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Possibility Raised for Electric Rate Increase

September 21, 2005
By: Katie Peterson
State Capital Bureau

JEFFERSON CITY - A spokesman for the state's largest electric company raised the possibility that this month's shutdown of the state's only nuclear power facility will lead to an electric rate increase for eastern Missouri.

On Sunday, AmerenUE shut down operation of the Callaway County nuclear plant for equipment replacement.

The project, $250 million or more, is scheduled to keep the plant out of operation for ten weeks.

"We have not raised our rates in 18 years, but all of our costs will eventually have to be recovered through rates in some fashion," said AmerenUE Communication Executive, Mike Cleary said.

AmerenUE serves the St. Louis metropolitan area and major portions of eastern Missouri.

Rates were raised 18 years ago to cover the costs of the Callaway Nuclear Plant's implementation. Rates have not changed since.

Currently, the company's rates are frozen until June 30, 2006 and will not be considered for adjustments until AmerenUE files a case of service study with the Missouri Public Service Commission -- required by the company to do by the first of 2006.

The Public Service Commission regulates utilities and utility rates in Missouri.

An economic analyst for the commission, James Watkins, said the information in a service study is essential to the commission's decision on a rate-increase request.

"A case of service study determines the overall cost of a company's operation compared to its revenues. If costs are higher the company could be allowed to increase rates," Watkins said.

The commission has approximately 11 months after a rate case is filed to determine utility rates after conducting audits of the company's records and allowing for interested parties to present testimony.

According to the US Energy Information Administration in 2004, Missouri residential customers pay an average of 7.06 cents per kilowatt-hour. This is below the national average of 8.94 cents.

"A case of service study could provide the basis for a rate case, but at this point we can't predict what impact it (the project) will have," said AmerenUE's Cleary.

The project will replace four steam generators and four turbine rotors at the nuclear plant. The upgrades will increase efficiency by generating 60 megawatts more with the same amount of fuel than the current 1,147 megawatts it produces. Cleary said the improved efficiency will offset some of the cost of the project.

The nuclear power plant is licensed by the Nuclear Regulatory Commission until 2024 for operation. AmerenUE has not announced if it will reapply for licensing.

Cleary said, "We felt it was a prudent time to make these major upgrades to ensure top operation for the remainder of our license. It would also pave the way if we should decide to seek licensing."

Victor Dricks, spokesperson for the Nuclear Regulatory Commission Regional Public Affairs Office in Arlington, Texas said, "Requirements are very vigorous and the operator of the plant has to show a plan for the effects of aging and be able to operate and meet all the safety requirements."

Dricks said a number of plants have shut down before the plant's license expired for economic reasons or political referendums; however, the nuclear industry does not expect anymore.

"We have been told by the industry that they expect that all plants currently operating will seek licensing renewals," Dricks said.