CEO defends Ameren at Taum Sauk hearing

Friday, August 17, 2007

JEFFERSON CITY, Mo. -- AmerenUE chief executive officer Tom Voss told the Missouri Public Service Commission on Thursday that the utility has launched new safety programs since the Taum Sauk reservoir collapse, but has not changed a bonus system that critics say favors keeping plants running over closing them for safety concerns.

Voss testified during a PSC hearing into the December 2005 collapse that spilled 1.3 billion gallons of water in southeast Missouri's Reynolds County, badly damaging Johnson's Shut-Ins State Park and injuring the park superintendent, his wife and three children.

Voss said the company has emphasized to plant managers that they have ultimate authority to to shut a plant down for repairs.

"We have good people that we put in place, and layers of management to make those kinds of decisions," he said.

Safety lapses

Ameren's bonus policy has been the focus of much questioning during the hearings that began last month. The PSC is examining whether safety lapses at Taum Sauk point to companywide problems at Ameren Corp., the parent company of the Missouri division called AmerenUE.

Ameren executives have said the bonus system played no role in managers' decision to keep the hydroelectric plant running. But PSC commissioner Steve Gaw said Thursday he was concerned that Ameren has not changed its bonus policy.

"There's an overriding incentive to keep plants running," Gaw said during an intermission. "I still haven't heard that there's an equally strong incentive that ensures the safety of the plant."

At issue is an incentive system for Ameren managers that pays out annual bonuses based on measures called Key Performance Indicators, or KPIs.

The policy pays out 60 percent of annual operating bonuses for generating profits, meeting budget and keeping plants open. Twenty percent is given for safety issues like avoiding lost-time accidents. The remaining 20 percent is tied to pollution control.

Voss vigorously defended the incentive system in an interview after the hearing Thursday.

Poor design, human error

He said the operating bonuses determined by KPIs are just one component of a manager's total bonus package. A larger portion of the bonus is a sum that is paid automatically only if the company meets its overall profit goals. The rest of the bonus based on a manager's personal conduct, which includes whether he or she makes proper safety choices.

Voss said that if a manager closed a plant even for three weeks, it would not affect the manager's year-end bonus.

Voss said Ameren studied what went wrong at Taum Sauk, and concluded that a combination of poor design and human error led to the collapse. He said the company formed a dam safety group to ensure there is more peer review of design and maintenance decisions at hydroelectric plants.

Ameren also has drawn up a new set of safety guidelines that managers are required to read and that are posted at all of its power plants, Voss said.

Attorney General Jay Nixon is suing Ameren over the collapse. He said in May he would not file criminal charges because a Missouri State Highway Patrol report did not find a suspect in the case.

Gov. Matt Blunt, speaking Thursday at the Missouri State Fair, said the PSC investigation has "demonstrated the very insufficient nature of the criminal investigation" conducted by the patrol and reviewed by Nixon's office. But Blunt did not cite any specific examples of how he thought the investigation fell short.

Nixon spokesman Scott Holste responded later Thursday that, "The information from the PSC hearing appears to be consistent both with the findings of the Highway Patrol and with the basis of the attorney general's lawsuit that Ameren put profits above safety."

While fellow commissioners questioned Voss in Jefferson City during the morning, commissioner Lin Appling was at the Missouri State Fair in Sedalia shaking hands at the annual political ham breakfast.

"Ameren has had a tough two years, but we don't want to drive these guys into the ground," Appling said in an interview at the fair. "I think it's getting a little bit tiring and hopefully Friday we can bring this thing to a wrap and do some other things."

Appling said he had appeared at the last 10 ham breakfasts and didn't want to miss this one.

Appling arrived in Jefferson City later Thursday and indicated while questioning Voss that he hoped the investigation would soon wrap up.

"I hope I can ask you a final question so you can get back up to St. Louis and do your job," Appling said.

When Appling asked what Ameren has done to ensure another accident like Taum Sauk did not happen again, Voss again outlined the management safety program and the new dam safety group.

The only PSC member who has consistently been at the three weeks of hearings is Gaw, who has peppered each of the Ameren witnesses with very detailed questions about the events leading up to the reservoir collapse.

Voss said after the hearing he thinks the PSC investigation is unnecessary because the collapse has already been investigated by Ameren and federal regulators.

"But if it makes the commission feel better," he said, "then I guess it was a success."

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