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Who's telling the truth? Untangling the ads supporting and opposing CWIP

This article first appeared in the St. Louis Beacon, April 7, 2009 - The ads promise straight talk, but AmerenUE customers who have been bombarded with TV spots on both sides of the increasingly contentious debate over how to pay for a possible new nuclear plant might easily feel like they've been thrown a series of curves.

The battle began with a stark ad from the Fair Electricty Rate Action Fund, opponents of the utility's efforts to be allowed to charge ratepayers for financing a new plant -- if it even decides to build one.

The spot, which warns of impending rate increases of up to 40 percent, aired during the University of Missouri's NCAA basketball game March 28, but only after a judge rejected Ameren's attempt to block it.

Next came a series of ads from AmerenUE in response, featuring longtime TV anchorwoman Karen Foss, who is now a vice president for the utility. The tone is far less scary than the anti-Ameren message, but Foss doesn't miss the chance to get in digs at the other side's "outrageous" claims that simply aren't true.

If you're feeling shocked by the current confusion over which side is right, read on.

WHAT IS AT STAKE?

The main issue in play here is something called CWIP, which stands for construction works in progress. AmerenUE says it is considering building a second nuclear power plant in mid-Missouri, next to its current plant in Callaway County, but to do so, it would have to be able to charge ratepayers for the costs of borrowing money to pay for the facility.

Right now, such a move is illegal because of a vote by Missourians in 1976 that banned the practice -- a proposal that passed by a ratio of nearly 2-1.

AmerenUE says it isn't sure it will end up building the facility. What it does insist on is that without the ability to pass financing costs on to its customers, it won't build the plant. CEO Tom Voss reiterated that stance in an interview this week, saying the company is not strong enough to build the plant on its own, particularly in the current economic climate.

"We couldn't go out to market and borrow that kind of money," Voss said.

So Ameren's allies introduced bills in the Missouri Senate (SB228) and House (HB554) to overturn the 1976 vote. They also would change the way the Public Service Commission would evaluate the project and allow rate increases to help pay for it.

The Senate bill, which seems to be the main one, was sent by a committee to the floor last week, by a vote of 6-4; debate began Tuesday, with many senators still remembering how the ad campaign caused their voice mailboxes to be jammed. But after 10 hours and a lot of wrangling, the bill was put aside as efforts began to forge some sort of compromise.

WHEN WILL RATES INCREASE? BY HOW MUCH?

What inflamed the passions of the senators' constituents was most likely the bright red WARNING sign on the opening screen of the 30-second opposition ad. An eerie echo repeats "warning" a few times more as the voiceover intones how the utility could raise rates "as much as 40 percent" and as often as four times a year for six years to pay for "their new nuclear plant."

With a worried senior citizen shown fretting over bills, the voice asks: "Can your family afford to pay hundreds of dollars more?"

Maybe not, but as Foss soothingly explains in the Ameren ads, the other side is using tactics that are unsettling and inaccurate. "A lot of what you're hearing right now is simply not true," she says.

If the company decides to build a new nuclear plant, Foss adds, there would be no 40 percent increase; instead there would be a "related 1-3 percent annual rate increase years from now for finance costs only."

Which side is telling the truth? As you might guess, the figures can be bent in such a way to make either case.

AmerenUE says if it decides to build Callaway 2, construction wouldn't start until 2013; that is when rate increases would begin, but they wouldn't be anything like the 40 percent immediate hikes that the other side is talking about. At most, CEO Voss says, it would be a 12 percent increase over the five or six years it takes to build the plant.

One difference between the two sides, Voss said, comes because Ameren plans to keep only 60 percent of the 1,600-megawatt plant, so the utility could only charge its ratepayers for that portion of the cost. It would sell the rest of the plant.

Gregg Keller, a spokesman for the opposition, insists that his side is accurate by talking about rate increase of "up to 40 percent," based on figures from the office of the public counsel, which represents utility customers in rate hearings in Missouri.

Lewis Mills, who runs that office, also stands by those numbers. In particular, he says, Ameren's estimate of the price to build the plant -- $6 billion, not including what it costs to borrow the money -- is too low. He figures the cost will be closer to $9 billion, citing cost figures for a similar plant in Maryland.

"I don't think anybody in the world except at AmerenUE thinks you an build a 1,600 megawatt plant for $6 billion," he said.

Mills also says Ameren is figuring the rate increase based not on what people are paying today but on what they may be paying when the construction begins. Because the utility is likely to have increases between now and then, he noted, the percentage attributable to finance costs for the plant will be smaller than the real percentage increase over today's rates.

WHO IS BEHIND THE ADS?

Another contentious point between the two sides is who exactly is paying for the ads against the Ameren plan, and why did they run when they did?

In one of her spots, Foss talks about the "pricey campaign" that the opponents are running and says the money is coming not from typical households but from "large industrial customers looking for lower rates for themselves." Already, she notes, such large power users whose rates are 40-50 percent less than those for smaller individual customers.

"So are they really looking out for you?" she asks.

Keller, the spokesman for the opposition, says that such large industrial users are indeed behind his group's campaign. Some of them include Anheuser-Busch InBev,, Monsanto, Pfizer, Procter & Gamble, Doe Run and Noranda Aluminum in New Madrid, which AmerenUE says is its largest customer in Missouri.

He says his group is upfront about working to keep rate increases down for both consumers and employers.

Keith Gregston, president and general manager of the Noranda facility in New Madrid, says if the CWIP bill were to pass, jobs at the plant could be in jeopardy. He said after the cut of 228 jobs in December, 900 remain.

He acknowledges that Noranda has negotiated lower rates than households pay for electricity, but he notes that the plant also has to pay whatever rate increases come through. He calls the bill bad for Missouri's effort to compete for jobs nationwide.

"We want to work with Ameren and all of Missouri ratepayers to find energy solutions for the state that will allow us to remain competitive in our business and establish Missouri as a competitive manufacturing base throughout the United States," Gregston said.

As far as pricey ad campaigns, neither side is saying exactly what the spots cost or how far the efforts will go.

Voss said the money spent by Ameren will fall into the same category as charitable or political contributions and will not be counted in the pool of charges used to determine rates; Keller says that his group will not disclose how many ads it may make or what it will spend because such information "goes to the heart of our strategy."

On the timing of the ads, Voss accused the other side of acting in bad faith by breaking what he said was an agreement not to take the issue public before the Senate committee acted on the issue on March 31. That pact, which he said was reached by both sides with the Senate leadership, was designed to keep the issue based on facts, not inflamed public sentiment.

"We all agreed to do that," he said, "but for some reason they decided to jump and start earlier.

"We felt they were attacking our reputation, so we had to respond. We didn't start this. But our reputation was on the line. It's totally opposite to what we are saying, and it's totally untrue."

Keller insists that his side has lived up to any commitments it made concerning advertising and insists that his side's spots "are an accurate portrayal of what the Ameren rate hike is going to do.

"Ameren took us to court trying to silence our ads about their rate hike plan. They testified that our ads were misleading and inaccurate, and what the judge found in letting us keep running our ads was that the ads were not misleading and that it was in the public interest that these ads remain on the air. Ameren has made a lot of accusations like that, and they have been incorrect."

A late -- and more positive -- entry in the ad wars comes from another group in favor of the legislation, Missourians for a Balanced Energy Future. Its spot, which began running on Friday night, discusses the need for wind and solar energy as well as nuclear, and it urges people to contact their legislators to vote yes.

"We just think it's important to let Missourians know that now is the time for the Legislature to take action," spokesman Scott Charton said.

"It is a positive ad and makes the case that Missouri cannot afford to wait. We need a $6 billion investment in the state and 3,000 good-paying jobs."

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