In the news

A proposal to shift the expense of building a nuclear power plant from the utility to consumers by billing them in advance for construction costs isn’t in the public interest, Iowa regulators said.

The proposal, which didn’t clear the Legislature last year but could be considered again this session, would let MidAmerican Energy begin billing customers for the plant’s $1 billion or more construction long before it begins providing power.

An analysis by the Iowa Utilities Board summarized in a Dec. 23 internal memo and provided Monday to the Associated Press warned that the plan placed all the risk on consumers, who would pay to research the project before MidAmerican even committed to construction.

“The company would be guaranteed a profit on all spending up to this point,” it said. “This could create a stronger incentive to walk away from a plant than complete it.”

MidAmerican officials discounted the memo, and the Iowa Utilities Board remains officially neutral on the proposal for advance billing.

“The legislation doesn’t allow us to build a plant, it doesn’t change anybody’s rates, it doesn’t cost anybody anything more,” said Mid-American President William Fehrman. “All it does is put certainty in place for how the investment is handled.”

The analysis warns the plan would turn traditional utility regulation on its ear.

“This provision would exempt proposed nuclear plants from the existing requirement that a public utility that proposes a new plant must show that it has considered feasible sources of long-term supply and the proposed plant is reasonable when compared to those alternatives,” it said.

It also says the proposed changes could affect more than just nuclear power in Iowa.

“While the current bill restricts those changes to nuclear power, staff believes some provisions may go beyond leveling the playing field and could give a nuclear power plant unintended advantages over alternative sources of electric power,” it said.

Opponents of the plant say the analysis merely underscores worries that consumers have had all along.

“This memo supports AARP concerns about shifting the high cost and risks to build an estimated multibillion plant onto ratepayers before it is built,” said AARP State Director Kent Sovern. “Besides highlighting the ways this bill incentivizes behavior contrary to the public interest, the memo also details ways this legislation would tie the hands of the Utility Board from protecting and advancing the public interest.”

Sonia Ashe of the Iowa Public Interest Research Group called MidAmerican proposal “pure folly.”

“Let’s hope the Iowa Utilities Board staff analysis opens lawmakers’ eyes to the real risks they’d be passing on to their constituents and puts the final nail in the coffin of this nuclear boondoggle,” Ashe said.

The measure was approved by the Iowa House last year but was not debated in the Senate.

The House is controlled by Republicans generally favorable to utility interests, while the Senate is run by Democrats who tend to be more critical. Senate leaders have not said whether they would allow debate on the plan this year.

Sovern praised the Senate: “The Senate demonstrated its leadership and its concern for consumers in its refusal last year to pass this legislation.

“This memo,” Sovern said, “confirms many of the ways this legislation is a raw deal for Iowa consumers.”