MidAmerican Energy has gotten the green light from Iowa regulators for a proposed $3.6 billion, 2,000-MW wind energy project the company believes will be the largest such renewable energy development in the US.
The Wind XI project is the largest renewable energy project approved by the Iowa Utilities Board, board spokesman Donald Tormey said Monday. The board formally approved the project Friday.
Wind XI is expected to cement Iowa's hold as the leader in terms of wind share of the state generation mix. Iowa received 31.1% of its generation from wind in 2015, compared with South Dakota at 25.5%; Kansas at 23.8%; Oklahoma at 18.4%; and North Dakota at 17.6%, according to the US Energy Information Administration.
Texas was still the top state in terms of total wind generation at 57.1 million MWh in 2015.
MidAmerican announced plans for the project, which includes the installation of up to 1,000 wind turbines, in April.
The company, a subsidiary of billionaire Warren Buffett's Berkshire Hathaway Energy, said in its IUB application the project is scheduled for completion by the end of 2019.
On Monday, however, company spokeswoman Ashton Hockman demurred when asked when construction will get underway.
"At this time," she said in an email. "The project timeline and roll out are still being determined. Therefore, it is premature to discuss this."
In its application, MidAmerican also said the project would allow the company to take advantage of federal production tax credits scheduled to be phased out from the 100% level beginning with the end of 2016.
The IUB agreed with MidAmerican's argument that Wind XI "brings environmental benefits at a price that cannot yet be obtained from other renewable sources at a utility scale. Also, because wind is an emissions free source, Wind XI should mean that MidAmerican will have fewer long-term compliance issues with current and projected federal and state environmental policies."
PROJECT HAS $1.792 MIL/MW, COST CAP
A settlement agreement endorsed by the IUB included a set of ratemaking principles that established the cost cap for the project at $1.792 million/MW, including allowance for funds used during construction, or AFUDC.
In the event actual capital costs are lower than the projected capital costs, the project's rate base will consist of the actual costs, the board said. If capital costs are higher than forecast, MidAmerican "shall be required to establish the prudence and reasonableness of such excess before it can be included in rates," the board said.
An 11% return on equity also was approved by the board.
If MidAmerican cancels any Wind XI site for "good cause," the company's prudently incurred and unreimbursed costs will be amortized over 10 years starting no later than six months after the cancellation, the board said.
The depreciation life of Wind XI for ratemaking purposes is 40 years, the board said, and MidAmerican is able to revise the depreciable life "in the event an independent depreciation expert provides support for a different useful life and a change in depreciable life is approved by the board in a contested case proceeding."
WIND XI TO REDUCE MIDAMERICAN'S RELIANCE ON FOSSIL FUELS The IUB concluded the settlement as a whole will reduce MidAmerican's reliance on fossil-fueled generation and position the company "to meet ongoing and future environmental mandates in a manner that is more likely to benefit its customers."
In a statement, MidAmerican termed the board's approval "a positive step toward the company's 100% renewable vision."
MidAmerican serves about 752,000 electric and 733,000 natural gas customers in Iowa, Illinois, South Dakota and Nebraska.
