nuclear plants are only being pursued if the taxpayers or ratepayers assume the risk. The nuclear industry has been pressuring Congress for loan guarantees, but so far they have only authorized funds to cover two or three new reactors.

So, AmerenUE is asking the Missouri General Assembly to repeal an important consumer protection law. This voter-enacted statute prohibits utilities from charging for power plants before they are built. AmerenUE is seeking Construction Work In Progress (CWIP) charges. These require ratepayers to pay rates that provide a profit to the utility on their investment during the entire time the plant is being built.

CWIP Charges are Patently Unfair. They distort marketplace decision-making, transferring risk from investors to ratepayers. Stockholders would continue to earn a rate of return commensurate with risk-taking, but the utilities’ customers would actually be assuming the risk by paying for plants that may never be completed or produce power.

CWIP Encourages Overbuilding. Utilities lose the incentive to build only the capacity that they really need. Further, with excess generating capacity, the last thing utilities will want to do is invest in efficiency measures which cut demand.

CWIP Removes the Opportunity for Oversight. Under current law, before the costs of a new plant are added to a utility’s rate base and included in customers’ bills, careful auditing of all expenditures is done. There is the opportunity for the Public Service Commission staff, the Public Counsel and consumer groups to challenge the legitimacy of expenditures. By allowing CWIP, the opportunity for prior oversight would be removed.

CWIP Can’t Make Imprudent Risks Prudent. AmerenUE Chief Executive Thomas Voss told the St. Louis Post Dispatch (6/9/08) that they would not build Callaway 2, a very expensive new nuclear reactor, without CWIP: “ ‘We just couldn’t do it,’ he said in an interview. ‘The risk would be too great. We don’t think people would lend us the money. We don’t think our board of directors would approve it. And we don’t think our stockholders would think it’s prudent.’ ”

If the investment is not prudent for their owners, how can it be for their customers?
CWIP is Unnecessary. If a major investment is sound, CWIP financing is not needed. Today, AmerenUE can invest most cost-effectively in efficiency improvements and renewable sources of electricity, especially wind power. These projects can be brought on line incrementally in a matter of months. We can meet energy needs, cut greenhouse gas emissions, clean up the environment and save money. Moreover, large, multi-year projects, like KCP&L’s Iatan 2, have been successfully financed without repealing the No-CWIP law.

Repealing the No-CWIP Law is Undemocratic. CWIP charges were outlawed by a nearly two-to-one vote of Missourians. Our legislature should not overrule the will of the people.

Make Your Voice Heard: Share your thoughts on CWIP with your Missouri state representative and senator.

Mark Haim is Chair of Missourians for Safe Energy. He can be reached at mail@mosafeenergy.org or 573-875-0539.