DES MOINES — The Iowa Utilities Board on Friday approved a modified settlement for MidAmerican Energy Co.’s proposed “Wind X” Iowa electric generation project of up to 552 megawatts.
IUB officials issued a news release saying the board’s order under the modified settlement agreement sets the cost cap for MidAmerican’s wind project at $1.61 million per megawatt -- including an allowance for funds used during construction. The modified cap was down from $1.638 million per megawatt for the completed project as a whole.
“This lower cap reduces the risk to customers and provides an incentive to MidAmerican to keep costs low while still providing a contingency for unanticipated changes that could increase costs above that shown by MidAmerican’s economic analysis,” according to an IUB statement.
The settlement agreement provides that the allowed return on the common equity portion of the Wind X project included in Iowa electric rate base will be 11.35 percent, down from 11.5 percent proposed by MidAmerican.
“The agreed-upon (return on equity) is lower than that awarded in any prior MidAmerican advance ratemaking proceeding including Wind IX, the most recent docket,” the board said in its news release.
Before the board could determine applicable ratemaking principles for MidAmerican’s Wind X project, two statutory conditions had to be met under Iowa law – the company has to have a board-approved energy efficiency plan in effect and must demonstrate that it has considered other sources for long-term energy supply and that the facility is reasonable when compared to other feasible alternative sources of supply.
“While the two statutory conditions have been satisfied to justify awarding ratemaking principles, in some cases the principles requested by the utility may need to be modified to provide an appropriate balancing of ratepayer and utility shareholder interests,” according to the board’s statement.
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MidAmerican will have 30 days to notify the board whether it accepts the ratemaking principles awarded. If accepted, the ratemaking principles would be effective for the regulated life of the facilities.
On April 30, MidAmerican filed with board a request for advance ratemaking principles and asked for expedited review.
On June 26, MidAmerican and the Office of Consumer Advocate, a division of the Iowa Department of Justice, filed a proposed settlement which, if adopted, would resolve all outstanding issues. The Environmental Law and Policy Center and Iowa Environmental Council also are parties in this docket.