Dive Brief:
- Iowa regulators have approved a settlement related to MidAmerican Energy's 552-MW proposed wind facility, capping costs at $1.61 million per MW including an allowance for funds used during construction.
- In addition to lowering the per-MW cost cap, the Iowa Utilities Board (IUB) also lowered the return on equity to 11.35%, down from 11.5% proposed by MidAmerican.
- The company will have 30 days to accept the settlement; according to regulators, it will allow the company to profit while creating an incentive to keep costs low.
Dive Insight:
Iowa regulators have approved the massive wind project proposed by Berkshire Hathaway's MidAmerican Energy, but with the tweaks it remains to be seen if the company will accept the settlement. The IUB capped costs-per-MW lower than the $1.638 million requesed by the company, saying it wanted to reduce the risk to customers.
“This lower cap reduces the risk to customers and provides an incentive to MidAmerican to keep costs low while still providing a contingency for unanticipated changes that could increase costs above that shown by MidAmerican’s economic analysis," IUB said in its order.
As for the lower return on equity, IUB said it "is lower than that awarded in any prior MidAmerican advance ratemaking proceeding including Wind IX, the most recent docket.”
On April 30, MidAmerican had requested expedited review and advanced ratemaking principles for the $900 million project. The company said it planned to begin and complete construction in 2016.
The IUB noted in a statement that before it could determine the ratemaking principles for Wind X, two statutory conditions had to be met: MidAmerican must have in effect an energy efficiency plan, and it must demonstrate that it has considered other sources for long-term energy supply.
“While the two statutory conditions have been satisfied to justify awarding ratemaking principles, in some cases the principles requested by the utility may need to be modified to provide an appropriate balancing of ratepayer and utility shareholder interests," IUB said in its decision.
