The bill would place time restrictions, require rate cases every three months during construction and would limit judicial review of the PSC's decisions.
"My concerns at a very high level are that this bill is far more than (allowing) traditional construction work in progress (CWIP)," PSC Chairman Robert Clayton said. "It has mandates for a new process that may hamstring the staff from their work and will lead to a reduced quality of decisions. ... While the bill references prudence reviews by staff, the time lines of those reviews may not allow the staff or other parties to conduct an adequate review on behalf of consumers."
Commissioner Jeff Davis said he understands that AmerenUE needs those provisions in order to give their investors a guarantee so that they can acquire a loan large enough to finance the construction of a second nuclear power plant in Callaway County. The plant is estimated to cost more than $6 billion, a price tag nearly as much as the stock market value of the utility's parent company, Ameren Corp.
"It is my intuition that this bill is 20 pages long because, based on what I know about investment banking, is that this is what those people probably told Ameren they were going to need to feel secure about trying to finance this project," he said. "Money isn't growing on Wall Street's trees anymore."
Ameren spokesman Mike Cleary confirmed the provisions in the bill are necessary to procure investment. He said it is a strong possibility that, without them, Ameren will be unable to give potential investors a strong enough guarantee and could be forced to abandon the project.
"(The investors) are the ones we're going to need to satisfy in order for them to put up the money," Cleary said. "Just like when you go down to the bank to get a home loan, I mean, you have to present sufficient information about your income and your prospects for future income and so on, to justify, to reassure the bank, that you would be a suitable risk to loan you that money."
Also in Tuesday's hearing, Clayton said it seems as though the proposed bill is designed to limit the regulatory powers of the PSC over Ameren by placing time restrictions on how quickly rate reviews must take place and by shifting the responsibility for declaring whether certain costs are prudent.
"It is my belief that the staff's effectiveness and role will be limited because of how this bill is drafted," Clayton said. "I think many of the provisions that reduce staff's role may be by design and intended to do just that."
Davis also voiced his concern about the effectiveness of the commission and its ability to regulate utilities were the bill to pass.
"If any of you have gotten the impression that the only thing we need to do to get this plant built is to pass a CWIP law, I think you're sorely mistaken," Davis said. "Obviously legislation is part of it, but the second half is good regulation. You've got to have a commission that can -- quite frankly -- sort through the BS and reach the right decisions."
He said that while legislators have a good reason to worry about what happens to ratepayers if Ameren cancels the project part way through, they should also worry about whether the commission all but forces Ameren to stop the project by curtailing its ability to keep the project financially viable.
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