MidAmerican Energy

Calls to Iowa legislators by members of AARP Tuesday (1/31) apparently delayed the first vote on a controversial bill giving MidAmerican Energy authority to raise electric rates upfront to pay for construction of a nuclear power plant.

IowaPolitics.com reported Iowa members of the American Association of Retired Persons (AARP) flooded the state legislature with more than 1,500 calls opposing the bill now before the Iowa Senate Commerce Committee.

The Iowa Utilities Board (IUB) staff has raised several warning flags about legislation sought by MidAmerican Energy to shift the risk of building a new nuclear power plant to utility ratepayers.

In a memo sent to the IUB and state legislators in December, the IUB staff warns that "some of these (bill) provisions could create incentives for the company to engage in behavior that could be contrary to the public interest in certain situations."

To illustrate what might happen, the staff report gives this possible scenario:

MidAmerican Energy paid $44,000 for "public perception" research as part of its 3-year, $15-million study on the feasibility of building a nuclear power plant in Iowa.

The assessment bill from Des Moines advertising/public relations firm Flynn Wright, Inc. was among the $2.3 million in expenses MidAmerican Energy charged to Iowa customers in the first year of the feasibility study.

MidAmerican Energy wants to boost electric rates, and is proposing a first-ever "environmental compliance" adjustment clause to reflect those costs on customers' electric bills.

The privately owned utility says it plans to seek approval for an overall 3.5 percent rate increase in February 2012. Interim rates could be in place by March.

Rather than file a general rate case, the utility has outlined in filings with the Iowa Utilities Board (IUB) that it wants to add two automatic adjustment clauses for "environmental compliance" and "coal and coal transportation" costs.

MidAmerican Energy spent $2.3 million on its nuclear plant feasibility study over the past 16 months, but has asked the Iowa Utilities Board (IUB) to keep details of most of those expenditures confidential.

The privately owned utility company was given approval by the legislature in April 2010 to collect a total of $15 million over a three-year period to pay for the nuclear plant feasibility study.

A five-year comparison of MidAmerican Energy financials shows a steady decline in profits, but the privately owned utility still earned a healthy 11.03 percent return on equity from its Iowa electric operations last year.

The utility has avoided seeking an electric rate increase since 1996 and has agreed not to increase rates through 2013 under a deal with the Iowa Utility Board (IUB).

MidAmerican Energy's chairman and heir apparent to Warren Buffett resigned Thursday amid questions about his stock purchases in a company later acquired by Berkshire Hathaway.

In an interview on CNBC, MidAmerican Energy Holding Company Chairman David Sokol said he was leaving the company to start his own "mini-Berkshire." The Berkshire news release quotes Buffett on the timing of Sokol's purchase of stock in a company, Lubrizol, which was later acquired by Berkshire. CLICK HERE for the Berkshire news release.