Saturday, July 26, 2014

The Clean Line Transmission Controversy In Iowa

Regular visitors to this blog can probably guess that I’m more interested in writing about farmer owned distributed generation (DG) than utility scale renewable energy projects. To clarify, I’m not really opposed to the big wind thing, but I’m opposed to large wind projects as the only business model for developing wind resources. I’m also of the opinion that small scale energy projects are more cost effective than centralized generation supported by transmission lines. Current U.S. tax policy and regulations discourage farmer owned DG, but that’s really a topic for an upcoming post. So, with that out of the way, let’s look into the Clean Line controversy a little more thoroughly, as it has generated a fair amount of media coverage in Iowa. 

Clean Line is a is a proposed transmission project that bills itself as a vehicle for carrying wind energy from O’Brien County in Northwest Iowa to markets in Illinois.  Farmers and landowners along the proposed transmission line route are quite upset at the prospect of a private company possibly using eminent domain to seize farm land for that companies own use. This has resulted in what I think is really the first organized opposition to renewables in Iowa. Several Farm publications have covered this story.  It was on the front page of a recent Wallace’s Farmer issue. The Iowa Farmer Today (IFT) also covered it, noting that over 1000 oppositions to the project have been filed at the Iowa Utilities Board.  IFT also noted that “Roger McEowen, director of Iowa State University’s Center for Agricultural Law and Taxation, said the first thing landowners need to realize is the agreement as it stands favors Clean Line Energy.”  Also, it appears that the transmission line compensation is a one-time payment, while wind projects generally compensate landowners annually. So, it’s easy to see why farmers are peeved.

While I’m very concerned about potential abuse of eminent domain in Iowa, I think it’s unfair for the opposition group to single out Clean Line on this issue. Eminent domain is typically used for projects that serve a public need, and Clean Line opponents don’t seem to believe the company has passed that test. Then they should also be concerned with other company’s eminent domain use in the state. In the Iowa Utilities Board 2009 Docket RPU-09-0003,

 Micheal O’Sullivan with Nextera Energy testified that “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”. 

So, it looks like a portion of MidAmerican’s (MEC) wind is sold on the wholesale market. Therefore, Clean Line opponents should also be concerned with MEC having eminent domain at its disposal to expand their AC transmission in Iowa for excess generation.
The Iowa Legislature introduced a bill in 2014 to tighten requirements for use of eminent domain for this type of project. Early versions of the bill would have also affected AC transmission lines. Later changes were proposed so the bill would only pertain to DC transmission lines, the type proposed by Clean Line, giving the state’s other utilities a pass. The bill didn’t advance, but why would legislators write an eminent domain bill that only affects one company, and not a bill that helps all landowners approached by developers.  The bill was almost certainly lobbied on by utility interests. It was also opposed by some environmental groups, who want the Clean Line project. It will be interesting to see if some of those same enviro groups will now oppose eminent domain use by a Texas company that has proposed an oil pipeline in Iowa. Some of them are already citing concerns about the pipelines potential impacts on farmers. It seems that the Clean Line opposition group might also oppose eminent domain use to acquire land for the pipeline. 

A number of groups do support the Clean Line project, so let’s examine the “for” position as well. Supporters like the potential additional clean wind energy the transmission project could bring online, and wind developers have secured easements where the Clean Line Substation has been proposed.  I’m not convinced that the new transmission line will just carry wind energy, as federal guidelines try to give equal transmission access to all forms of generation. Wind generation in that section of Northwest Iowa would have a very good capacity factor, probably close to 45%. But that still means that quite often, it could carry coal power from the Dakotas. Wind is currently without subsidies, as the federal production tax credit has expired, while coal still enjoys federal assistance (see my past post, or try Google). So, coal power could have an advantage over wind for electric power purchasers. That may balance out somewhat with the proposed EPA regulations for power plants, but you get the picture.  This study by Capx2020, while from back in 2007, seems to think Regional Transmission Projects may help import coal power to areas of the Midwest (page 15 – PDF file). 

I found the above link in the comment section of an article discussing the nebulous sounding idea of a “Special Purpose Development Corporation — created for the sole purpose of acquiring properties for a transmission project and then selling the bundled parcels to the developer. The number of shares granted would depend on assessed value.” The concept was pitched by the Center for Rural affairs, to help decrease landowner opposition to transmission projects. While the think tank’s attempt to “think outside the box” is somewhat refreshing to me, Clean Line opponents didn’t seem to care for it, as a “small riot” erupted in the comment section of the article. 

So, how do we go about encouraging more renewable energy development in the Midwest? I’m going quite a bit further out of the box. Annual payments to landowners for wind projects have worked well to date, so it seems annual transmission line easement payments might work better to secure rights for new power lines. It’s pretty clear that eminent domain use by renewable projects pisses people off. It’s an old business model tool that doesn’t seem suited to modern clean energy development. Letting affected landowners have actual ownership in the wind project and transmission line might work a lot better. Even wind energy trade magazines have noticed that the current model for wind development might be in need of improvement. Mark Del Franco at North American Windpower notes that “Times have changed, and so must the actions of wind developers. It’s the new reality.”   

However, I’ve noted before that I think it’s high time for a robust distributed generation policy to encourage more local ownership of wind and solar. It will build more public support for renewable energy policy. It might also help larger projects as the public will become better educated about wind and solar when they can own it. The public might start ignoring misinformation about renewables. It will also help regulators plan and watch for ratepayer interests, given that some are projecting that as many as half of the countries electric customers might generate their own power by 2028.  Some of the many projects planned around the country just won’t be needed under that scenario. Having a stable DG policy in the country would help regulators decide which of those projects will be warranted. Until that happens, at least some forward thinking areas of the company have decided not to wait. I’ll close with a link to a positive example of rethinking our plan for modernizing the countries electric grid.         

I found an additional link for this post. It is a Fort Dodge Messenger story about Clean Line meeting with local economic development officials in northwest Iowa. It contains the following quote "Because of the federal regulations that require line owners to allow interconnecting, Detweiler said there is the likelihood of additional revenue by other entities moving power along the system."   So it looks likely this project will carry some coal power. Mr. Detweiler is an employee of Clean Line.


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