Monday, May 23, 2016

Why Iowa Is Leading In Wind Power

It’s no secret that Iowa is a leader in wind power. News outlets, internet searches, wind trade organizations, etc. all tout Iowa’s installed wind capacity, though I’ve yet to see an article that explains why Iowa has become a wind power leader.
The quick answer is - Policy!   

Iowa’s first wind construction of note happened because the state's legislators required investor owned utilities to have 2% wind in their portfolios. Utilities opposed the legislation, though it passed and required utilities to purchase wind energy from other sources. Legislators envisioned lots of small installations, owned by farmers and other entrepreneurs, but ended up with a single installation owned by Enron (sigh). 

Wind was also added in the windier parts of northern Iowa to support RPS goals in surrounding states (looking for a supporting link here).  Iowa also has a special wind property taxassessment, and access to the sometimes available, sometimes not, federal windproduction tax credit. However, none of these policy tools catapulted Iowa to leadership status IMHO. 

Faced with a potential increase in the states renewable portfolio standard in 2003, MidAmerican instead pushed legislation passed by the Republican controlled House and Senate, and signed by then Governor Tom Vilsack, that allowed MidAmerican to include wind generation in its customer rate base. That’s right, Iowa didn’t lead in wind energy until one of our large utilities was guaranteed a minimum rate of return on its wind assets (kind of sounds a lot like a feed in tariff, right?)  That legislation also conveniently (for the utility) excluded farmers and other independents from receiving the same fair treatment.  A proposed amendment to the MidAmerican bill to fix that omission failed. And, MidAmerican still fiercely opposes any legislation to level the playing field. Iowa’s relatively small distributed wind, farmer and independently owned assets since, have been constructed using a hodgepodge of state and federal grants, tax credits, and other incentives, often at considerable risk.  

Wind is very cost competitive with other generation sources of course, though MidAmerican’s owner Warren Buffet would tell you otherwise. So, Iowa policy makers, how about a stable fair policy that gets renewable energy for the rest of us

Edit - part 2

Since we set the "way back machine" to Iowa's early wind power days and Enron, I should note that Iowa policy makers anticipated then that electric utilities in the state would become deregulated. In fact, the states investor owned utilities pushed heavily for it in 2000. In 1998, Utility property tax rates were overhauled anticipating such a change, creating a utility replacement tax. The deregulation effort was halted here, probably when the Enron scandal broke, and also I hear, because of heavy resistance from the state rural electric coops, labor, and the enviro community. I'm guessing at least one of those groups regrets that decision now. 

However, my understanding of the wind bill put forth by MidAmerican is that it achieved partial deregulation, deregulating the wholesale market, allowing the utility to build excess wind capacity,and guaranteeing a rate of return, while also shutting out competition. Customer rate payers were held captive to their monopoly utility, unable to shop for competitive electric plans, and receiving unfair treatment if they wished to generate their own electricity. Partial deregulation allowed the Enron market manipulation scandal to happen in California, though differences in Iowa's legislation seem to be more about limiting competition and limiting consumer choice.  

So, this stinker policy change is responsible for Iowa's "leadership" in wind energy.
Even though legislators originally envisioned diverse widespread ownership of renewables in Iowa, one utility has cornered the market. 

MidAmerican - stable, guaranteed rate of return on wind assets, while only required to offer low avoided cost to farmers and competitors, 

Profits flow to Berkshire Hathaway instead of being retained in rural Iowa.

Ratepayers left without choice in electric providers.

and etc. 

Bad as this legislation is, it still proves that only a stable risk free environment will allow for this country's transition to clean energy. Distributed generation is an important part of that transition, but now utilities are moving to corner that opportunity as well. Distributed generation needs such a stable policy as well, except one that creates opportunities for farmers, home owners, and other average folks, not big utilities. In other words, it will be much easier to get public support for said clean energy transition, if we create policy that benefits the many, not the few.  In Iowa and nationwide, its time for energy democracy



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