By Katarzyna Klimasinska and Jim Polson
June 1 (Bloomberg) -- MidAmerican Energy Co., the Iowa utility controlled by Warren Buffett’s Berkshire Hathaway Inc. may buy wind-power assets from FPL Group Inc. rather than starting from scratch with its own windmill farms.
Such a deal would help MidAmerican jump-start a plan, filed with state regulators, to add 1,001 megawatts of wind power capacity in Iowa, Dean Crist, the company’s vice president for regulatory affairs, said today in an interview. FPL, the largest U.S. producer of wind and solar power, offered to sell Iowa assets to keep MidAmerican from building competing farms.
MidAmerican seeks to tap federal tax credits aimed at cutting emissions of gases linked to global warming. The expansion would give the company more excess power that can be sold to other utilities and a guaranteed rate of return. FPL said in May 22 testimony to the Iowa Utilities Board that MidAmerican won’t need added power for utility customers until 2019, and the new farms would cost over $2 billion to build.
Crist declined to comment on the $2 billion estimate. FPL, based in Juno Beach, Florida, said it would sell only part of the capacity MidAmerican seeks to add. The sale would include 100 megawatts of capacity at the Endeavor 1 wind farm in Osceola, Iowa, and a 250-megawatt project that’s scheduled for completion in 2010 or 2011, according to the testimony.
Additional wind-generated electricity would be sold to Des Moines-based MidAmerican under 25-year contracts, called power- purchase agreements, FPL said. The company, also owner of Florida’s largest utility, said the proposal would be cheaper for consumers than MidAmerican’s plan.
Ownership Issue
Crist said it’s important for MidAmerican to own the wind farms, not just buy their output under power-purchase agreements, or PPAs. Ownership of the plants by the utility would ensure that tax credits and other alternative-energy incentives benefit the company’s customers, he said.
“Under a long-term PPA with a third party, generally speaking, they would retain those environmental attributes and our customers would not benefit,” he said.
Iowa is the No. 2 U.S. state in wind-power capacity, ranking behind only Texas.
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