Measure allowing MidAmerican Energy to bill customers for cost of proposed nuclear reactor before construction is done has enough support in Iowa legislature to become law, says key lawmaker; company would still have to convince Iowa Utilities Board

Tracy McDonald

DES MOINES, Iowa , January 26, 2012 (Associated Press) – A measure allowing MidAmerican Energy to bill customers for the cost of a proposed nuclear power plant before construction is done has enough support in the Iowa Legislature to become law, according to a key lawmaker.

Even if the measure is approved by lawmakers, the company would still have to convince the Iowa Utilities Board that it's a good idea.

Sen. Matt McCoy, a Des Moines Democrat and chairman of the Senate Commerce Committee, said the measure includes substantial changes to a version that was approved by the House last year but that stalled in the Senate. The changes give the Iowa Utilities Board more latitude to determine whether a nuclear plant is prudent and the costs associated are reasonable for customers, McCoy said.

The board could decide not to allow MidAmerican to proceed with a project, McCoy said, or could decide to allow construction but not let the company recover costs in advance of completion.

"Even if they clear this hurdle they still have about 10 more hurdles they have to clear," McCoy said of the measure. "It makes sense to me to allow (MidAmerican) the opportunity to make a business case for this."

The Republican-controlled House approved a more prescriptive bill on a 68-30 vote last session, but it was never taken up in the Senate. It was derailed due to opposition from consumer groups and the nuclear disaster in Japan, after which a number of lawmakers asked to hold off until this year.

McCoy is planning a subcommittee meeting on the issue on Thursday. He expects a bill to be approved out of his committee the following Tuesday.

Anthony Carroll, state director for advocacy for the Iowa AARP, said the amended version in the Senate does little to address his group's concerns. He said billing customers in advance of construction is fundamentally unfair, and sets a dangerous precedent.

The group last year placed ads, sent mailings and organized thousands of calls to the Senate to oppose the bill. Carroll promised a similar effort this year.

"The question now is, is this Senate going to listen to Iowans, or are they going to listen to the special interests of utility companies," Carroll said.

A memo from the Iowa Utilities Board this week also questioned the measure, noting the guaranteed return for spending may create a stronger incentive for the company to walk away from the project if it hits a snag, rather than complete it,

"The risk is that they spend money and the consumer doesn't get a return," McCoy said. "On the other hand, there's a risk if we don't have cheap, alternative energy."

Some lawmakers and industry leaders say nuclear power may be the best option for future electricity generation in the state, due to regulations on coal-powered plants. About 72 percent of the state's electricity comes from coal, and about 15 percent from wind.

Iowa currently has one nuclear facility, the Duane Arnold plant near Cedar Rapids, which produces about 9 percent of electricity in the state.

"MidAmerican Energy still believes legislative changes are needed to establish nuclear power generation as one of the few alternatives for meeting Iowa's base load power needs in a carbon and environmentally constrained future," company spokeswoman Tina Potthoff said.

If a measure is approved in the Senate, it appears lawmakers in the House and Gov. Terry Branstad would be on board.

Rep. Chuck Soderberg, a Le Mars Republican and chairman of the House Commerce Committee, said there's still support for nuclear energy in the House. And a spokesman for Branstad said all energy options should be explored, including nuclear.

Senate Republican leader Jerry Behn noted affordable, reliable energy is an important element for economic development, something lawmakers have put at the top of their priority list. He served as the top Republican on the commerce committee before taking over as leader.

"Conceptually, it's still a good idea," Behn said of the bill. "The real question is: If you're going to pursue nuclear, what is the appropriate way to do it?"

Behn and McCoy both said the nuclear plant model MidAmerican is considering is safer than others, including those that failed in Japan.

"I don't think you can draw any analogies between the Japan nuclear situation and the Iowa nuclear situation," Behn said. "The reactors that we're looking at are so far removed from what Japan has, it's not even fair to compare."

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