Conditional green light for 1,001MW Iowa wind project

December 15, 2009

A national “leader” among utility wind developers has been given the green light to develop up to 1,001 Megawatts of new wind-powered electric generation in Iowa, between 2010 and 2012.

Des Moines-based firm MidAmerican Energy Company intends to develop the Wind VII Iowa electric generation project, which state officials suggest could cost between $1.7 billion to $2.5 billion for a 20-year lifespan.

The company sought permission back in March 2009 to price the project based on a 12.2% rate of return on its equity – the price of the project will affect future electricity rates for MidAmerican’s customers.

With a shortage of transmission capacity available for wind developers in Iowa, rival developers have been opposed to MidAmerican’s proposals.

Fears of a market “chill” for wind development in the State has seen the Iowa Utilities Board deciding that MidAmerican should seek further consent for developing beyond the first 750MW of the Wind VII project.

In a statement outlining its decision, the Board said yesterday (December 14): “MEC will be required to make a future compliance filing with the Board before making any substantial investment beyond the first 750 Megawatts of new wind generation. In that compliance filing, MEC will need to update the market power analysis in the record for this case to demonstrate that the additional wind generation will not give MEC too much control over wind-driven electric generation in Iowa and surrounding states.”

Two further conditions were set for the Wind VII project, for MidAmerican to file bi-annual status reports on the project until it becomes operational, and for the company to submit copies of all studies related to the wind farm to the Board.

MidAmerican

MidAmerican already operates 1,284MW of wind generation capactity at eight projects in Iowa.

Back in April 2009, MidAmerican was named as the national leader among regulated utilities for developing wind energy capacity.

Nearly 20% of the utility’s generating capacity uses wind resources.

The utility sought permission for its Wind VII less than seven months after receiving permission for its Wind VI project.

MidAmerican has been quiet on the details of the project to date, and was granted confidential treatment by the Board based on fears that information could affect proposals from potential suppliers to the Wind VII project.

Rival developers NextEra Energy Resources, which is based in Florida, and Oregon-based Iberdrola Renewables have challenged the Wind VII project through various filings during 2009.

Among issues, they objected to MidAmerican controlling “2,300 MW of an approximately 4,000 MW of total wind capacity in Iowa – nearly 60% of all Iowa wind resources”.

Such a situation would not be good for electricity rate payers, they said.

During hearings, MidAmerican demonstrated to the Board that wind was the only “mature renewable resource” available to it in “significant quantities”.

The utility has been steadily increasing the size of its development portfolio each year, from 160.5 MW in 2004 to more than 623 MW in 2008 – with bigger projects designed to cut down the number of filings required for new capacity.