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Air commission backs repealing prohibition on cost recovery during construction

  

JEFFERSON CITY, Mo. — The Missouri Air Conservation Commission (MACC) wants lawmakers to walk back a voter-approved law preventing companies from recovering costs during the construction of nuclear power plants. 

All five members of the commission voted in favor of a resolution calling on the General Assembly to repeal or replace a 1976 law passed at the ballot box. If the legislature takes the commission’s advice, the Office of Public Counsel (OPC) warned it “would merely shift cost overrun risk from shareholders to ratepayers.”

The law at issue stated: “Any charge made or demanded by an electrical corporation for service, or in connection therewith, which is based on the costs of construction in progress upon any existing or new facility of the electrical corporation, or any other cost associated with owning, operating, maintaining, or financing any property before it is fully operational and used for service, is unjust and unreasonable, and is prohibited.”

The resolution passed by MACC argued repealing the law would be for the advancement of clean air and a secure energy future for Missouri. It stated the nation’s rapidly growing energy demand will require a balanced portfolio of energy sources that includes nuclear power plants. The resolution also noted nuclear power plants promote clean air by providing continuous power with no greenhouse gas or traditional air pollutant emissions. 

“[The law] has proven to be an intractable roadblock for financing and construction of new nuclear power plants in Missouri,” stated the approved resolution

It is that point where OPC disagreed with the air commission.

“Section 393.135 reinforces the ‘used and useful principle’ exercised in utility regulation that requires energy assets to be physically used and useful to current ratepayers before the ratepayers can be asked to pay the costs associated with them. This is a fundamental principle of utility regulation. Section 393.135 was enacted through the will of the people in a voter-driven initiative that was spurred, in part, from large capital overruns of nuclear power plants across the United States in the 1970s. The statute applies to all supply-side generation assets and does not single-out nuclear,” OPC said in written testimony

It went on to argue utilities have not pursued nuclear because they have no need to add incremental baseload generation along with the instability of the nuclear industry.

The Missouri Coalition for the Environment also opposed the resolution.

The Missouri Farm Bureau, on the other hand, supported the resolution. 

Members of the organization voted at its annual meeting to adopt a policy in support of amending the “Construction Work in Process Law to allow cost recovery during construction of new power generation facilities in Missouri.”

“We believe allowing cost recovery would position Missouri to be a leader in the drive to expand source of domestic energy,” Blake Hurst, Farm Bureau president, said.