An Iowa energy company should learn next month whether its rate plan tied to a $900 million wind energy project will fly with state regulators.
MidAmerican Energy Co. and the Iowa Office of Consumer Advocate testified this week about proposed ratemaking principles connected to MidAmerican’s Wind X, a plan to add 552 megawatts of wind generation at two sites in Iowa.
The nine principles set caps for cost, size and return on equity, customer revenue credits and depreciation, among other details. The two sides had reached a settlement on the nine rate principles before the hearing, and now wait to see if the three-member Iowa Utilities Board will sign off.
“The board is reviewing MidAmerican’s Application for Determination of Ratemaking Principles,” Utilities Board spokesman Don Tormey said. “Based on the board’s decision, MidAmerican will decide if they proceed with the proposed project.”
This case comes months after MidAmerican’s Wind IX plan came before the board. In that, the Utilities Board ordered MidAmerican to repay $2 million a year in credits to electric customers, saying the ratemaking principles skewed too much in favor of the energy company over customers.
After MidAmerican complained about the ruling, Gov. Terry Branstad made changes to the board. He did not reappoint one of the commissioners and demoted another, according to Associated Press reports.
The proposed Wind X principles include a cost cap of $1.638 million per megawatt, which means if the cost exceeds the cap, MidAmerican would need justification before pasting extra costs to customers.
Customers also would see $237 million flow back to them through rate reductions up to 2027, and MidAmerican would expect 7.9 percent return on equity, which is below the 11.35 percent cap, according to testimony filed in the case.
MidAmerican Chief Financial Officer Thomas Specketer, who testified at the hearing, said the company doesn’t foresee “a need for a rate increase in the next 10 years.”
“It’s not needed from a reliability perspective,” Specketer told the commissioners. “We look at these projects because we want to bring low-cost service to customers, economic development for the state, environmental benefits, and the ability to generate capital for company.”
The expectation is Wind X would not necessarily reduce prices for customers, but would slow increases and also would help meet environmental targets under the federal Clean Power Plan.
“Over the 30-year life of the plan, the benefits should more than offset the cost,” Ron Polle, an attorney with Office of Consumer Advocate, said in a telephone interview.
Nathaniel Baer, energy program director with the Iowa Environmental Council, testified to the board in favor of the project.
“Wind X provides important economic and environmental benefits to MidAmerican ratepayers and to the state of Iowa, including compliance with the proposed Clean Power Plan, increased fuel diversity, reduced use of imported coal and other non-renewable fuels, job creation and economic development and the addition of a low-cost generating resource,” he testified.
If approved, the Wind X capacity would represents nearly 10 percent of the wind generation capacity in Iowa as of 2014, 5,708 megawatts, which ranked third in the nation, according to the American Wind Energy Association.
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The hearing on Wind X was the final one before the board makes a decision in the case, which is expected in August, Tormey said. The parties in the case have until July 14 to file additional briefs, he said.
MidAmerican had requested an expedited review and final order by Sept. 9, with a preferred deadline of Aug. 15. MidAmerican sought the advanced timeline to take advantage of federal production tax credits. The company hopes to complete construction by the end of 2016.