MidAmerican settles issues over 2,000-MW Wind XI program

MidAmerican Energy, the Iowa Office of Consumer Advocate (OCA), Facebook Inc., Google Inc., Microsoft Corp. and the Iowa Business Energy Coalition (IBEC) have settled ratemaking principles related to MidAmerican’s 2,000-MW Wind XI program, with MidAmerican filing that deal on July 26 at the Iowa Utilities Board.

The Environmental Law & Policy Center, the Iowa Environmental Council  and Interstate Power and Light have authorized the settling parties to state that they have no position on the settlement terms related to the ratemaking principles but generally support Wind XI and therefore have no objection to the stipulation and agreement. ITC Midwest LLC will file a separate pleading indicating that it has no objection, either.

On April 14, MidAmerican filed an Application for Ratemaking Principles in conjunction with its proposal to add up to 2,000 MW of additional wind facilities in Iowa (“Wind XI”). That filing was accompanied by a request for expedited consideration and a board decision by Sept. 21, 2016.

Among the matters settled by the parties:

  • The cost cap for the Wind XI Iowa Project is $1.792 million per MW (including AFUDC). In the event that actual capital costs are lower than the projected capital costs, rate base shall consist of actual costs. In the event actual capital costs exceed the cost cap, MidAmerican shall be required to establish the prudence and reasonableness of such excess before it can be included in rates.
  • The ratemaking principles shall be applicable to all new MidAmerican wind generation up to 2,000 MW, built as part of Wind XI.
  • The depreciation life of Wind XI for ratemaking purposes shall be 40 years. MidAmerican will be able to revise the depreciable life in the event an independent depreciation expert provides support for a different useful life and a change in depreciable life is approved by the board in a contested case proceeding in which parties to this proceeding may participate and present evidence either in support of or in opposition to the proposed change in depreciable life. MidAmerican is tp notify such parties of any application filed with the board asking that the depreciable life of Wind XI be revised.

MidAmerican Energy told the Iowa Utilities Board in the April 14 application that its 2,000-MW Wind XI development program is designed to meet renewable energy needs and extended production tax credit (PTC) authorization from Congress. MidAmerican Energy applied for a Determination of Ratemaking Principles for the proposed Wind XI Project, which, like its name implies, is the eleventh installment of a slate of wind projects developed in recent years.

Wind XI is a significant step forward in MidAmerican’s vision of producing enough renewable energy to match 100% of the annual electric energy requirements of customers. “The energy industry is in the midst of a shift away from fossil fuels and towards emissions-free renewable generation,” the application noted. “While court actions on the Clean Power Plan proposal may impact the timing of this shift, the trend is clear: the future of the industry will be in generation that does not emit greenhouse gases. Aside from regulatory requirements, customers are increasingly demanding sustainable energy options. MidAmerican’s vision is a proactive action to address these trends and to position MidAmerican, its customers and the state of Iowa for a leadership position in this changing industry.

“With this Application, MidAmerican is seeking advance ratemaking principles for 2,000 MW of new wind generation. When added to our current fleet, MidAmerican will have over 6,000 MW of renewable generation, enough to serve approximately 85% of the annual energy needs of our customers when Wind XI is completed.

“However, this step towards the 100% vision has a critical timing component. The recent extension of the federal Production Tax Credit (‘PTC’) provides a limited opportunity for MidAmerican to achieve this proactive step and bring financial benefits to the state of Iowa without the need to ask for an increase in prices to do so.”

William J. Fehrman. MidAmerican’s President and CEO, said in supporting testimony that when the prior Wind X project is completed in 2016, MidAmerican will have 4,048.2 MW of wind generation in operation. MidAmerican anticipates that in 2017, wind generation will supply 58% of its Iowa retail customers’ energy needs.

All potential Wind XI sites, which were unspecified in the application, are in Iowa.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.