by Craig Mosher, President, Johnson Clean Energy District, and Andy Johnson, Executive Director, Clean Energy Districts of Iowa
There’s a somewhat quiet debate raging at the Iowa Legislature right now over the wonky issue of utility rate regulation … and the potential of nuclear power plants returning to the state. Given the stakes involved for ratepayers and communities, the debate should be a whole lot louder.
The issue is whether Iowa should require “Integrated Resource Planning” (IRP) as part of regulating rates for monopoly, investor-owned utilities, and whether utility plans for new nuclear power plants should be subject to IRP review.
As this recent guest column explains, IRP is really just a fancy term for a process regulators use to ensure that ratepayers are only paying for what they really need from the grid, rather than for all the extras that shareholders would love to earn a profit on.
Integrated Resource Planning is Standard Practice
Almost all states that regulate monopoly electric utilities like Iowa require a robust IRP that is conducted on a regular (usually 3-year) cycle, is transparent and comprehensive of all utility assets, and allows for ratepayer and stakeholder participation. It’s a critical tool for ratepayer protection, because utilities such as Alliant and MidAmerican have no competition; the state of Iowa grants them monopoly service
territories and very hefty profit on fully captive customers.
So it’s ironic that the House just passed a bill that includes an entirely toothless, ineffective IRP section, yet also includes a clause that could greenlight nuclear plans for MidAmerican Energy with insufficient regulator overview and minimal public transparency or participation.
Apparently, legislators were influenced by the investor who may have sucked more ratepayer money out of Iowa communities than any other: Warren Buffett. MidAmerican Energy belongs to Buffett’s Berkshire Hathaway, and has long wanted build nuclear generation in Iowa.
A robust IRP would subject nuclear to the same cost-effectiveness analysis as other energy sources, and Buffett is furious. In his latest annual letter to shareholders, Buffett complained about tighter regulations on utilities, and in what could be seen as a threat to policymakers, wrote “We will not knowingly throw good money after bad.”
Huh. I wonder if what Buffett really meant is, his companies are less likely to throw big money after big investments like nuclear if the state isn’t willing to give them blank checks, in the form of guarantees that ratepayers will foot the bill no matter what.
Nuclear Should Come At Investors’ Expense
Because the history of nuclear in recent decades isn’t exactly one of throwing good money after good deals. The Vogtle reactors in Georgia are the first to come online in the US since 2016, and the first fully new nuclear build in over 25 years.
Approved in 2009, the two reactors were planned to be operational by 2017, at a cost of $14 billion. The first reactor powered up in the spring of 2023, and the second not until 2024, at a combined cost of $35 billion. Ratepayers, however, have been paying for the plant since 2011 – well over a decade before it generated a single kilowatt-hour of electricity.
I should be clear – I am not ideologically or absolutely anti-nuclear. But we should all be absolutely clear that if ratepayers are ever to be on the hook for nuclear in Iowa, it must be subject to a comprehensive, transparent, participatory and regularly required IRP that makes darn sure Iowa ratepayers are only paying for what they need.
It’s Time for Ratepayers to Speak Up
Without subjecting future utility plans for nuclear to a very robust IRP, there’s a high chance that Iowa ratepayers could someday soon be throwing a whole helluva lot of good money after bad. Whatever statement legislators want to make on nuclear, they must pass such a robust IRP bill, and
ensure that nuclear – if ever seriously considered in this state – is subject to the same level of scrutiny and cost-effectiveness as any other proposed energy resource. And that if highly risky investments like nuclear are made, company shareholders – not Iowa rate-payers – bear the risk if those investments go bad.
Posted: March 24, 2024
