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Regulators back MidAmerican Energy is battle for Iowa

NORTH AMERICA: After months of waiting, MidAmerican Energy has emerged the winner in the battle for wind power dominance in Iowa - a state with more than 3 GW online, second only to Texas. A unanimous decision by the Iowa Utility Board (IUB) allows the utility to build 750 MW of new wind generation on top of nearly 1.4 GW already owned or maintained under contract in its home state. Although MidAmerican, which is based in Iowa, had sought to build 1 GW by 2012, the IUB will consider the remaining 250 MW after the utility completes 750 MW.

After months of waiting, MidAmerican Energy has emerged the winner in the battle for wind power dominance in Iowa - a state with more than 3 GW online, second only to Texas. A unanimous decision by the Iowa Utility Board (IUB) allows the utility to build 750 MW of new wind generation on top of nearly 1.4 GW already owned or maintained under contract in its home state. Although MidAmerican, which is based in Iowa, had sought to build 1 GW by 2012, the IUB will consider the remaining 250 MW after the utility completes 750 MW.

In an unusual move, Florida-based NextEra Energy, the US's leading wind power producer, stepped into the ring last spring, insisting it could provide better value for MidAmerican's customers by forcing MidAmerican to purchase a mix of long-term power purchase agreements (PPAs) and existing or future wind plants (Windpower Monthly, July 2009). The board deliberations culminated in November. "The board has ruled, and pretty much gave MidAmerican what they wanted," says John Perkins, utility consumer advocate for the State of Iowa. "It's up to MidAmerican now to decide whether they want to go ahead with their wind farms."

NextEra had offered MidAmerican 850 MW in PPAs and assets - options the utility is still free to explore. "MidAmerican flat-out said if all NextEra wants to do is sell wind power through purchase agreements, they're not interested," Perkins says. "But if NextEra wants to build turbines and then sell them to MidAmerican, they said they'd consider things like that."

Without long-term PPAs, NextEra must continue selling its existing Iowa wind power on fluctuating merchant markets in the downturned economy. If securing new PPAs is unlikely, its prospects for building more projects in Iowa are also dim. Mike O'Sullivan, NextEra senior vice-president of development, testified to the board that NextEra and other developers would thus be inhibited from building more wind projects in Iowa if the decision went in MidAmerican's favour.

Uncertainty

"I don't see the logic of that," says Perkins. "I think that's NextEra just puffing. We've still got lots of wind here and if they think they can make a buck selling on the merchant market, they'll build here. I can't imagine that they wouldn't be here. They wouldn't be cutting off their nose to spite their face." NextEra spokesman Steve Stengel responded: "I'm not sure tit for tat is productive at this point. Mike O'Sullivan's comments are on the record."

MidAmerican, owned by billionaire Warren Buffett's Berkshire Hathaway holding company, did not comment. But while the utility has publicly acknowledged it will not need new generation on its system until 2019, it has expressed a desire to build quickly in order to take advantage of a favourable wind turbine market and federal stimulus money aimed at renewable energy.

Although MidAmerican has not disclosed locations of its proposed projects, it is likely to export new generation to markets outside Iowa, which it says will ultimately benefit ratepayers. It has paved the way by becoming a member last year of the Midwest Independent System Operator, a 13-state independently operated competitive electricity market.

Ron Polle, a State of Iowa attorney who worked on the case, believes that MidAmerican will take whatever path is best for its ratepayers and that NextEra is not necessarily done with Iowa. "I'm confident MidAmerican is going to find the lowest-cost approach," Polle says. "And NextEra has thousands of acres of potential sites for wind generation available to them. If they can make money, they will develop it, if they can't make money, they won't. And that's the way it should be."

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