Need for new plant a powerful question
By KEN MIDKIFF
Published Friday, March 6, 2009
(http://www.columbiatribune.com/news/2009/mar/06/need-for-new-plant-a-powerful-question/)

While the primary debate about construction of Callaway 2 is about who pays, there’s an even more fundamental question: “Is it needed?”

No doubt, analysts in the employ of AmerenUE — the utility company that is proposing to build the plant — are examining very closely the demand for electricity. There is little doubt that, at present, the supply exceeds the demand. There are several older power plants relying on nuclear, coal, natural gas and hydro to generate electricity. Some of those plants are nearing the ends of their life expectancies and will be retired or upgraded. Will it be cheaper to upgrade those older plants or to construct a new one?

Remember that AmerenUE is a for-profit company, beholden to its shareholders to make a profit. In pursuit of the money to pay dividends, various monetary angles must be considered. It matters not to a for-profit company about pollution or global warming or the use of natural resources — what matters is compliance with or avoidance of governmental regulations and the omnipresent bottom line. Publicly funded not-for-profit enterprises — such as our recent bond issue on the drinking water plant upgrade — do need to be concerned about such matters but don’t pay much attention to making money.

There is considerable evidence that the demand for electricity is declining. No doubt, the current monetary crunch has something to do with that, as consumers are looking for ways to lower their monthly bills. Assuming that President Barack Obama’s stimulus package works — and the jury is still out on that — it is likely that electric rates will remain low as consumers have made the switch to compact fluorescent bulbs, energy-saving appliances and more insulation and converted to heat pumps and away from traditional furnaces and air-conditioning units.

It is not predicted that consumers will go back to incandescent bulbs, tear out insulation or revert to energy hogs for heating, cooling, refrigeration, cooking and even TV watching. Plasma TVs are much more energy-efficient than those “big boxes” now relegated to recycling and landfills. That is probably why AmerenUE execs told Sen. Kurt Schaefer there’s only a 25 percent chance the plant would be built. If it isn’t needed and won’t make money, then it won’t be done.

Our friends out on the West Coast provide the example. While the demand for per-capita electricity in California has always been among the lowest in the United States (40 percent below the national average), demand there has gone down by more than 10 percent.

Again, some of this decrease is attributable to the current recession. But even before the economy hit the skids, demand for electricity in California was going down. A recently enacted California law requires that next year, 20 percent of electricity be from “renewable sources,” and this goes up to 33 percent by 2020.

So is Callaway 2 needed? This is the primary question being pondered by market analysts at AmerenUE. Will demand go up, go down or remain the same? Will it be cheaper to upgrade older plants? Will a healthy percentage of electricity from renewable sources — wind and solar — be mandated in the future?

One thing is for certain. For consumers, it is a lot cheaper to rely on efficiency and conservation efforts than to pick up the tab for a possibly unneeded and very costly — estimates range from $6 billion to $12 billion — nuclear power plant.