Analysis: Regulators mull costs from Taum Sauk

JEFFERSON CITY, Mo. -- More than five years after the catastrophic collapse of a utility's reservoir sent a billion gallons of water tumbling down a Southeast Missouri mountain, Ameren Missouri has built a better replacement. Now, the power company wants to recover from its electric customers some of the cost of building it, sparking criticism from consumer advocates.

The dispute comes as regulators at the Missouri Public Service Commission are considering an electric rate increase requested by St. Louis-based Ameren Missouri. The power company contends customers benefit from a new Taum Sauk reservoir that is safer and will last longer. It wants a portion of the nearly $500 million cost for building the replacement reservoir added to the rate base to be collected from electric customers over time.

Critics, including the state public counsel who represents customers before regulators, argue electric customers should not be forced to pay and that Ameren previously has said its ratepayers would not be on the hook for the collapse of the initial reservoir.

"But for the fact they ran the thing so badly that they destroyed it, we wouldn't have any of these costs," public counsel Lewis Mills told The Associated Press this past week.

Ameren Missouri says the new Taum Sauk reservoir has improved seismic considerations, can produce more energy and will be in operation longer. A spokeswoman for the utility said it has upheld the promise that ratepayers would not face the costs of the collapse and that what it is seeking are allowed.

Ameren Missouri stated in a written argument filed with the Public Service Commission for its rate case that "enhancements provide incremental benefits to customers, in the form of a safer, or more efficient, or more productive, or longer lasting upper reservoir." The utility added: "It is only fair that customers, as the beneficiary of those enhancements, pay for them."

Missouri utility regulators could make their decision later this month about how to handle Taum Sauk and the entire requested rate increase. Ameren, which has about 1.2 million customers in Missouri, is asking for an increase of more than $200 million.

Although it is only a piece in the broader electric rate case, the Taum Sauk issue has plenty of history.

In December 2005, the 50-acre reservoir near Lesterville about 110 miles southwest of St. Louis overflowed and collapsed. It emptied in 12 minutes, and the wash of water swept away the home of the park superintendent, critically injuring his three children.

The utility, called AmerenUE at the time, reached a November 2007 settlement with state officials that called for the company to pay for rebuilding Johnson's Shut-Ins State Park, pay to extend the Katy Trail along the utility's Rock Island Railroad and give $56.2 million for an economic development fund in Reynolds County.

Ameren also agreed not to charge customers for the costs of the accident with the caveat that it could seek recovery for "enhancements, costs incurred due to circumstances or conditions that are currently not reasonably foreseeable and costs that would have been incurred" even if Taum Sauk had not collapsed. Regulators were not part of that settlement.

The original Taum Sauk started operation in 1963, and the new reservoir started in April 2010. Water flows down the mountain and turns turbines. At night when electrical demand is low, the water is pumped back to the top of the mountain.

In the power company's current rate case, one of the issues has become how to determine what is an "enhancement" in the new reservoir and what costs were likely eventually to have occurred even without the collapse of the original. Ameren Missouri and the staff for the Public Service Commission say some of the costs for the new Taum Sauk reservoir qualify. The public counsel, the Consumers Council of Missouri and Missouri AARP contend they do not.

"How can we trust them when they say, 'We made errors, and it's our problem and we'll fix it and consumers won't,' and then they come asking us for it?" said Joan Bray, the president for the Consumers Council of Missouri.

Ameren argues the new reservoir is better and that the original would have needed to been rebuilt or retired even without the 2005 collapse following an impending federal inspection. Spokeswoman Rita Holmes-Bobo said the criticism has come despite the legal facts surrounding Taum Sauk and the settlement.

"The costs we are seeking to recover would have been incurred by the company in the absence of the failure of the upper reservoir in 2005. Additionally our request is exactly what our agreement with the attorney general's office allows us to do," Ameren spokeswoman Rita Holmes-Bobo said.

Part of the disagreement over the Taum Sauk costs stems from how to measure whether a feature of the new plant is an "enhancement." Ameren Missouri compares the new Taum Sauk reservoir to the characteristics of the original. Meanwhile, the public counsel points to how the new reservoir stacks up against current construction and licensing standards rather than the reservoir that collapsed.

During a recent meeting among regulators, Public Service Commission member Terry Jarrett said they got little help with trying to determine exactly what was meant in the legal settlement by "enhancements."

"It's like everybody else punted and left it to us to decide," Jarrett said. "So I guess that they can shoot arrows at us if we decide it the way they don't like it."

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EDITOR'S NOTE -- Chris Blank has covered state government and politics for The Associated Press since 2005.