By Rep. Ed Emery
On Thursday, April 29th the Joplin Independent ran an article by Kathleen Logan Smith titled HB 2343 is called a massive corporate giveaway. I don't believe I have met Ms. Smith and cannot comment on her character or ability, but the extraordinary misrepresentations and exaggerations in her article suggest neither thoroughness nor accuracy.
Legislation, particularly regulation, is seldom perfect, but HB 2343 is singularly structured to ensure continued access to reliable and affordable electricity for Missourians. Access to electricity and other utilities is foundational to a healthy and prospering society, and Missourians cannot be sure of such access without hard work, decades of careful planning, and investments in the billions of dollars.
It is particularly ironic that the day Ms. Smith's article ran a notice was issued that the Governor of Iowa signed into law a bill referred to as a "nuclear energy jobs creation bill" (HB 2399). The legislation authorizes one of Iowa's utilities to collect $15 million over the next three years to conduct site studies on building another nuclear power plant in Iowa--just the latest in a long string of events in other states supporting construction of needed baseload generation plants and the thousands of good paying jobs and the benefits they provide.
Prejudiced and ill-informed assertions like those in the article on HB 2343 are going to continue to make it difficult to move Missouri's energy policy where it needs to go for everyone's benefit. Missouri will then grow increasingly dependent on importing more costly electricity, subsidizing other states and impoverishing Missourians.
The following statements by Ms. Smith were particularly egregious and need to be addressed specifically:
- "...would allow utilities to pass on to ratepayers the entire risk and cost of coal and nuclear energy projects before they are works in progress and could take decades to come online."
- "...provide power companies with a blank check for raising rates before a power plant is built."
Facts: HB 2343 specifically requires that the Missouri Public Service Commission (MoPSC) conduct a study to consider the relative merits of various methods to finance construction of needed generation plants and facilities. The findings of this study are extraordinarily important as we look at financing the replacement of aging generating plants that currently provide 89% of Missouri's electricity.
The bill includes stringent requirements for analysis of energy resource alternatives. Under the provisions of the legislation the MoPSC would only authorize the further development of a project and subsequent construction of the project if they were satisfied that the utility had demonstrated that incurring these costs is prudent and reasonable.
This determination by the MoPSC would include a carefully developed budget and schedule. If the utility doesn't perform under the established budget and schedule they would face the risk of disallowances. Broad statements about this legislation shifting risk and being any sort of blank check are inaccurate and deceptive.
- "Paying for power plants in advance is like paying for the car factory without ever driving the new car"
- "Charging ratepayers for 'Construction Work in Progress' removes the natural market incentives and puts the liability onto rate payers, offering nothing in return..."
Facts: HB 2343's primary objective is the removal of compounding interest charges on customers - to the benefit of customers. Several states have already changed their laws in support of CWIP and others are looking at making this change in support of access to reliable and affordable power in the future. It is inverse logic to accuse HB 2343 of placing 'liability onto ratepayers.' Lack of access to CWIP financing on Missouri's one nuclear power plant drove up the financing cost of that plant by approximately $1 billion to AmerenUE's customers who are continuing to pay for it today.
If you buy a big screen TV on credit and wait a few months to make any payments, you will pay much more than just the cost of the TV in interest charges. Imagine now that your big screen TV cost $2 billion and you make no payment on it for five years. This is similar to the structure of financing that Missouri's utilities now face in constructing major facilities, and it results in significant increases in costs that could be avoided and acts as a strong incentive to build less capital intensive resources, like natural gas fired plants. Natural gas plants are cheaper to build but put the consumer at much higher risk clue to the volatility of natural gas prices.
- "...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."
Facts: As I have already detailed, this legislation includes numerous stringent consumer protections and is designed to encourage lower costs and rates. The 40% number is a mystery since HB 2343 would only permit construction of the most cost effective options. The collective effect will be toward the lowest possible rates, not higher.
When Ms. Smith refers to an 'expensive and environmentally-polluting' project I presume she is referring to nuclear power. If I am correct, some facts need to be remembered:
- Nuclear power generates over 70% of the emission-free electricity in our country.
- Nuclear power has the lowest production cost of any dispatchable power resource (including natural gas and coal).
- The nuclear power plant in Missouri, Callaway 1, has been a champion electric resource for Missouri - 4th greatest nuclear electric production in the country and 20th in the world and the recipient of numerous awards.
- If science discovers a link between carbon emissions & climate (I don't think it will), nuclear power becomes critical in providing reliable low-cost power.
Finally, I find it remarkable that Kathleen Logan Smith refers to this legislation as "a massive corporate giveaway" when her organization and others support policies that mandate utilities to buy costly and duplicative power resources (frequently taxpayer subsidized) and hand all the increased costs to customers as higher electric rates and higher taxes.
Our nation's energy challenges are growing daily, and we need a healthy debate of realistic options and a careful review of the facts to solve these problems. Unfortunately the information provided by Kathleen Logan Smith retards rather than advances such debate. I apologize for the length of my remarks, but I believe the truth is worth it.