By Christine Buurma
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Ameren Corp. (AEE) said Thursday it is suspending plans to build a new nuclear plant in Missouri because of legislation that would prevent the company from recovering costs.
Missouri law prevents utilities from raising electric rates to pay for new power plants until the plants are operational. Because nuclear plants costs billions of dollars to build, financing such projects is difficult unless utilities can recover costs ahead of time.
A bill in the Missouri legislature would have provided a mechanism for such cost recovery, but the latest version of the legislation "strips the legislation of the very provisions we needed most to move forward," said Thomas Voss, chief executive of Ameren utility AmerenUE, in a prepared statement.
"A large plant would be difficult to finance under the best of conditions, but in today's credit constrained markets, without supportive state energy policies, we believe getting financial backing for these projects is impossible," Voss said.
Ameren had planned to build a 1,600-megawatt second reactor at its Callaway nuclear plant in central Missouri. The plant provides power to St. Louis and surrounding areas.
The utility had estimated the cost of the new reactor to be at least $6 billion. Ameren had formed a partnership with UniStar Nuclear, a joint venture between Constellation Energy Group Inc. (CEG) and France's Electricite de France SA (EDF.FR), to build the Areva SA (CEI.FR) Evolutionary Power Reactor.
Energy demand has grown 50% in Missouri since 1990 and is projected to grow significantly over the next 50 years, Ameren said.
-By Christine Buurma, Dow Jones Newswires; 201-938-2061; christine.buurma@dowjones.com