MidAmerican nuclear power feasibility study includes $450,000 for natural gas power plant analysis

MidAmerican Energy's second year of studying if a nuclear power plant is feasible for construction in Iowa included spending nearly $450,000 to analyze whether building a natural gas-fired generating station would be a better idea.

The utility, in the second of a three-year feasibility study of nuclear power, filed its spending report with the Iowa Utilities Board (IUB) November 15 and the bills included the payment of $447,543 to NERA Economic Consulting, headquartered in New York City. NERA energy consultants have a lengthy record of testifying against U.S. Environmental Protection Agency (EPA) air quality regulations and for Republican-backed energy policies.

Customers of the utility are funding the $15 million cost of the feasibility study through a surcharge on electric rates. The Iowa State Legislature adopted the legislation allowing the "carbon reduction cost recovery rider" in 2010.

Although natural gas-fired power plants emit less pollution than coal-fired generating stations, both natural gas and coal are carbon-based and both types of power plants have emissions of carbon dioxide, nitrogen oxide and sulfur dioxide, so-called greenhouse gases which also contribute to the formation of ozone.

Under terms of the legislation, the utility can charge customers for "the reasonable and prudent costs of its analyses of and preparations for the possible construction of facilities of the type referenced in paragraph "a." The language in paragraph "a" of the legislation states the study is "to undertake analyses of and preparations for the possible construction of nuclear generating facilities in this state that would be beneficial in a carbon-constrained environment."

Whether MidAmerican ultimately gets to charge customers for the NERA Consulting study of natural gas-fired alternatives to nuclear or last year's $44,000 bill from a Des Moines public relations firm for a public perception survey on nuclear power will be decided by the IUB after completion of the study in 2013. The IUB will convene a rate case hearing to examine expenses incurred by the utility and determine if the spending was appropriate under the legislation.

NERA's study, according to MidAmerican's filing with the IUB, was for "assessment of the natural gas market for analyzing baseload alternatives to a nuclear generating facility in Iowa; in particular a natural gas combined cycle generating facility."

The NERA consultant's report was still being drafted when MidAmerican filed its most recent report with the IUB.

MidAmerican has spent a total of $4.83 million to date, and has collected $10.6 million through the electric rate surcharge as of Sept. 30. The utility wants to retain the excess collected so far because it says expenses in the coming year may exceed the $15 million allowed to be collected before the surcharge ends next September.

The largest "study" expense in 2012 was $1.84 million to obtain options to purchase land in Fremont and Muscatine counties as potential sites for a nuclear power plant. Both sites are approximately 700 acres.

"During the next 12-month period ending Sept. 30, 2013, it is expected that MidAmerican will complete all anticipated on-site evaluations at the potential site locations," the utility said in its filing. "The objective of these on-site evaluations will not be to complete a full licensing application for a preferred site location. Rather, a limited amount of data will be collected in an effort to identify potential site issues early on in the site selection process. . ."

According to the IUB filing, MidAmerican will complete "the natural gas base load generation alternative assessment" and submit it along with the nuclear business plan and final site selection report to the utilities board next spring.

MidAmerican had lobbied the legislature during the past two sessions trying to obtain approval for a bill that would have allowed the utility to begin charging customers in advance for construction of a nuclear power plant. Opponents, including the Iowa AARP, opposed the legislation saying ratepayers should not have to assume the entire risk of building a nuclear power plant, and pointed to the experience in Florida where customers paid for initial cost of a nuclear power plant that was later cancelled.

CLICK HERE to download a copy of the 2012 MidAmerican Energy report to the Iowa Utilities Board.

CLICK HERE to download an itemized list of expenses during the second year of MidAmerican's nuclear power plant feasibility study.