Another example of why I believe that MEC has too much influence on regulators and elected officials is their legislative handout (below) in opposition to legislation designed to encourage locally owned renewable energy. This happened several years ago, but once again, this is yet another example where MEC estimates the cost of installing wind energy to be higher than the valuations they were actually reporting to county assessors.
First lets examine the handout. This Legislation that MEC opposed attempted to established a fair price for non utility owned (hopefully locally owned) wind energy by front loading the price paid by the utility to the wind project owner. The first 10 years, the price would be higher, then after the project had theoretically retired its debt, it would be receive a lower price for electricity sales by the utility. The CBED brochure below has more details. This is essentially a modified form of a feed in tariff IMO. It addressed the main problem with farmers, regular Iowans, etc run into when financing wind projects, that the avoided cost calculations used by utilities are unfair to independent wind project owners. This problem has been around since wind energy was first connected to the grid in the U.S. It's been written about extensively, to the point of ad nauseam, So I'm not seeing a reason to get into the weeds here.. IMO, this issue really comes down to utilities having too much influence on regulators and legislators It's unnecessary to have electric provider monopolies when anyone can generate their own electricity. It's time to come up with a fair way for people who want to do that to get paid for their electricity sales. Using the Utilities avoided cost calculations ( an average of the cost of electricity for all the utility forms of generation) isn't fair.
Back to the legislation. This effort was patterned after similar similar legislation in Minnesota that was having good success at the time (more on this legislation in a future post). See the C- BED brochure at the bottom. That success was probably responsible for the MidAmerican freakout evident in their handout to legislators below. They obviously didn't want farmers- regular Iowans crossing the monopoly moat so favored by Warren Buffet.
That their talking points below were successful should be ample evidence the utility has a little too much influence at the legislature IMO. To me , this handout misleads legislators on how the utility is compensated for their wind energy assets and threatens to litigate the legislation if it passes, as the utility did with net metering legislation before. They lost that one if I remember correctly.
Back then, MEC would respond to questions from me, so I asked them how they came up with their assumptions for this legislative hand out. Dean Crist from MEC was kind enough to provide them.
Note the MEC estimate of their guaranteed rate of return. But, also note that MEC estimates the installed cost of wind is much higher than they were reporting to county assessors in the 2007 time period.
I don't think the Minnesota legislation lasted more than a few years, I think the combination of utility opposition and developers who weren't really "local" ended this effort, but, the Minnesota advocates probably know this story better.. A decade after this, the avoided cost issue is still debated. Getting a fair price for electricity sales is definitely easier when the utility agrees, rather than when MEC picked a fight with the 30 some co sponsors of this Iowa effort (more on that in an upcoming post). It's pretty obvious that the value of renewable energy assets is higher than a utility's avoided cost. I just wonder how much longer it will take regulators and legislators to summon the courage to address that.
And then there's that wind property tax issue again!
