Utilites pad revenue through reserve practices

The Iowa Utilities Board regulates electric utilities. They don’t have the authority to dictate how a utility produces its electricity but they are required to grant them a reasonable rate of return on their investment. That means that the best way for a utility to increase revenue and profits is to develop intermittent sources that require backup to create a reliable grid.

In practice, this means that the backup must be capable of providing the full load when the wind and solar production is low, as well as providing spinning reserve when they are producing. This method of increasing revenue is known as the Averch-Johnson Effect.

The Lazard study that renewable advocates like to cite isn’t worth the paper it’s written on. The proof of that claim is that in the very same 2018 public meeting in which NextEra was telling us that closing the Palo nuclear plant was going to save fuel costs they were requesting a 25% increase in residential rates.

Todd Dorman asks if skeptics have ever heard of batteries. (Sept. 10, “Trump tilts at windmills,” Page 6A.) For a long time I’ve been asking how much battery storage would be required to get us through another July and August like we had in 2023 when we had very low wind for weeks at a time, and how much additional generation it would take to carry the load and charge the batteries too to get us through another period like that.

Fred Hubler

Cedar Rapids