Sunday, October 26, 2008

Rating Ameren's case in the 'show me' state

The path to assure the future of a new nuclear plant will be neither short nor easy

boxingAmerenUE (NYSE:AEE) has plans for a new nuclear power plant in Missouri, but two determined opponents stand in its path. What's more a law enacted in that state in the 1970s prohibits the recovery of construction costs from the rate base while a new plant is being built.

It all but chokes off Ameren's future as a nuclear utility. Ameren doesn't have the capital to bet the company on a merchant plant option. In fact, the 1976 law effectively stopped a previous effort by Ameren to build a second nuclear plant dead in its tracks. No one else has tried since then.

Getting the legislature to change the law may be the utility's end game, but before it can move the chess pieces down the board, it must first deal with the Missouri Public Service Commission. That body has just granted "standing" to the Missouri Coalition for the Environment and Missourians for Safe Energy.

Henry Robertson, the legal counsel at Great Rivers Environmental Law Center, which is representing the two groups, told the Columbia Missourian newspaper on Oct 19 the groups are replying on a 1976 law that prohibits charging customers for a new nuclear power plant before it enters revenue service.

Robertson said both groups are opposed to the construction of a second nuclear power plant in Missouri which Ameren says is needed by 2018-2020 to meet rising demand for electricity.

Ameren current operates the Callaway nuclear plant. Built in 1984 at a cost of $3 billion, it provides 1,190 MW of electricity. The two green groups argue that energy efficiency, lower consumption of electricity, and renewable energy technologies will meet Missouri's needs.

Slaying the nuclear dragon

st_george_slayingBoth groups see themselves as a modern day metaphor for St. George slaying a dragon. The anti-nuclear movement born in Missouri in the 1970s has three decades later cloaked its cause in a mantle titled "consumer protection." The "safe Energy" group calls nuclear power a "failed technology." On its web site the group calls for the "phase out" of all current nuclear power plants.

Mark Haim, a leader of Missourians for Safe Energy, told the newspaper that the intent of the law is clear and that Ameren's request to recover the $46 million it spent on submitting a COL to the NRC for an Areva EPR would violate the law.

Ameren spokesman Mike Cleary says the cost of the NRC license application is "necessary" under the definition in state law, and should be included in a rate increase. It is needed, he said, "to ensure future power supply, reliability, and energy independence for Missouri."

For its part the Public Service Commission has ruled that the two groups have shown "good cause," under the 1976 law, in challenging the request for a rate increase to cover the NRC licensing costs.

Lose a battle to win a war?

The legal battle to get the money will likely be lost at the regulatory level. Ameren will have to take its case to the legislature to over turn the 1976 law. The issue isn't just the recovery of the licensing costs. What is at stake the the future of the new nuclear plant and whether Missouri's future supply of electricity will be generated by fossil fuel plants with their greenhouse gases or not.

There's plenty of precedent for what Ameren wants to do. Florida has a law on the books that allows exactly what Ameren wants in Missouri, and four reactors are planned to provide electricity in the sunshine state by 2018-2020.

The battle is joined in the "show me" state. The only question is whether the legislature and the public will see what they are being shown.

show me license_plate

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