In a recent quarterly filing with the Securities and Exchange Commission (SEC), Berkshire Hathaway Energy unit MidAmerican Energy updated its effort to settle Iowa Utilities Board (IUB) issues concerning a proposed 2,000-MW wind expansion.
In July, MidAmerican Energy filed with the IUB a settlement agreement between MidAmerican Energy and the intervenors in the ratemaking principles’ proceeding “that resolves all contested issues associated with MidAmerican Energy’s application,” the company said in the Aug. 8 SEC filing.
“All of the major terms of the application discussed above remain unchanged other than the fixed rate of return on equity over the 40‑year useful life of the facilities, which the settlement agreement modifies to 11.0%.” The settlement agreement is subject to approval by the IUB, the company noted in the filing.
In April 2016, MidAmerican Energy filed with the IUB an application for ratemaking principles related to the construction of up to 2,000 MW (nominal ratings) of additional wind-powered generating facilities expected to be placed in service in 2017 through 2019.
The filing, which is subject to IUB approval, establishes a cost cap of $3.6bn, including AFUDC (allowance for funds used during construction), and provides for a fixed rate of return on equity of 11.5% over the proposed 40-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. Additionally, the filing proposes modifications to the revenue sharing mechanism currently in effect. The proposed sharing mechanism would be effective in 2018 and would be triggered each year by actual equity returns if they are above the weighted average return on equity for MidAmerican Energy calculated annually.
“Pursuant to the proposed change in revenue sharing, MidAmerican Energy would share 100% of the revenue in excess of this trigger with customers,” the company said in the filing. “Such revenue sharing would reduce coal and nuclear generation rate base, which is intended to mitigate future base rate increases. MidAmerican Energy has requested IUB approval by the end of the third quarter of 2016.”
If approved by the IUB, MidAmerican Energy expects to incur about $300m of additional capital expenditures in 2016, which are not reflected in the current 2016 forecast, MidAmerican said in the filing.