In 1976, Missouri voters approved a ballot initiative by a 2-to-1 margin that prohibited Construction Work in Progress (CWIP) charges. HB2343 would overturn this law and essentially provide power companies with a blank check for raising rates before a power plant is built. Missouri voters had decided that ratepayers would only pay utilities for electricity that actually exists, or, technically, only pay for the costs of building a power plant after if became "fully operational and used for service."
"Paying for power plants in advance is like paying for the car factory without ever driving the new car," Kathleen Logan Smith, executive director of the Missouri Coalition for the Environment, said in an e-mail to her supporters.
"Charging ratepayers for 'Construction Work in Progress' removes the natural market incentives and puts the liability onto rate payers, offering nothing in return, Logan-Smith said. " When investors put up the cash for construction, they get a return on their investment in exchange for taking on the risk. They also exercise some oversight and thus motivate more careful attention to cost overruns caused by mistakes, delays, strikes, material and labor shortages, and more."
Logan-Smith cited the benefit to the St. Louis area utility company, AmerenUE, that she said would have difficulty convincing private investors to invest in nuclear due to its risk and expense. She believes that if the company knows that money to finance a new nuclear reactor (Callaway II) would be guaranteed upfront by ratepayers, then the pressure to explore least cost options and efficient management would be weakened. Her comment is based upon the fact that When Callaway I, the existing nuclear reactor, was completed and audited by the Missouri Public Service Commission (PSC), hundreds of millions of dollars were "disallowed" by the PSC as imprudent cost overruns.
"Ed Emery has once again put forth his giant personal favor to his friends in the coal and nuclear industries," Logan-Smith added. She calls the bill "a massive anti-consumer corporate giveaway that will lead to electric rate hikes up to 40% to pay for expensive and environmentally-polluting projects before they provide one watt of energy to consumers" and that "it goes a step further and removes all authority of any local government over siting, operations or maintenance of such power plants."
Logan-Smith suggests that voters tell their legislators to pass bills for clean, renewable energy projects that will transform Missouri's economy, not bills for huge corporate giveaways.