Missouri’s largest electric provider hopes to use a state law meant to help utilities add renewable energy to close a coal plant found in violation of federal clean air laws.
St. Louis-based Ameren Missouri, which serves 1.2 million customers, is planning to close its Rush Island Energy Center in Jefferson County next year under a court order forcing it to either install pollution controls or shut down the facility.
The company announced almost two years ago it would close the plant, saying the pollution controls would be too expensive.
Last week, it filed with the Missouri Public Service Commission seeking permission to use a new financing law known as securitization to recoup its investment at Rush Island.
In testimony filed with the Public Service Commission, Ameren Missouri President Mark Birk said continuing to operate coal plants had become “extremely challenging.”
“Faced with these realities, the only prudent option was to shut down Rush Island instead of adding scrubbers,” Birk said.
Rush Island is a two-unit coal plant south of St. Louis on the Mississippi River. Ameren had planned to operate Rush Island until 2039 before the court order.
Rush Island is old enough that the company was not required to install pollution controls when the facility’s two units were put into operation in 1976 and 1977. A 1977 update to the Clean Air Act required new power plants to do so. Older coal plants were grandfathered into the rule until they made upgrades beyond routine maintenance in a way that increased emissions.
Once Ameren overhauled the coal plant units in 2007 and 2010, it fell under the requirement, but it failed to apply for that permit, according to court filings.
U.S. District Court Judge Rodney Sippel ordered Ameren in 2019 to obtain that permit, install scrubbers and meet standards for sulfur dioxide emissions. In 2021, the 8th Circuit U.S. Court of Appeals upheld that ruling, though it struck down a requirement that Ameren also install scrubbers at the Labadie Energy Center in Franklin County.
Despite losing the argument in court, Ameren maintains its upgrades at Rush Island were not significant enough to trigger the required pollution control updates.
“Given the facts and circumstances as they existed at the time, no rational utility would have done anything differently with respect to Rush Island,” Birk said. “Having made prudent decisions, the securitization of the cost of retirement for Rush Island is appropriate.”
For the Public Service Commission to approve Ameren’s request, it must find the utility is acting prudently in retiring the plant. Even in its decision not to seek a permit for the upgrades to Rush Island, Ameren argues it has acted prudently.
“We believe we have a strong case that at the time the decision was made to (not) pursue a permit for this work, we had no regulatory directive to do so,” said Warren Wood, Ameren’s vice president for legislative and regulatory affairs.
Asked if he had any misgivings about Ameren using securitization in the case of a coal plant found in violation of the Clean Air Act, Andy Knott, with the Sierra Club’s Beyond Coal Campaign, said the environmental nonprofit supports the use of the securitization to shutter coal plants.
“But Ameren must use the proceeds to invest back in renewables,” Knott said.
The relatively new securitization law allows utilities to essentially refinance coal plants. A third party issues bonds to pay back the utility’s investment in building the plant. Then customers repay the bonds through their bills.
The policy — which was backed by an unusual alliance of environmental and consumer advocate groups and utility companies — is meant to incentivize companies to close coal plants early and invest the savings in renewable energy projects.
Ameren did not commit to additional clean energy investments if it is allowed to securitize Rush Island. Under its current “integrated resource plan,” filed with Missouri regulators, the company proposes adding 2,800 megawatts of wind and solar power, 400 megawatts of battery storage and an 800-megawatt natural gas plant by 2030.
“I can’t speak to if it provides opportunities to accelerate some of those investments,” Wood said. “It may, but it would certainly be helpful to moving ahead with the IRP plan that we most recently issued.”
According to Ameren’s filing, it’s seeking to securitize the remaining value at Rush Island of $475 million and other costs associated with decommissioning the plant. Including financing costs, the company hopes to securitize costs of more than $519 million.
Compared to recouping its investment at Rush Island from ratepayers, Ameren estimates customers will save almost $76 million in net present value over 15 years.
The cost to ratepayers to pay back the securitization bonds, the company estimates will be about $1.71 per month for the average customer.
