July 6, 2017
Iowa

MidAmerican must refile PTC request for refurbished turbines

Jeffrey Tomich, E&E News reporter | Published: Wednesday, July 5, 2017 | www.eenews.net

Iowa regulators sided with consumer groups by refusing to grant MidAmerican Energy Co. an exemption from a tariff that would let the utility keep federal production tax credit revenue related to plans to re-power 706 older wind turbines.

In a written order issued Friday, the Iowa Utilities Board agreed with the state Office of Consumer Advocate, part of the Iowa Department of Justice, and technology companies Facebook and Google, all of which challenged MidAmerican’s request on procedural grounds (Energywire, June 14).

The IUB decision was procedural and not based on the merits of MidAmerican’s proposal, which said refurbishing more than 1,000 megawatts of wind turbines would be a triple win for the company, the state and consumers. The company said customers would reap hundreds of millions of dollars in benefits through reduced fuel and capital costs and revenue sharing, as well as economic and environmental benefits.

But the three-member board said MidAmerican would need to apply for a more exhaustive tariff change to achieve the regulatory certainty it seeks.

In an email, MidAmerican spokeswoman Tina Potthoff said the utility plans to do just that. It is unclear immediately how quickly the board would act on a proposed tariff change or whether anyone would challenge it.

MidAmerican describes the turbine re-powering project as another step in its march toward 100 percent renewable energy. So far, the company has installed more than 4,000 MW of wind generation, with an additional 2,000 MW in development through its Wind XI project, approved last year.

Under the utility’s existing tariff, the PTCs associated with wind farms in the utility’s rate base would flow through to consumers.

But MidAmerican told the board the project would be economically feasible only if it’s allowed to retain 100 percent of the PTCs.

The IRS allows wind farm owners to requalify for the PTC for an additional 10 years under the 80/20 rule that requires no more than one-fifth of the fair market value of the re-powered turbine to be used equipment.

MidAmerican said re-powering the 1.5 MW turbines that were originally placed in service between 2004 and 2008 involves replacing significant portions with new, more efficient parts, such as longer blades and gearboxes that can lead to increased production.

The tower structure and foundations of the General Electric turbines that MidAmerican wants to re-power would be left intact, while the nacelle and blades would be replaced.

The company hasn’t publicly disclosed the cost of the project, and figures included in regulatory filings were redacted.

While the Iowa consumer advocate and tech companies signaled support for MidAmerican’s effort to increase use of cheap, renewable energy, both groups objected to the fast-track process and said a more thorough vetting of the proposal was necessary to ensure customers would benefit as stated.

The tech companies also said the commission should decide the prudence of the proposed investment instead of doing it when the utility fields its next rate case, which will be at least a decade.

The company had hoped to begin the re-powering project later this year and complete it in 2020.