Published on May 13th, 2013 | by Tina Casey8
Legendary Investor Warren Buffet Pumps $1.9 Billion Into Iowa Wind Power
Iowa Governor Terry Branstad went out on a limb last year, bucking his party and his candidate to lobby with Democrats for extending a key federal tax credit for wind power. The credit was extended after a pitched battle in Congress, and Branstad’s gamble has just paid off in spades with the announcement of a $1.9 billion investment in new Iowa wind farms by MidAmerican Energy Company, which comes under the corporate family of wind power fan and legendary investor Warren Buffet. So, who’s the big loser here?
Iowa Wind Power Cheaper Than Other Fuels
When MidAmerican announced the new investment, it gave full credit to the extension of the production tax credit for enabling it to expand its wind generating capacity.
The new investment will add up to 656 new turbine’s to the wind portfolio of MidAmerican Energy, which has already pumped 1,267 turbines into Iowa since 2004 (Buffet’s affection for wind power is active in other states as well, by the way).
When the new turbines are operating the company expects to produce 39 percent of its retail generation from wind power.
In comparison, by the end of 2011 the company’s energy mix was dominated by coal at 47 percent, with wind coming on strong at 26 percent. Another 20 percent came from natural gas and oil, with nuclear, hydro and “other” combining for the remaining 7 percent.
The company expects rates to go down by $10 million annually when all the new turbines are completed in 2017, with an initial $3.3 million savings due to kick in even earlier, so Iowa ratepayers certainly aren’t going to lose any sleep over its latest investment in Iowa wind power.
Relief For Iowans With Asthma
One big reason behind MidAmerican’s push for clean energy is the forcible drying-up of its coal portfolio in Iowa. Back in January, Cassandra Sweet of the Wall Street Journal reported that the company reached a settlement with the Sierra Club over alleged Clean Air Act violations.
The proposed agreement called for the company, which is a unit of Warren Buffet’s Berkshire group, to stop burning coal at five of its Iowa power plants and install new pollution control equipment at others
That’s good news for people with asthma, and it may also bring Iowa some relief from the growing problem of coal ash disposal. Typically impounded as a slurry, leftover ash from burning coal can leak arsenic and other toxic substances into groundwater. That’s on top of the threat of impoundment failure, as vividly demonstrated by the 2008 coal ash spill in Tennessee.
More Green Jobs For Iowa
MidAmerican anticipates that the new wind projects will generate 460 construction jobs, 48 permanent jobs, and more than $360 million in new property tax revenue over the next 30 years.
To get a look at what that could mean in terms of local economic development, take a look at the Atchison County, Missouri wind farm we profiled a couple of years ago. The project, from Ibderola Renewables, provides 44 different landowners with new revenue from leasing their property, with payments totaling about $365,000 annually. The ripple effect in new tax revenue for the project’s home county is up to $1 million annually.
Atchison County credits its wind tax base with promoting local fiscal stability, as a County official noted back in 2010:
“Every county in the state of Missouri almost has experienced a decline in their sales tax revenue and Atchison County has not. We attribute that directly to the construction of the wind farms.”
Transferring that to Iowa, residents win with a few dozen new green jobs, but the ripple effect is much broader, due to the potential for a wide distribution of revenue from land leasing, and a more sound fiscal footing for local governments to tend to roads, bridges, schools and other civic infrastructure.
Branstad’s Wind Gamble Pays Off
Governor Branstad comes out smelling like roses from all this, too. When he lobbied for the extension of the production tax credit for wind power, he didn’t just sign his name onto a letter. As the issue started to boil right after the November election, Branstad came out swinging at a joint press conference along with fellow Republican Governor Sam Brownback of Kansas and two Democratic governors, John Kitzhaber of Oregon and John Hickenlooper of Colorado.
Branstad had this to say:
“My state has directly seen the negative impact related to the PTC not being extended earlier. For example, Siemans recently laid off over 400 employees at its plant in Fort Madison, Iowa, and Clipper Wind Power laid off 100 workers at its plant in Cedar Rapids, Iowa.”
Now fast-forward to last week, when MidAmerican announced its new wind farm investments. Branstad, who is referred to as “a champion for wind energy in Iowa,” offered up this new assessment of the state’s prospects:
“MidAmerican Energy’s proposed project will be the largest economic development investment in the history of the state, bringing needed jobs to Iowa, as well as significant economic benefits.”
For a governor struggling with a 45 percent approval rating (according to a February 2013 poll), that will look pretty good on campaign literature for the next election cycle.
In fact, it looks like the only big loser here is whatever candidate the Democrats can offer up for governor next year in Iowa. Despite his mixed reviews from Iowa voters, the same poll also shows Branstad ahead of all of his potential opponents by wide margins.
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