Monday, March 18, 2013

MidAmerican wind farm property tax update

It’s time for an update on my research to determine if MidAmerican pays the correct property tax amount at its Pocahontas County wind project site.   A recent phone conversation with Dean Crist reaffirmed that MEC was not willing to share any of its confidential filings at the IUB.  Access to these documents is important to this effort.  As an example, IUB DOCKET NO. RPU-09-0003, filed in May 2009, contains testimony that estimates MEC’s installed cost per KW of wind. This testimony (by Nextera) states that MEC’s installed cost per KW could be as high as $2685 for future construction.   A 1.5 Megawatt turbine would cost slightly over $4 million using that cost per KW. As noted earlier, The 1.5 megawatt turbines installed at Pocahontas County in 2007 (2 years before) are valued for tax purposes at just below $2.6 million. So as you can see, it appears that that MEC’s confidential documents would certainly yield information to aid the county in determining property tax values.

I also expect these documents would contain figures of construction costs that were depreciated, and property tax estimates for the life of the project. Having access to itemized project costs will also be key.

Also of interest in this docket are estimates “As demonstrated in Exhibit ____ (MO-3), MidAmerican had non requirement sales for resale in 2008, according to its FERC Form 1 filings, of approximately 38% of its total sales of electricity, and approximately 42% of its total MWh sold. These percentages are significantly greater than the figures for other major utilities in the region as shown in Exhibit ____ (MO-3). The peer company that comes closest to these levels of wholesale sales is Ameren, where 33% of its total MWh sold were sales for resale but only 16% of its total sales were non-requirements sales for resale, as compared to 42% for MidAmerican. All the other peer companies reported less than 10% of their sales for resale as non-requirement sales.”

 It appears MEC sells a lot of its capacity on the wholesale market. The IUB agreed to a settlement late last year, allowing MEC a rate increase to cover costs.  At MEC’s “Empower U” meetings late last year, the utility discussed its plans for future rate hikes.  Really, this could probably be the subject of an entire series researching the extent, if any; the utilities wholesale electricity sales affect customer rates.  Not sure that I want to be the one to do that after sifting through property tax and Tax Increment Financing though! Kind of seems like there are more enjoyable pastimes.  

Stay tuned.

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