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BATTLE RAGING TO SAVE MARKET IN IOWA

Iowa, along with other states in the Upper Midwest such as Minnesota, has up to now been the most promising region for wind development in the US. But over past weeks wind has suffered a series of blows across the country as utilities cut back on perceived costs and as priorities shift away from long term energy policy. This could mean that projects in Iowa may be halted before any of the planned major plants have been constructed. The law to rescind renewables backing was introduced by the Iowa Utilities Association.

Renewable energy development may be halted in Iowa just three years after it was adopted by state regulators and before any major plants have been constructed. Until now, Iowa, along with other states in the Upper Midwest such as Minnesota, had been the most promising region for wind development in the US. But, over past weeks wind has suffered a series of blows across the country as utilities cut back on perceived costs and as priorities shift away from long term energy policy.

In mid March, Iowa's Alternative Energy Producers' Law (AEP) was under fire in the state legislature. The law, passed in 1984 but adopted by the Iowa's utilities regulatory Board in 1992, required the state's investor-owned utilities to buy 105 MW of alternative power. As of March 17, a law to roll back renewables support had been passed by a house committee and was to go to the floor for a full vote. The law to rescind renewables backing was introduced by the Iowa Utilities Association. If passed, it could halt the 118 MW of wind currently proposed in Iowa, says Ty McNeal of Windway Technologies in Des Moines. A rally to oppose the new legislation was being organised for March 23.

Zond Systems Inc could be the big loser -- it is proposing to install 60 MW near Alta, 30 MW near Manson and 10 MW near Sibley. The remaining 18 MW of wind is being proposed by Northern Alternative Energy, also for a site near Sibley.

The utilities attacking the AEP include potential buyers of wind power -- Midwest Power, Iowa-Illinois Gas & Electric, IES Utilities and Interstate Power. They argue the existing law would require them to buy power that is too costly and that they would become less competitive. The current AEP $0.0603/kWh for a fixed 33 year contract, which the utilities says is twice as high as the rate they would pay for other power. In addition, Iowa-Illinois and Midwest Power are merging anyway, which could impact the wind proposals.

"We're scared to death," says Ty McNeal. "We haven't lost the battle, but it's going to be a real tough fight." He says the bill was defeated in the senate, where Democrats are a majority. Republicans are in the majority in the Iowa house. If the full house votes for the bill rescinding renewables support, it would be re-introduced into the senate. McNeal says the utilities also appear to have been working on the bill even while wind companies were negotiating with them in good faith for power purchase contracts.

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