CWIP Battle
As legislation begins to move through the Missouri General Assembly that would remove prohibitions against so-called Construction Work in Progress consumer rate increases, a fine debate ensues.
CWIP was prohibited with a constitutional amendment approved by voters in 1976 after the controversial construction of the Callaway Nuclear Plant near Fulton. In the years since, Callaway and other nuclear generation stations in the U.S. have proved their worth. They are far safer than almost any other source of electric power, and their potential for generating unlimited amounts of carbon-free wattage is an environmental boon.
AmerenUE proposes to build Callaway 2, but the new larger plant is too expensive to finance with traditional borrowing. CWIP would allow the Public Service Commission to grant rate increases to Ameren customers to underwrite interest costs along the way.
These are costs that would cause higher rate structures when the plant goes online, but opponents do not like the idea of consumers paying anything before the electricity is available. This argument appeals to those who supported CWIP prohibition years ago, but today there are several good arguments for removing the ban.
For potential users to pay public infrastructure costs before improvements are completed is common. Citizens begin repaying costs for new highways before the projects are completed. Some of these taxpayers will never use the roads just as some interim rate payers might never use the power generated at Callaway 2, but in the meantime important infrastructure enhancement is underwritten. Better roads must be built, and Amerens important electricity supply must be sustained by financing future generation.
The most promising source of future generation for Missouri and the nation is nuclear power, and private borrowing just wont work without a way to raise carrying costs along the way.
Callaway 2 will cost upward of $6 billion. It will be the largest construction project ever undertaken in Missouri, requiring thousands of workers and a large ongoing staff. The Public Service Commission will be empowered to make sure rate increases are no larger than necessary to pay interest costs on the financing. They will be modest and spread across Ameren’s entire rate base.
The General Assembly should pass the repeal of CWIP prohibition, enabling AmerenUE to continue with Callaway 2.
