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Just a sham say activists

With a state-mandated deadline of February 9 looming, an Iowa utility is reportedly negotiating with Zond Corp to supply a sizeable amount of wind power in the Midwestern state. MidAmerican Energy Co of Des Moines, which issued a request for proposals (RFP) for 45 MW of alternative energy in October, received 18 bids by the December 2 cut-off and is reportedly negotiating with Zond to provide the lion's share of 45 MW of alternative energy.

Even so, local energy activists say the negotiations are a sham because the utility is still trying to get a state court to overturn or delay the state's controversial Alternative Energy Production (AEP) law anyway. "The utility is doing it as a charade," says Heather Rhoads of the Iowa Citizen Action Network.

She notes that under the AEP, a queue to supply the alternative power had been established, at great cost to wind and other energy suppliers. "They're trying to get rid of the whole queue and start from scratch," she says. The AEP, which requires Iowa utilities to buy 105 MW of alternative energy, has indeed come under fire especially from MidAmerican Energy, which argues the $0.0602/kWh price required for clean power is too high.

"Zond is the only company that will play ball with them," Rhodes added. One day after MidAmerican issued the RFP for 45 MW, it filed a petition with the Federal Energy Regulatory Commission to block the law's implementation. Zond did not respond to interview requests, but the RFP stated that no more than 75% of the 45 MW total could come from any one technology.

The scope of Zond's negotiations with MidAmerican are not known, but others in the industry fear the situation is reminiscent of Kenetech's deal with Southern California Edison (SCE) in the wake of the collapse of California's controversial auction for renewable power, the Biennial Resource Plan Update (BRPU). Kenetech signed a "replacement agreement" with SCE -- which was meanwhile opposing the BRPU in every way it could -- that was more favourable to the utility. Other wind companies selected under the BRPU, as was Kenetech, were understandably furious.

Ever since Iowa's AEP was originally passed in 1983, it has drawn the ire of utilities there. They say the price it requires them to pay -- which is fixed for 33 years -- will disadvantage them in a deregulated market. The utilities, with MidAmerican the most vociferous, have unsuccessfully asked state regulators and the legislature twice to repeal the law.

Last year, state senators reaffirmed the law and in fact called for a doubling of the alternative capacity required. More recently, the Iowa Utilities Board (IUB) ordered MidAmerican and IES Utilities to proceed and sign contracts for the AEP projects by February 9. MidAmerican's share of the total 105 MW required is 55 MW, but it already has 10 MW of alternative energy in its power mix. The other utilities in the state, IES Power and Interstate Power, are currently merging with a Wisconsin utility and are expected to comply with the IUB ruling.

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