MidAmerican Energy, an Iowa-based utility company controlled by Berkshire Hathaway, has $1.1bn in its calendar year 2013 budget for things like building new wind farms and adding emissions controls to coal-fired units.
MidAmerican Energy said in a Nov. 1 Form 10-Q report that its forecasted utility construction expenditures, which exclude amounts for non-cash equity AFUDC and other non-cash items, are approximately $1.1bn for 2013 and include:
- $391m for the construction of 1,050 MW (nominal ratings) of wind facilities expected to be placed in service in 2013, 2014 and 2015.
- $187m for emissions control equipment, primarily at George Neal Energy Center Units 3 and 4 and Ottumwa Generating Station to meet air quality targets, including the reduction of SO2, NOx and particulate emissions.
- $67m for transmission system investments, including $25m for Multi-Value Projects (MVPs) approved by the Midcontinent ISO for the construction of 245 miles of 345 kV transmission line located in Iowa and Illinois. MidAmerican has entered into a contract totaling $342m related to its MVPs approved by MISO with minimum payments of $17m in 2013, $140m in 2014, $149m in 2015 and $36m in 2016.
- $17m for other generation development projects.
In August 2013, the Iowa Utilities Board (IUB) approved a settlement agreement between MidAmerican and the Iowa Office of Consumer Advocate for ratemaking principles related to the construction of up to 1,050 MW (nominal ratings) of additional wind facilities. The settlement agreement establishes a cost cap of $1.9bn, including AFUDC, for the construction of these facilities and provides for a fixed rate of return on equity of 11.625% over the proposed 30-year useful lives of those facilities in any future Iowa rate proceeding.
The cost cap ensures that, as long as total costs are below the cap, the investment will be deemed prudent in any future Iowa rate proceeding.
MidAmerican Energy has entered into contracts totaling $1.3bn related to these projects. Minimum payments are expected to be $343m in 2013, $522m in 2014 and $447m in 2015. MidAmerican Energy expects all of these wind facilities to qualify for federal production tax credits.
Four coal units to be shut a year earlier than under a legal consent decree
In anticipation of the April 16, 2015, federal Mercury and Air Toxics Standards (MATS) compliance deadline, MidAmerican Energy evaluated each of its coal-fueled generating units for compliance with the MATS emission limits. Due to the MATS compliance costs, MidAmerican Energy plans to retire four coal units by March 31, 2015. These units are Walter Scott, Jr. Energy Center Units 1 and 2 (118.2 MW total) and George Neal Energy Center Units 1 and 2 (418 MW total). A fifth facility, Riverside Generating Station (137.4 MW), will be limited to natural gas combustion by March 31, 2015.
The units being retired produced 2.2 million MWh of electricity, or 7% of MidAmerican Energy’s owned generation production, during 2012. These planned retirements are independent of and precede the April 2016 deadline by which these five units are required to stop burning solid fuel under a consent decree MidAmerican Energy previously agreed to with the Sierra Club.
Incidentally, the Iowa Department of Natural Resources (IDNR) is out for public comment until Nov. 11 on draft prevention of significant deterioration (PSD) permit changes to account for recent design changes for air emissions projects at one unit of the coal-fired George Neal North plant. The permit applications were submitted by MidAmerican for George Neal North, which is located at Sergeant Bluff, Iowa.
MidAmerican co-owns the 1,046-MW plant with minority partner Interstate Power & Light. Units 1 and 2 are also at the north site, while there is another coal unit at the nearby George Neal South.
In September 2011, the department issued both new and amended permits at the George Neal North plant to allow MidAmerican to install selective non-catalytic reduction (SNCR), flue gas desulfurization (FGD), a baghouse, and activated carbon injection (ACI) to Unit 3. This new permitting is a request to amend three permits for stack parameter changes based on changes to the final design of the emission points.