A rendering shows Evergy’s planned natural gas plant in Hutchinson, Kansas. A bill in the Missouri Legislature would allow utilities to add the cost of building new gas-fired plants to consumer bills before the project is completed. (photo courtesy of Evergy).
A quip is a witty remark that brings a chuckle. Another kind of CWIP, however, is an extra charge on utility bills that critics say is nothing to laugh about.
The acronym stands for Construction Work in Progress, and it means allowing companies to put a charge to build a new generation plant on customer bills before it is producing power. A bill that passed the Missouri Senate last week would allow the charge for the first time since voters banned it as “unjust and unreasonable” with an initiative petition passed with a 63% majority in 1976.
The bill is now on a fast track, scheduled for a Monday hearing and vote in the House Utilities Committee.
Promoters of the 1976 petition were upset that the Public Service Commission allowed Union Electric — now known as Ameren — to pass on the costs of constructing the Callaway nuclear power plant with no certainty it would be completed.
Utilities across the country were reconsidering nuclear power. In all, despite billions in expenses, 40 plants where construction commenced during the 1970s, including a second reactor at Callaway, were canceled before completion.
“The primary driver was concern about inflation, just like the concern is today, and having to pay in advance for a power plant that’s not yet serving you and, who knows, may not ever serve you,” John Coffman, attorney for the Consumers Council of Missouri, said during a January hearing in the Missouri House.
Past attempts to repeal or revise the prohibition — most notably in 2009 as Ameren again considered adding a second nuclear reactor — failed in the face of bipartisan opposition.
The vote on this year’s bill was also bipartisan — five Democrats joined 17 Republicans supporting it and five Democrats and six Republicans opposed it.
In this year’s version, the CWIP charge would be allowed for power plants that use natural gas to generate electricity. In another section, it is allowed for new generating plants, including nuclear, that are part of an approved plan for meeting power demands.
The PSC would not be allowed to consider the process for generating new power, only the utility’s “qualifications to construct and operate the resources, the electrical corporation’s ability to finance the construction or acquisition of the resources, and siting considerations.”
There are consumer protections built into this year’s bill that makes repeal more palatable, said Republican state Sen. Mike Cierpiot of Lee’s Summit, sponsor of the bill.
The PSC can deny an application for the charge, he said, and consumers will get a refund of the extra charge, with interest, if the plant is not put into operation.
“There’s not a lot of gas turbines here that are being planned and money spent and then canceled,” he said.
State Sen. Tracy McCreery, a Democrat from Olivette, negotiated with Cierpiot and utility lobbyists over several provisions of the bill. None of the items she won to strengthen consumer protections offset the extra cost customers will pay if the bill passes, she said.
“These monopolies are going to be able to pull a billion dollars out of my constituents’ pockets and transfer it to stockholders of these companies,” McCreery said.
Republicans opposed to repealing the ban agreed it was a bad deal for consumers. During Senate debate, Republican state Sen. Mike Moon of Ash Grove said he didn’t think making the charge discretionary was a true protection.
“Because of that option, the ratepayers, the customers, those that we represent, are kind of under the thumb,” Moon said.
The PSC does not control rates for municipal power utilities or rural electric cooperatives. Past attempts to repeal the ban made it mandatory for the commission to allow the charge.
Making it optional for regulators is a big change, Cierpiot said.
“If they don’t think it’s the consumer’s best interest, they could say no,” he told Moon.
Another change from 2009 is that the PSC supports the repeal.
“We need to unlock CWIP accounting treatment for new generation that goes through the new resource planning process,” PSC Chairwoman Kayla Hahn said at a January hearing on a House bill.
During testimony on the 2009 bill, then-PSC Chairman Robert Clayton said the PSC would not be able to properly regulate rates if the ban on construction work in progress charges was repealed.
“The staff’s effectiveness and role will be limited by this bill,” Clayton said at the time.
Omnibus bill
Cierpiot’s bill began as a measure allowing utilities to apply to use a “future test year” for setting rates. The companies would project their planned spending and the PSC would determine what that meant for customer costs.
The bill he brought to the full Senate combined several measures he proposed in other bills, heavily worked in lawmaker offices by lobbyists. The first attempt to get it passed faltered under a filibuster from Democratic state Sen. Angela Mosley, a member of the Commerce, Consumer Protection, Energy and the Environment Committee chaired by Cierpiot.
McCreery, also a member of the committee, negotiated for consumer issues and said in an interview that she secured several items to protect against shutoffs and strengthen the official consumer voice. McCreery voted against the bill, but did not filibuster it.
Mosley said she was disrespected because no one had asked her if she wanted changes to soften her opposition.
“My biggest concern is the constituents having to pay more money on their utility bills,” Mosley said in an interview. “We have a lot of people on fixed incomes. We have a lot of people losing their jobs at this time due to our new president.”
Mosley tried to add a 10% discount for customers over 60 to the bill.
The bill was set aside when Mosley made it clear she wouldn’t back down. The final bill did not include her amendment but it does create a discounted rate for people who pay an unusually large portion of their income for utility service.
Mosley did not resume her filibuster after that provision was added.
“If you could take the time to speak to everybody else about the bill, you should have been able to take the time to speak to me,” she said.
The major points of the bill sent to the House would:
- Allow “future test year” rates. Currently, rates are set after the PSC examines the actual costs incurred to deliver service and determines if each expense was prudent and necessary. In a future test year scenario, the utility would outline what it expects to spend and the costs would be pre-approved by the PSC.
- Require electric utilities to submit plans projecting demand for at least 16 years into the future and plans for meeting those demands. This is the section that allows CWIP for any form of generation approved in the resource plan.
- Increase the assessment on utility revenue to fund the PSC and, for the first time, add an assessment to support the Office of Public Counsel, which represents consumer interests before the commission.
- Change the shut-off rule for hot and cold weather. Instead of using 24-hour forecasts, the rule would use 72-hour forecasts, prohibiting shutoffs for non-payment in summer if the temperature is expected to exceed 95 and winter if it is forecast to go below 32 within that period.
- Require the PSC to review any savings utilities realize from federal tax cuts that may go into effect in the next four years to adjust rates.
- Allow consumers with “smart meters” that allow real-time monitoring of power consumption to replace them with traditional meters and opt-out of time-of-use billing.
At a news conference Thursday, House Majority Leader Alex Riley of Springfield said the utility bill is being fast-tracked because having adequate generating capacity is “an urgent concern” for Missourians.
“We are very concerned with wanting to make sure that our constituents, that the entire state has sufficient power generation to meet their needs,” he said.
The impact on rates, he said, is an important consideration but not the overriding question.
“You’re always trying to make sure that you’re balancing generation and rates and making sure that when our constituents turn on their lights, that the power turns on, that when they need their heat, that there’s sufficient heat there for them to be able to do that,” he said. “You have to, at the same time, address those rates, and we don’t want rates to go sky high.”
Democrats in the House are split on the measure as they were in the Senate, House Minority Leader Ashley Aune of Kansas City said.
Several of items in the bill have strong support from Democrats, so members will have to balance that, and whether the need for new power generation justifies the package of incentives.
“We are talking about a bill that could potentially raise rates for consumers,” she said. “That said, we are also in a period where rates are rising for consumers either way.”
Power needs
A new push to repeal CWIP is coming as utilities plan new natural gas plants, with Ameren working on an 800 megawatt plant at the site of the now-closed Meramec Energy Center, which burned coal, in south St. Louis County. The plant closed in 2022.
Evergy, the largest power provider in Kansas and western Missouri, is planning two natural gas plants in Kansas to open by 2030. Those plants are cited by supporters as a failure of Missouri to provide the right incentives.
“We don’t want to be losing any football teams, Googles, Metas or gas plants to Kansas,” Hahn said during the House hearing on CWIP.
The Midcontinent Independent System Operator operates the interstate high-voltage transmission grid serving Ameren’s territory in eastern Missouri and all or part of 14 other states and the Canadian province of Manitoba. It estimates, in a report published in January, that there is a regional need for 17 gigawatts of new power generation per year for the next 20 years.
“The situation could be further exacerbated by the large load additions that are expected in the MISO region due to the growth of data centers, electric vehicles and other factors,” the report states.
In a shorter-term projection, the Southwest Power Pool, which operates the grid that serves western Missouri, forecast a shortage of 5,950 megawatts in its 12-state region by 2029.
How that translates to Missouri customer needs, and how much more they will pay for power, depends in large part on whether Cierpiot’s bill passes.
“There was nothing I was able to get into the final version of the bill that will offset the negative impact on Missourians,” McCreery said. “And I’m not exaggerating when I say this bill will, with 100% certainty, increase what people are paying for their gas and their water and their electricity, and in some communities, their sewer.”
The bill will also impose substantial new costs on commercial users, McCreery said, putting jobs at risk.
“I did not see a path to be able to kill this bill on the Senate floor,” she said.
The dedicated funding for the Office of Public Counsel will help it fight for the lowest possible rates, she said, adding she does not trust the PSC.
“It appears to be a place where politicians go when their terms are up, and I’m not necessarily sure that that commission has the ability to do a thumbs up or thumbs down for dramatic amounts of money,” McCreery said.
Hahn was policy director for then-Gov. Mike Parson when she was appointed and previously worked for the state Senate. There are two former lawmakers on the commission, a vacant seat recently held by a former lawmaker and one member, John Mitchell, who worked for an engineering firm for 34 years.
All costs are rising and utility rates will increase whether or not the bill passes, Cierpiot said. And there is no doubt that regionally, more power will be needed to meet demand, he said. For many years, demand did not grow because of increasing efficiency of homes and businesses, but data centers and electric vehicles are pushing needs up again.
“We have still got some of the cheapest rates in the country and in the area,” he said, “and I think that will continue.”
This article has been updated to correct the partisan breakdown of the Senate vote for passage of the bill.
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