AmerenUE looks to build second nuclear plant in Callaway County

Saturday, June 14, 2008 | 4:48 p.m. CDT; updated 10:45 a.m. CST, Wednesday, February 18, 2009

ST. LOUIS— Union Electric Co. withdrew plans for a second nuclear reactor in Callaway County in October 1982, but a new generation of executives is back 25 years later with plans for another plant.

The St. Louis-based utility, now called AmerenUE, and its partner, Baltimore-based UniStar Nuclear LLC, will seek a construction and operating license as soon as next month for a $6 billion, 1,600-megawatt plant next to the existing Callaway nuclear plant.

A decision on whether to go forward with the project won’t be made until 2010, but officials want everything in place regardless. On the to-do list is reversing a 1976 law that prohibits Missouri utilities from charging customers for power plants while they’re being built.

Missouri voters approved a law to prohibit so-called construction work in progress — or CWIP — on Nov. 2, 1976, by a 2-1 ratio despite being massively outspent. The law was the product of a grass-roots endeavor by anti-nuclear activists to halt construction of the first Callaway plant.

The $3 billion plant was ultimately completed in 1984. A second unit at Callaway was canceled — until now.

The utility is stressing energy efficiency and greater use of wind and solar energy, but claims another power plant will be needed by the end of the next decade to meet growing electricity demand. Officials are opting for a nuclear plant, which would emit virtually no carbon dioxide — the greenhouse gas most closely linked with global warming.

AmerenUE estimates the cost of a new unit at Callaway would be at least $6 billion, or $9 billion with financing.

That’s too much to borrow. So unless AmerenUE can pay for the plant as it goes — by charging customers during construction — it won’t get built, Chief Executive Thomas Voss said.

“We just couldn’t do it,” he told the St. Louis Post-Dispatch. “The risk would be too great. We don’t think people would lend us the money. We don’t think our board of directors would approve it. And we don’t think our stockholders would think it’s prudent.”

Anti-nuclear activist Kay Drey of suburban St. Louis, who helped push the 1976 ballot initiative, pledged to challenge any effort to undo her work of 30 years ago.

“I’m 75 years old, and I’m not looking for another statewide election fight, but I’ll do it,” she said.

Another is John Coffman, an attorney for the Consumers Council of Missouri and the AARP, who is troubled by the prospect of allowing utilities to charge customers for a power plant before it’s built because it removes a powerful incentive to manage costs.

Costs for all types of power plants are rising sharply.

Last month, energy consultancy Cambridge Energy Research Associates, based in Cambridge, Mass., reported that a power plant that cost $1 billion in 2000 costs $2.31 billion today.

AmerenUE executives insist that reversing the law would benefit customers in the long run.

Doing so could save $3 billion in borrowing costs and prevent the kind of rate shock that threw Illinois into chaos last year after electric bills skyrocketed, Voss said.

Jeff Davis, chairman of the Missouri Public Service Commission, agrees. He said changing the law could benefit consumers if drafted properly.

“If you pay cash, you’re going to get a better price than if you put it on a credit card,” he said.

The PSC chairman said he would support legislation to do so only if it included adequate consumer protections and preserved the commission’s authority to disallow costs.

AmerenUE officials have met with some legislators and found support for reversing the Missouri law banning charges for construction work in progress, Voss said. The utility, however, realizes that November elections will change the makeup of the legislature, and the state will have a new governor next year.

“I don’t know if we’ll get something passed next session, but we’d certainly want to get a feel for the legislature,” Voss said.

Part of AmerenUE’s appeal to lawmakers is jobs, Voss said. The plant would be the biggest construction project in Missouri’s history, generating as many as 3,000 temporary construction jobs and 500 permanent jobs.

“It’s a huge economic boon in a state that could use it,” he said.

If AmerenUE is unable to build a new nuclear reactor, the utility probably will build more natural gas-fired generating capacity in Illinois to supply Missouri customers. That means Missouri would lose the jobs and economic benefit of a multibillion-dollar project and rates could climb even more than they would if a nuclear plant is built, Voss said.


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