MidAmerican Wind Repower

Above picture taken at the MidAmerican Pomeroy project.


So, how is MidAmerican disposing of the blades from their wind repower?  At their project near me, Contractors told myself and several local residents, they were to be land filled in southern Iowa some where. If true, that raises a lot of additional questions. Previous posts about the wind repower here noted the utility submitted filings at the state utilities board that properly maintained wind turbines have a life span of 25 years or more. Yet, since the repower was approved, many of the replaced blades will be retired a decade or more early because of the utilities desire to take advantage of federal tax credits.

My previous posts on this subject noted the lack of discovery available to local governments on taxable property added with the repower and rate increases for consumers. Now there is a disappointing equipment disposal on a touted green energy project?

I'll probably do some additional digging here. Did MEC tell the state utilities board that the blades would be disposed of this way? Did the environmental groups that supported this repower know the blades would be land filled? Did these environmental groups negotiate for options besides disposal?
Did they ask? Did entities purchasing green credits from MEC know of the blade disposal method ?

So, the issue about what to do with retired wind turbine blades is admittedly a difficult one, as this article notes. However, a good place to start would seem to be not retiring turbine blades early just to qualify for a tax credit.

 

Of course, comment is welcome from MEC to clarify if the blades are really being disposed of in this manner.   As MEC also promised to contact me about the property tax issues I've wrote about here, (they haven't yet) I may be waiting a while .

UPDATED

I noticed this issue getting discussion on agtwitter.
So, yeah , it's twitter , be prepared for lots of politics and opinions (and anger)  on renewables , but I thought these comments were relevant to my post on this. 

 

 

So, I should check out nearby Fort Dodge for the salvage yard.

Since they felt obliged to put up a sign, these blades are evidently causing lots of discussion.

Yet this trucker comment on this thread notes his fellow trucker friend is hauling Iowa blades to a Nebraska land fill. This matches what contractors have told numerous residents near MidAmerican's Pomeroy project.

So, when things like this happen (repower decision driven by tax policy?) It's another reason why we need a local owned renewable policy , instead of one controlled by monopoly utilities. Of course, if MEC would simply go on record about how they're disposing these blades, it would solve a lot of the speculation here. I haven't seen MEC do that yet, so if anyone has seen otherwise, please send it my way.


Here's my periodic reminder that I'm a big renewable energy lover. It's just time we move beyond the current renewable policy into a more distributed, locally owned policy. 

In the meantime, IMO, Warren Buffet's utility company should be able to afford to properly dispose of their wind turbine blades, and accurately pay their taxes.  As usual, MEC is welcome to provide more information,  about the blade disposal, and the wind tax issues I've wrote about.

   

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MidAmerican Wind Property Tax Update

As I have mentioned before, the state auditors office called , telling me the office was looking into many MidAmerican tax issues that I've posted about. When visiting the auditors web site to contact them for an update, I noticed the following:

 I seems to me that the tax discrepancies I've been posting probably fall into the categories that require public officials to report them to the auditors office. Now, I'll bet that many of the public officials I've notified about these items I've found with MEC tax filings didn't know of this requirement. I certainly didn't. Someone contacted the state treasurers office about my property tax posts.  The Treasurers office did refer it to the auditors office. I wonder how many public officials I've contacted about this actually let the auditor know there were potential issues. Especially the Department of revenue, who told me "they were not going to devote resources to this". Surely they would notify the auditor if they were not going to review the issues I sent them. Bleedingheartland noted that there appears to be some turmoil at DOR. I wonder if the staff members on phone call when I was chewed out are still there.

 You can review the many MEC tax discrepancies I've identified here. Many of the public officials I've notified about this are listed there. Look for a more complete list as I review my email history. It wouldn't be much of a list though, if the first public official I contacted about this had called the auditors office.

Another example of MidAmerican having too much influence on state and local officials? I'm thinking that's possible...       

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The MidAmerican Monopoly - A Trip Down Memory Lane

Part one of this series is here.

I've been reading Matt Stoller for information on Monopolies, market concentration, and anti trust.
As a farmer, many of the challenges our operation faces are monopoly related. Matt has been calling  attention to health care concentration lately. Our family recently had a health care experience that once again shows the challenges monopolies pose for we rural Iowans.

But I'm an energy blogger, so I'll take Matt's advice here and apply it to the utility industry.

  "I'm from MidAmerican and I'm here to help."

 As you can see from my previous post, I don't think MEC's opinion piece or their ads on TV are very truthful .

I produced some evidence in the previous post that shows customer owned solar does indeed provide a benefit to customers who don't own solar. I believe that's more than MEC has done so far to back up their claim. In fact, I would translate MEC's messaging so far on the legislation they helped write as "Just give us all the solar like you did with wind energy , you rubes!"
Legislators should ask MEC to prove their claim is accurate. Will elected officials do that ?
Matt Stoller hasn't commented on utility monopolies much yet. but his comments do seem to apply.

The "net metering bill" was amended to exclude co generation facilities producing combined heat and power; renewable fuel producers registered with the U.S. Environmental Protection Agency as manufacturers; facilities that use less than 10 percent biomass; and private generators with a capacity greater than one megawatt, as noted by bleedingheartland, whose post covers the political players on this bill.  I'd be surprised if any of these types of facilities have solar installations that are net metered, though there are probably distributed generation installations on the type of facilities mentioned here.
The Iowa Utilities board lists net metering size limits at 1 megawatt. Net metered or not, private owned solar distributed generation. still has ROI concerns with the tax implications I noted in part one.
Demand charges are still assessed to these facilities, net metered or not. Larger facilities also pay much less for electricity than residential and small businesses. Let's look at an example. Here is a an industrial electric bill from a MidAmerican customer.

      
If this customer installs a solar array that offsets the businesses electric usage, the user will still pay over $20,000 per month in demand charges, even though in part one, I noted that this customer would be providing significant peak electric savings for MidAmerican. Also, this user is paying less than 4 cents for electricity during peak periods, and less than 3 cents for off peak (this bill is a few years old). Adding solar to facilities like these, probably would yield a poor ROI,  more reasons that  I favor tariff payments to private renewable energy owners over net metering.

So, exempting these types of facilities from the legislation is probably not opening up MidAmerican to much risk. Exempting them does, however, further raise questions with MidAmerican's claim that solar owners "don't pay their fair share", as numerous other groups have picked up on.

In order to better understand the current effort to monopolize solar in Iowa...(well not just Iowa, It looks like similar bills are pending elsewhere) , let's look at a few of MidAmerican's previous legislative efforts.

Not in any particular order, but starting with Midamerican's effort that enabled it to corner the wind energy market from the 2003 time frame, I believe. Earlier, the legislature passed a renewable portfolio standard requiring 2% of Iowa's electricity to come from renewables (wind). Iowa utilities were not allowed to own wind energy because policy makers at the time envisioned lots of locally owned wind farms, and also because Iowa utilities fought the RPS hard. Instead, we got one wind project owned by Enron.

In 2003 the legislature was considering a proposal to increase the RPS, which called for a percentage to come from distributed generation.   
Just like the current effort to monopolize solar dangles a MidAmerican solar project to legislators, MidAmerican instead promised to build a wind project if legislators would change the law in 2003 to allow it to own wind energy. Identical bills appeared in the House (led at the time by Chris Rants) and the Senate (Stew Iversen).  A group of Senators attempted to amend the bill by requiring some of the wind energy to come from farmers -locally. The amendment was heavily opposed by the unions and the utilities, and failed. So, unions and business groups teaming  up against farmers, small business, and home owners just like the current solar effort. Democrat Mike Gronstal was senate minority leader at the time, and currently is working as a lobbyist for one of the unions supporting the MidAmerican solar bill. Chris Rants is now a lobbyist working for the Iowa solar trade association.

Then governor Democrat Tom Vilsack signed the legislation, and soon became a paid wind consultant for MidAmerican after the session ended. Evidently this passed ethics scrutiny, but really?  So, the current solar effort by MEC , looks nearly identical to the wind legislation of years ago to me.

Here we should shift to the Iowa utility effort to push deregulation in the 2000 time frame.
The 2003 wind bill essentially deregulated the wholesale side of electricity in Iowa but no one called it deregulation. It was wind legislation. Now, when I say deregulate the wholesale side, MidAmerican was allowed to build excess generation funded by the ratepayers, with the option of moving that generation into the rate base for a guaranteed rate of of return. Independent wind producers interconnecting to MidAmerican would only get the utility's avoided cost estimate. See how that works? Deregulation just for Iowa investor owned utilities. It's been awhile , but I think my memory is pretty close. The 2000 effort also would have deregulated the retail side. Tax laws were changed  (replacement excise tax) in the late 90s to lower utility property taxes to prepare them to compete in a deregulated environment.

A pretty weird coalition formed to oppose deregulation - municipal utilities, the rural electric coops, the unions, and the environmental community. Complete deregulation failed in Iowa,  most likely because the Enron scandal broke while Iowa legislators were considering it. I'll note that my understanding of the 2003 Iowa wind bill is that it recreated California legislation that caused the Enron scandal, but folks sharper that I are encouraged to weigh in. Friends tell me the utilities made some interesting offers to split the coalition above, but to no avail.

The 2003 wind bill only deregulated the wholesale side of electricity, evidently easing the fears of the unions, RECs, and Munis. The environmental groups, who were supporting the expanded RPS, were suddenly in a funny position, and many of them split to support the MEC wind effort. Years later, in an example of comic reversal, environmental groups, losing at the utilities board, went to the state supreme court to fight for the ability of a solar installer to act as a third party monthly solar lease entity to homeowners (enviros are for deregulation now?). The utilities opposed (against deregulation?) and lost. 3rd party solar leasing likely would have been possible under deregulation,   With perfect hind sight, The 2000 deregulation bill would have been terrible for MidAmerican, but the utility wanted it badly (legislators still jump to accommodate the utility today though), The monopoly now prefers to hide behind regulators these days. MEC achieved lower taxes (replacement tax), while retail customers still can't choose their electric providers. The environmental community is now in danger of losing net metering, their effort from decades ago, after losing the energy efficiency programs they also advocated for years ago in the last legislative session.If retail customers could choose their provider, maybe the utility with the best efficiency programs and KWH price would be at an advantage.

MidAmerican also proposed building a nuclear plant a few years back. Nuclear legislation once again appeared in both the state senate and the house that not only let MidAmerican start charging rate payers while MEC decided if they actually wanted to build the plant, but also made ratepayers liable for costs even if the plant never was built for some reason. I haven't read that legislation for a long time. If memory serves, ratepayers were also liable for accidents that might occur at the plant.
If you'll pardon the joke, MEC wanted "all of the fun and none of the fallout". movie buffs will probably recognize that line. Now with nuclear plants putting terrible burdens on ratepayers around the country, this would have been a pretty stupid idea for Iowa.

                     

Sadly, legislators tried their darnedest to pass this bill. The only thing that stopped it was the Fukushima nuclear melt down happening while the legislature debated this.

So, just because MEC wants legislation, doesn't mean its a necessarily a good idea for the utility or Iowa. Even the wind legislation from years ago, while good for utility shareholders, had the following consequences for Iowa .

Virtually eliminated competition from other wind projects, arguably a bad deal for ratepayers.

Wind energy has mainly developed in Iowa as an extraction industry. Wind leases paid to landowners are still probably less than 2% of wind turbine gross revenue. So count the number of turbines in Iowa, and it quickly becomes apparent that $billions of dollars are extracted from rural Iowa annually to be deposited in Berkshire Hathaway's bank account. Also consider that about half of Iowa's farmland is absentee owned (the last time I checked). So wind lease money doesn't necessarily stay in Iowa either. It kind of maters if the wind turbines are owned by rural Iowans. 

Yes, I know some counties have received a "wind fall" of property tax revenue from these projects.
But I've posted ample evidence on this blog that county assessors are leaving wind property tax revenue on table. I'm a reasonable guy. Please explain to me, anyone, why I'm finding all the tax discrepancies listed on this blog. Plus, look at the counties who have seen no benefit from wind because the legislature favored MidAmerican. How many independent wind projects were never built because of the 2003 legislation? A robust local owned wind policy would spread property tax dollars more evenly around the state.  

These days there is substantially more resistance to wind projects in the state. Don't take my word for it. A quick internet search will provide plenty of articles. MidAmerican has the most wind turbines in Iowa, so it seems reasonable that the utility might share some of the responsibility for that. For example, the MidAmerican project near me received a bunch of complaints. Don't take my word for it. Spend some time in the neighborhood. For comparison, a non utility wind project next to the MidAmerican project has generated no criticism to my knowledge. The projects look vastly different when you drive through here. The private project is also more accurately reporting their wind valuations IMO. In my area, it comes down to the what the Europeans have discovered. Maybe we should learn from them.

 

There are many other issues. Full disclosure - A MidAmerican turbine sits on my farm. I could write extensively about that experience,. For now, lets just say I wouldn't lease them a spot for that turbine if I had it to do over again.

So will legislators do the same with solar that they did with wind energy? It looks that way, judging from the last election cycle. Candidates in Iowa argued who was most responsible for what can be described as the least imaginative outcome for wind energy in Iowa. Even though, as noted above, the Political decisions on wind were made before their time. Still, if I had a buck for every politician that was photographed in front of a wind turbine...used turbines in their campaign ads...

I think pols would gather more support in rural Iowa if they instead talked about how future energy development in Iowa could be improved, not trying to take credit for what we have now.
I hope legislators do better with the solar opportunity in front of us than they did with wind energy. heck, its probably not even too late for Iowa to adopt a decent locally owned wind policy...
Are any politicians talking about that?
        

More to come in the next post.    

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MidAmerican Makes Monopoly Play for Solar in Iowa

updated for better flow, along with a couple additions.

I've been considering a post about what fair electric sale pricing for distributed wind and solar owned by farmers, small business, home owners... you know, we regular folks, might look like. I've put a lot time into advocating for establishing a fair price for these systems. Iowa still hasn't done that. Lately I've been busy documenting the many discrepancies coming from MidAmerican's accounting department when it comes to the utility's tax filings. However, with the introduction of HSB 185 at the state legislature, maybe it's time to throw my 2 cents in on the fair pricing issue once more. This bill deals with net metering, so lets start with with a couple online sources.

The first, is a Midwest Energy News article concerning HSB 185. This piece takes a run at explaining what the bill does. I'd like to point out a passage or 2, however.
the first is a quote from the utility spokesperson.

Wow... The first thing that comes to mind is my numerous posts on MEC's property tax discrepancies. I think it's unfair to Iowa tax payers who pay their fair share of taxes when a large entity such as MidAmerican possibly doesn't. It's my opinion that MEC probably isn't, and I am using many of their state and federal filings to document that. Obviously I feel there is a problem, or I wouldn't keep posting about it.

But, back to net metering. MEC seems to think the solar subsidy issue has been decided in their favor. Many of the other utilities, unions, and business groups supporting this bill evidently think so as well.

 So.....

 The article is correct that where the "solar subsidy" issue has been studied around the country, it generally has been proven that customer owned solar has a benefit to the grid and utility customers who don't own solar.

However, you can safely bet that cost shifting has been studied in Iowa, by the utilities pushing this bill.

I think Josh is also mistaken that the bill would "decimate the future of distributed solar" in Iowa.
The Iowa utilities are simply moving to control solar, distributed or otherwise, like they did with Wind generation years back. And that means that these said utilities clearly like the economics of solar, hence their effort to monopolize it. So... distributed wind and solar owned by farmers, small business, homeowners... or owned by Warren Buffet's utility?  

Next up.

 Again, the utilities have studied this. They probably have information shared by other utilities around the country, They have information from net metered projects in the state, along with utility owned pilot projects.

A friend shared this a while back. Seems like this might be a good time to discuss it.
Here's a link to a 2013 solar presentation given by the then head of the Iowa municipal utility association, Bob Haug.

  

   Note the "true avoided cost" definition, maybe like there is an avoided cost and a "true avoided cost". Handy hint , The "true" calculations probably (I'm being generous with the "probably") aren't the ones your utility is using on the the avoided cost payment they offer for private owned wind and solar projects. Heck, If they included all the "true avoided costs" below, they probably couldn't keep your solar project from being built, could they?
 Bob tells us what that "true avoided cost" value was projected to be in 2016, except for an environmental benefit, which also should be given to customer owned solar.

 So, Solar appears to have a net benefit to non solar customers and the grid. Thanks Bob. That makes it pretty easy to evaluate HSB 185, which the muni association supports.

I'll use my solar array as an example here. My REC offers a 5 year agreement that roughly approximates net metering. It will be up for renewal soon.  I pay a monthly fee to be connected to the grid. The REC bills me for demand charges and other costs.  Remember, large sections of Iowa don't have net metering, which has been around for decades for customers of Iowa investor owned utilities.
Our farm used to have a monthly electric bill in the $200 range. Using Bob's numbers above, My 10 kilowatt solar array gives a monthly benefit to the grid (and REC members who don't own solar)  of $600. Even if you subtract my monthly savings in electricity purchases, I'm still giving $400 a month of benefits to the REC and it's members that they are not compensating me for. Since I've spoken up now, it wouldn't surprise me if I receive less favorable terms when it comes time to renew my agreement.

So, Is MidAmerican deliberately misleading elected officials with this bill? It sure looks like that to me. I have posted another example where MEC did the same to state legislators. Will elected officials stand up to MEC this time? I guess we'll find out soon enough.

I'll probably split this fair price for local wind and solar discussion into multiple parts, or this will be a looong post.

Though, as you can see from above, I feel net metering doesn't deliver a fair price to privately owned generation. Legislators shouldn't pass this bill, considering MEC hasn't shared the above information with elected officials. But it's high time that Iowa had this discussion. Paul Gipe has written extensively on this issue, so you might check him out as well.

I believe the state department of revenue wrote concerns a while back, citing the loss of electric sales tax revenue from net metered systems. Hmm, and yet DOR won't look into the numerous MEC tax discrepancies that I've been listing here. But, I haven't located a copy of the DOR net metering letter to confirm that. Please send it my way if you have it.

If you have a farm or small business, when you generate your own electricity on site, you lose the  tax deduction that you used to claim for your monthly electric bill , when using net metering.That should be calculated into ROI projections, as a good energy consultant friend used to insist.

A properly constructed tariff  using the information above  (your utility definitely doesn't want you to have this) for customer generation would serve farms, businesses, and probably residential customers better (while addressing the concerns of DOR) than net meting, a concept from the 1980s .
 

As Paul Gipe said in 2013, "the utilities want to kill net metering, maybe we should let them if we can get a better policy".          


And Hey! Why won't state and local officials look into the MidAmerican tax items that I've been documenting. I'm a reasonable guy.  Someone please show me why these issues are occurring...
  

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MidAmerican wind property tax

I do have a lot of correspondence on this issue.  I thought I would share some of it.
Here, in 2013 , a couple board members at the Iowa Wind Energy Association seem skeptical that MEC was installing wind turbines for the cost I listed in this post at bleedingheartland. 
And, if you check my 2014 post, where IWEA discusses installed wind turbine costs, they are higher than MEC was reporting to assessors in 2013 and before. So, MEC is somehow installing turbines at a lower cost than industry numbers reported by the American wind energy association in that time frame ?  
In his comment at the end of the  bleedingheartland post,  IWEA board member Mike Carberry even called it a "financial malfeasance" while wondering if the Des Moines Register would be interested .  So far, the Register is not.
Link to the bleedingheartland post. 

Here's an email discussion with Senator Joe Bolkcom a few months back. I'll post some excerpts. I've known Joe for several years. He seems like a good guy who represents his constituents well. I reached out to him because quotes he made in the media concerning Iowa's budget issues.
 Senate Dems were first made aware of this issue when Daryl Beall scheduled a meeting with the DOR property tax department and sent a senate staff person in 2014. Mike Granstal's office was informed also,  but I would be happy to meet with them to go over more recent information that I've found. Plus, if people haven't dealt with an issue before, they'll need to learn about it. That's why all those lobbyists hang out at the capital after all :) .    Also , yes, my writing skills are not great, and I don't think I always explain this issue well to folks dealing with it for the 1st time.

Really ? Contact the Register? My thinking is any elected official concerned  about the budget might want to be involved when someone sends information about discrepancies with $$$ amounts this size, but I did contact Lee Rood as he suggested.  Also, I did send some of this information to another  DMreg writer a while back, Donelle Eller if memory serves.

  


Didn't hear anything more from these folks. I did remind Senator Bolkcom about this when I received a Dem email later on fretting over the condition of the states budget, so I've probably annoyed him. Still, I'll gladly meet with senate staff and go over the issue. They will likely be able to obtain documents I've had a hard time getting so far.  I'd simply like to hear someone explain why the discrepancies I've identified are occurring .

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MidAmerican wind property tax update

updated on 12-9

A timeline of my wind property tax research might be useful to blog visitors.

My research into the MEC wind property tax issue began a few years ago, when I saw a per turbine valuation listed in a local newspaper. I thought the valuations looked too low, as I had some experience with wind project development. When I asked to see MEC's filings in Pocahontas county, I was told they weren't available to the public. Yes, I was denied access to public records. After a lawyer drafted a letter to the Pocahontas county assessor office, The assessor  provided the paperwork I had requested. I had the same experience in Calhoun county. A copy of the letter I sent  to Pocahontas county previously secured MEC filings in Calhoun as well. I'm not the only taxpayer denied access to these files, but persistence pays off I guess. Did MEC request these records remain confidential?

It soon became apparent that local government had little interest in verifying that the utilities filings were accurate. Daryl Beall was the elected senator for my district at the time. He was kind enough to  schedule a meeting with the state property tax department at the Department of of revenue when I informed him about this. He was unable to attend, so he sent a senate staffer (Jace Micheals) with me. The state property tax director had little interest in this issue, and I was directed to the local property tax review board to resolve it. I did file a petition in Calhoun county , which was quickly denied, even though  the Calhoun county assessor actually supplied information that supported my suspicion that MidAmericans wind property taxes were too low. It seemed the outcome was predetermined here.

So, from the beginning I got little cooperation from state or local government. I was able to eventually piece together enough information to become convinced that there was a problem here. Much of that information has been uploaded to the blog. including more details on items above. I have more to sort through, and I'm sure there will be more info to come. I worry that this issue is much larger than the discrepancies I've found so far, which is why I called for a thorough audit of MidAmerican's wind property and replacement tax filings in the previous post. The issue looks huge. It's been going on for years. It will take state and local officials lots of time and effort, and no doubt will anger one of the county's largest utilities, which, as this post mentions, can exert a lot of influence in the state.  No doubt these are some of the reasons it has been so hard to get public officials interested. Newspapers are probably risking potential advertising income here as well.

So I want to list the public employees and elected officials that have received this information so far. The list will likely be added to as I go back through several years of correspondence on this issue.

The assessors from Calhoun and Pocahontas counties. A Webster county assessor told me the state DOR had warned her against contesting wind property valuations. The following Webster county assessor who replaced her said his hands were tied,  and to contact the state DOR and department of management.Supervisors from Webster county and Calhoun county were informed and did not act on the issue.

I fared no better at the state level. DOR sent  me back to the local  property tax review boards, stating this was a local government issue, so, state and local government are contradicting each other.  I finally sent DOR much of the information here on the blog, and received no response. I then contacted the department of management , who in turn contacted DOR. This resulted in an angry unscheduled phone call from DOR property tax department, documented here on the blog. Department of management ceased responding to to me soon after.


Another groups inquiry to the state AG office about MEC's turbine repower project was referred to the DOR, not a good sign considering the experience I had there.



On the Democrat side, former state senator Daryl Beall was very helpful. The information was also sent to Micheal Gronstal's office (Eric Bakker), Senators Joe Bolkcom , and Rob Hogg. who were not interested to date. The state treasurer referred my information to the state auditor ( Republican-who has stated they are looking into this). The state AG office (elected Democrat) referred the turbine repower part to the DOR. Since these discrepancies have been going on for years, the heads of the departments above would have Democrat appointees during part of the time periods I have identified.
They didn't find these problems, or didn't act on them if they did.
an email example sent to Senate Dems, Never did hear back from Eric:

The heads of the state departments above are now staffed by Republican appointees who  currently have shown little interest and one even displayed what I would consider strong push back on this issue. The exception being the state auditors office (elected Republican) who said they would review it.

  I'm not surprised when someone ignores this, maybe thinking it looks like a lot of work. But I've experienced a lot of bipartisan resistance, along with some genuine push back while trying to sort this out. Add in some off the record comments folks have mentioned, and I'm confident in the need for a large audit.

My current state senator and representative are Republican and I recently met with Senator Kraayenbrink about this. I'm hopeful for their help.

Area newspapers - the Pocahontas Record Democrat and the Storm Lake Times have shown little interest. Lee Rood from the Des Moines register did not respond to information sent to her.


One elected official asked if MidAmerican would ask for a rate increase if it was found the the utility owes more taxes. I suppose it's possible, MEC is a rate regulated utility who gets a guaranteed rate of return . However, if I was a regulator, I'd ask why the utility wasn't reporting taxes accurately in the first place. I'd vote to make the MEC board of directors to cover any back taxes. Fully disclosed tax liability would be crucial for regulators to properly do their job. The last IUB regulator who was critical of MEC was replaced though.  

An elected official even revealed during a conversation that he was "told not to look into this" (wish I had a written record of that!) . If he disputes that, he is welcome to roll up his sleeves and assist. And yes, I've endured the jokes about getting audited, or that I'll get beat up from people. Considering that I had one of my letters opened by MidAmerican a few years back  .....well ....   I always hope for the best with people, though I've got to say this issue has been disappointing at times.

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And also , anyone listed here is welcome to provide a statement if they disagree with what I've written. Or, they could simply prove me wrong and help sort this out. I'm just a farmer, but I did discover this issue, as opposed to several people above who have the responsibility to make sure things like this don't occur. Anyone of them are welcome to contact me. It would be nice if someone would explain why all these financial discrepancies are happening. This spare time research and reporting project continues....

   

  “If you smell something, say something."

 

   John Stewart

               

MidAmerican wind property tax update

Updated -12-8 , comments added 


Almost a year ago, I received a call. Someone had forwarded the MEC wind property tax information I've been making available online to the State Treasurers office. That office in turn had forwarded the information to the state auditors office. The gentleman on the phone mentioned he was from the state auditors office, and had seen the information I've been uploading. He asked some questions , stated the auditors office would be proceeding with a full review that would take a while, and said his office would be in touch at some point. I told him that I would be happy to provide information, relevant correspondence, etc. and thanked him.

As I mentioned above, that's been almost a year ago. I've thought it odd that I've heard nothing since, though I recently noticed the auditors office completed a review started in May of Iowa's medicaid system. It examined several months, January 2017 to November 2018, with 5 staff members performing the review. The article linked here was critical of the audit. The blogger is active in Democrat politics, and the current auditor is Republican, so I won't comment on the politics here, except to note that Iowa has room for improvement on healthcare, lots of room . But,  hey , I'm an energy blogger, so I'll keep those opinions to myself for now, except to recommend that visitors who are also interested in healthcare might check out the link to Matt Stoller on the side bar of this blog.  I was interested in the  time period audited, and time ,staff needed to complete the Medicaid audit because some of the wind property tax discrepancies I've been listing on the blog have been going on more than a decade. Much longer than the review time frame for the medicaid audit.So maybe it isn't odd after all that I haven't heard back from the auditors office.Reviews like this undoubtedly add to their normal annual workload.


I'm hoping the state auditor is still active on this, and will trace down why all the discrepancies and procedures  I've listed on the property tax issue have occurred. I still have additional information I haven't uploaded yet. I'm researching and reporting what I've found in my spare time after all.  So, here's my wish list for a full and thorough audit into MidAmerican's wind property tax :

1 Audit all of MidAmerican's 20 plus wind projects. Compare the utilities federal FERC wind cost filings and the Iowa utilities board filings , and compare to valuations MEC submitted to county auditors, Every MEC wind project I've looked at so far. has discrepancies between MEC's county filings and the MEC's federal FERC filings, so the auditor should look at all MEC wind projects.The Iowa Utilities board MEC  filings relevant to this are likely confidential. The IUB wasn't helpful at all to my inquiry about this. The auditors office would have no trouble getting them. Indeed, the gentleman who called me mentioned he had visited the IUB and would be continuing a review of MEC's wind property taxes. There's probably useful information relevant to this issue at the SEC as well, which I haven't had much time to check into, except to notice some information that MEC filed there that I couldn't find yet at the IUB (transparency issue ?). Some of these wind  projects have been in operation for a decade, so that's a lot of wind projects and a lot of years to review.

2 Audit MidAmerican's replacement tax filings at the state department of revenue. Every MidAmerican wind project has listed certain wind project grid connection equipment in the replacement tax program. That information is from an email sent to me by MidAmerican employee Dean Crist. He may possibly be retired. Thanks for your help Dean! That email is posted here on the blog, along with a Webster county MEC filing that supports the email. I've found another wind project that listed similar equipment as wind property. When I review the Iowa code, I don't think MidAmerican should be able to do this. Definitely not fair if DOR is allowing them to and other wind projects in the state can't.

I also noticed MEC removing this equipment from wind property , but I can find no record MEC added it to the replacement tax.  Again... 20 plus wind projects, some them more than a decade old, so lots of work here. When I sent DOR information about this, they didn't reply. Then I received an angry call from DOR when I contacted the department of management(the budget folks), and DOM contacted DOR about. During the angry DOR call, they stated that this was not happening. I followed up with an email that I thought clearly showed the wind asset switcheroo was happening. I received reply that stuck to their original position. So... they didn't find this error on their own, or they did know, and were unconcerned ?  And, since I found an instance of MidAmerican wind equipment missing from the replacement tax, I suspect that MEC is self reporting their replacement tax to DOR with insufficient oversight. My question about this to DOR has gone unanswered so far.      

Since I've found this issue, the auditor should examine MEC's other assets in the replacement tax program for similar problems. Since The annual KWH's of generation are listed at FERC for MEC wind projects, I'm guessing the rest of MidAmerican's assets are there also. State DOR said replacement tax calculation formula was confidential (transparency issue ?) The auditor should compare those generation and transmission assets annual KWH's,  calculate the excise tax due on those assets and compare them to the MEC filings for these assets at the department of revenue.I'm guessing there will be discrepancies, and if so, then MEC's natural gas assets should be audited also. The replacement tax program has been in place about 20 years... so, wow! That's a lot to track down.  Replacement tax was adopted when the utilities pushed for deregulation in Iowa, noted in another post on this blog.

3 The state auditor should take a position on MidAmerican's current wind turbine repower operation.The state DOR has stated that it considers this operation to be repairs, not improvements.So no additional property taxes will be due .  Since MEC is installing bigger gear boxes, larger generators, and longer turbine blades, These sound like improvements, and should be taxed accordingly. The state auditor should sort this out as well. I've also found instances where MEC has lowered the valuations on their wind projects with no supporting documents in county assessor filings. Again... 20 plus wind projects, some in operation over a decade.

I've sent this information to lots of agencies and elected officials, so it was encouraging that one of them called me and said they would be looking into it. As you can see, I'm hoping for a pretty thorough audit, so Iowans can be sure one of the states largest taxpayers is paying its fair share, and treated the same as everyone else. Who knows, maybe the auditor might find some back taxes due to aid the state budget. The discrepancy that I found on just 1 wind project is worth about $120,000 annually,      

  Also, Iowa will soon have a new State Auditor, Rob Sand, who has stated his intent to exercise use of the auditors office prosecuting and enforcement authority more than the Auditors office has in past years.
There's plenty of other energy issues to write about, but I think I'll stay with the wind property tax issue a while longer. Hope readers aren't getting bored.

Here are some past posts about this issue for easy reference. 

emails sent to department of revenue , wind turbine repower,   wind turbine repower 2,  wind turbine repower 3,   mec wind xi, gov removes IUB member after MEC meeting, DOR phone call,  utilities board not helpful, non mec owned wind project superior assessor filing,   mec press release compared to county assessor filings, mec replacement tax,   questions sent to DOR and department of management, mec highland wind project,  mec press release 2, mec lundgren wind project,  mec wind press release vs county filings, Iowa wind energy association cost estimates,  Calhoun county  MEC wind property tax review, DOR wind cost reporting memo to assessors, mec wind Pocahontas county, mec wind Calhoun county,  mec dean crist,   auditors office, and more posts, though these have the bulk of the information found..

here