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Consumers group backs bill letting Ameren pass permit costs to consumers

This article first appeared in the St. Louis Beacon, March 3, 2011 - When lawmakers considered repealing a voter-approved measure in 2009 prohibiting utility companies from passing on construction costs to consumers, then-Sen. Joan Bray said interests pushing the measure "overreached."

"There were too many angles in this bill that gave too many people something to hate in it," said Bray in 2009, who at the time represented a state Senate district in St. Louis County.

But Bray -- who is now the chairwoman of the Consumer Council of Missouri -- is throwing support behind Sen. Jason Crowell's legislation authorizing Ameren and other utility companies to pass $40 million in permit costs to consumers for a potential nuclear reactor in Callaway County.

Among other things, Crowell's bill would cap recovery costs at $40 million and prompt consumer refunds if the plant falls through. It would provide a ratepayer-fueled funding stream of roughly $3 million for the office of public counsel, an independent entity that represents utility customers and the public in matters before the Public Service Commission.

It's competing legislation of sorts to a measure sponsored by state Sen. Mike Kehoe, R-Jefferson City, that's gathered support from lawmakers, organized labor, some utility companies and Gov. Jay Nixon.

One reason her group is supporting the measure, Bray said, is that Crowell's bill possesses "consumer protections." But, she added, there are also political considerations.

"We'll start with realpolitik; Ameren's very powerful in the Capitol," said Bray in a telephone interview with the Beacon. "And it can pretty much get done what it wants to get done. However, we have a committee chair who is willing to put the consumer interests into the bill. And that's a lot better than a bill with no consumer interests."

While a group supporting Kehoe's bill is less than thrilled with Crowell's legislation, Bray and others may have an ace in the hole -- Senate President Pro Tem Rob Mayer. Mayer, R-Dexter, is cosponsoring Crowell's bill, and since he assigned bills related to the issue to a committee Crowell chairs, the two-term lawmaker from Cape Girardeau will have a major role in what comes to the Senate floor.

Meltdown In The Rearview

The push to pass on permit financing comes after a more expansive effort failed.

Lawmakers in 2009 tried to carve out an exception for the construction work in progress, or CWIP, statute, which prohibits utility companies from passing on construction costs to consumers. (The original CWIP prohibition came from a vote of the people in 1976, and some have questioned whether the Legislature should overturn such a vote or whether it should go to people again.) Without changes, Ameren said it would not go forward with building another reactor in Callaway County.

Proponents said the push would pave the way for a huge construction project in mid-Missouri, as well as provide the state with an abundant power source. A diverse set of interests -- including Republican legislators, labor unions, chambers of commerce and the Farm Bureau -- supported that effort.

Yet the bill also attracted a diverse set of opponents, including big businesses affected by rate increases, consumer groups and some environmentalists. It also failed to get the support of Gov. Jay Nixon, whose veto pen loomed large over the process.

Lawmakers ultimately abandoned the effort after AmerenUE announced in April 2009 that it would no longer seek to build a second nuclear plant.

In November 2010, Nixon announced support for legislation to allow AmerenUE and a consortium of utility companies to recover costs for an early site permit. That process could take up to three years, the company says. And if a permit is issued, Ameren would have 20 years to build a plant.

At the time, the governor said, residential and commercial consumers would "not pay one penny unless the consortium is given the early site permit, the costs associated with seeking that permit are determined to be 'prudent' and the Missouri Public Service Commission approves them."

"That agreement put the wheels in motion for the construction of a second, state-of-the-art nuclear power plant in Callaway County," said Nixon during his State of the State address in January.

Mike Cleary, a spokesman for Ameren, said the company has no plans to construct a second plant. But Ameren is supporting Kehoe's bill because it preserves the option to build in the future.

"But there is no specific plan, there's no specific technology," Cleary said, adding that Ameren is reviewing Crowell's bill. "In fact, that's one of the reasons that the next step would be to pursue a site permit. It would certify that the site is suitable from an environmental, a safety and an emergency preparedness standpoint for another plant. So that process would not need to be repeated."

Kehoe most recently filed an updated bill to one he proposed in December 2010. Among other things, the latest version would:

  • Cap the permit recovery costs at $45 million.
  • Mandate that if the plant is not built or if the permit is sold to another company, all collected money must be refunded.
  • Only allow for collection for the permit if the Public Service Commission deems the expenditures to be "prudent."

The legislation is cosponsored by 19 other senators, Republicans and Democrats, including state Sens. Jim Lembke, R-Lemay,  Jane Cunningham, R-Chesterfield, Robin Wright-Jones, D-St. Louis City, Maria Chappelle-Nadal, D-University City, and Tim Green, D-Spanish Lake.
"This is an attempt to keep the protections we had in [a previous bill] and try to expand things for some of our larger users," said Kehoe in a telephone interview with the Beacon.

The governor's support -- along with a more Republican-leaning General Assembly -- provides an advantage to interests in favor of Kehoe's bill, Bray said.

"There's a hyper-majority in the Senate now," said Bray, referring to the 26 Republican senators. "And [they're] much, much closer to a super majority in the House. So the politics of the building have certainly become more corporate friendly. ... And there's folks now getting elected without contribution limits, so the power of the utilities to invest heavily in campaigns is much more of an opportunity now for them."

The Crowell Factor

Crowell was a major factor in opposing CWIP legislation in 2009. And he could play a big role in the latest battle.

One difference between Crowell and Kehoe's bill is the funding stream for the office of public counsel. And Crowell said keeping that agency well-funded could be beneficial for consumers.

"Net to net, it will result in greater oversight, greater transparency and lower rates in the long run," said Crowell in an interview with the Beacon. "It's sort of like keeping air in your tires. If you keep your tires properly pressured, they will last longer than if you let all the air out of them. So in the long run, you spend less on tires by taking the time by putting a quarter or 50 cents or 75 cents in the air machine and making sure your tires are properly inflated than never, ever checking them and running them on the rims."

Lewis Mills, the state's public counsel, said Crowell's bill would allow for a more stable funding source for his office to function.

"We're a small agency that's competing with the same pot of dollars with universities and prisons and all aspects of state government," Mills said. "When revenues go down, so do our funds and so do the number of employees to fight against rate increases."

Mills said his office would do a better job of keeping utilities "in check" with a larger staff.

"The provision of electricity in this country and this state is a hugely controversial topic," he said. "There are all kinds of issues going on between renewable energy, energy efficiency and increased investments in infrastructure by utility companies and transmission companies. There are literally billions of dollars at stake on a daily basis."

"Right now we have two accountants," Mills added. "Right now, we cannot continue to play effectively in that arena without having enough people to get into the numbers and look at what's going on."

Bray echoed Mills' assessment. "There's so much going on in the Public Service Commission in rate cases and were this nuclear plant ever to be built, the office of the public counsel would have to be just absolutely vigilant in watching the process and monitoring the process," she said. "You could not do it the way the public counsel is funded right now."

Ebb And Flow

Mayer -- whose district includes Noranda, an aluminum company that opposed the 2009 legislation -- is supportive of Crowell's bill, telling MissouriNet at a Jefferson City press conference that the bill "has the best consumer protections I've seen to date." (Noranda is also the state's largest consumer of electricity.) But not everybody is happy.

Irl Scissors, the executive director of Missourians for a Balanced Energy Future, said in a press release on Monday that Crowell and Mayer are "holding hostage legislation that has widespread support around the state." Scissors' group supported the 2009 efforts to alter CWIP.

In a telephone interview on Tuesday, Scissors said Kehoe worked diligently to bring numerous stakeholders together to pass his bill, such as the governor, the AFL-CIO, the Farm Bureau and numerous chambers of commerce.

"Kehoe's language addresses exactly what is necessary to make this site permit happen, and keep energy rates as low as possible," Scissors said. "Here are [President Pro Tem] Mayer and Sen. Crowell and their small group of folks to say they know what's best for the state when I just don't think all the other stakeholders who have worked so hard to support Kehoe's bill think they have the right idea."

In particular, Scissors said Nixon supports allocating more money for the office of public counsel.

And Kehoe said that decision led him keeping a provision similar to Crowell's out of the bill.

"I felt like -- and I felt that most Missourians would feel like -- in a day where school districts and various state departments are receiving cuts, that a department that got a doubling of their budget was probably getting a pretty good shot in the arm for them," Kehoe said, adding that his goal was to tweak elements of his original bill.

But Mills said there's also a fairness issue at stake. He said a number of Missourians aren't served by regulated public utilities, but are essentially paying for his office anyway.

"There are big chunks of the state where residents are served by a propane company or an electric co-op -- and we don't regulate either of those," Mills said. "So under the general revenue funding concept, those people are paying my salary and my employees' salaries and we're not doing a darned thing for them. Under the assessment concept, it would only be customers [of regulated utilities] that would be paying for the costs of their representation."

And Crowell said the increase in funds for the public counsel would mean a more level playing field in rate cases.

"What's going on right now is that Ameren gets top-powered lawyers and experts and, no offense to the public counsel, but the consumers' lawyers that are supposed to be involved in that adversarial setting of a rate case where you put on evidence have been getting not even a quarter of the resources. Not even an eighth of the resources that it's fighting," Crowell said. "You want to talk about a true David and Goliath square-off for lack of a better word, that's what's been going on."

Musical Committee Chairs

As president pro tem, Mayer is responsible for assigning legislation to committees. And he directed Kehoe's initial bill to the Senate Committee on Veterans' Affairs, Emerging Issues, Pensions and Urban Affairs, which is chaired by Crowell. Crowell said he plans to assign all related bills -- including his legislation -- to the committee he chairs.

Scissors said Kehoe's bill should have been directed to the Senate Commerce, Consumer Protection Energy and the Environment Committee, which is chaired by Sen. Brad Lager, R-Savannah.

"Every other energy bill is heard there. This issue is not an emerging issue; I mean we've had a nuclear plant in Missouri for 25 years," Scissors said. "A fair hearing is what is appropriate. And I'm not sure that's what we're going to see."

But Crowell said all bills -- including Kehoe's two bills -- will be opened up when his committee holds a public hearing next Wednesday. He said if he wanted to block legislation, he would hear his bill in committee. Kehoe said Crowell assured him that his legislation would get a "fair" hearing.

"Do I have influence as the chairman? Absolutely I have influence as the chairman," Crowell said, adding that he sees "eye-to-eye" on the issue more with Mayer than former President Pro Tem Charlie Shields, R-St. Joseph. "I don't know what the public testimony is going to reveal. And I think it's going to be a healthy discussion."

Nixon said a well-funded office of public counsel is important, but added it's still early on in the legislative process.

"We've got to have a more robust office of public counsel, so that not only businesses but individuals know that we're going to watch rates and we're going to watch them strong," Nixon said at press conference Thursday in St. Louis City. He added that he also wants to see a "hard cap" on the amount of money that can be collected and refunds if the permit isn't granted. "So [Crowell] is putting forth a bill that's touching some of those [issues]. I think there's going to be a good, robust argument about this. I hope with those safeguards in there, we can get this measure to my desk."

Asked why his bill was the route to take, Crowell provided another analogy -- this time involving a sandwich. When he was younger, Crowell said that he used to fight often around lunchtime with his brother. So his mother offered a compromise: Crowell's brother Josh would get to cut the sandwich, while Jason Crowell would get to choose the half he wanted. That, he said, was a good check and balance on making sure that everyone was happy.

In this situation, Crowell said utilities are getting everything they say they want with his bill, while consumer advocates are obtaining protections they desired.

"To me, it's a win-win," he said.

Jason Rosenbaum, a freelance writer in St. Louis, covers state government. 

Jason is the politics correspondent for St. Louis Public Radio.