Iowa Supreme Court equalizes cooperatives, rate-regulated utilities

The Gazette, Cedar Rapids, Iowa --Jul. 22

Jul. 22--An Iowa Supreme Court ruling Wednesday could encourage more farmers to invest in wind or solar energy by requiring rural electric cooperatives to buy their excess electricity under the same terms as Iowa's rate-regulated utilities.

The state's highest court ruled against Midland Power Cooperative of Jefferson in an appeal of a 6-year-old dispute with customers Welch Motels Inc., and Gregory and Beverly Swecker of Hamilton County. Windway Technologies, a now-inactive supplier of wind turbines, was also a plaintiff.

The plaintiffs, represented by Attorney Wallace Taylor of Cedar Rapids, claimed Midland ignored the Public Utility Regulatory Practices Act, requiring unlawful interconnection terms that prevented them from selling excess power to the REC economically. They said Midland offered much lower rates on the power bought back from the wind turbines than for the power Midland was selling them.

Related issues have been heard by the Iowa Utilities Board, the Federal Energy Regulatory Commission and state district court. In every case, Midland claimed the jurisdiction was improper.

The Supreme Court ruled Midland must provide an interconnection based on "net metering" that is already required by the Iowa Utilities Board for rate-regulated utilities, such as Alliant Energy.

In net metering, power bought or sold by the customer goes through the same meter. The meter runs either forward or backward depending on whether the power producer is selling more or less electricity than they are buying. The small producer pays only for the amount of electricity used above the amount supplied to the REC. The price is based on the supplier's "avoided cost," the amount they would have paid to generate or buy the power.

Midland had sought to employ a principle it called "net billing." Under that principle, the customer would have two meters, one for power sold to the REC, the other for power purchased from the REC. Power sold to the REC would be reimbursed at a different and lower rate than power purchased from the REC.

Farmer Greg Schwecker said the decision means he can now finally get a wind turbine hooked up to the grid.

"Now all the utility customers who want to invest in renewable energy have the opportunity to do so," Schwecker said. "They can reduce our dependence on fossil fuels and keep the money they spend for energy in their local economies."

Executive Vice President Brian Kading of the Iowa Association of Electric Cooperatives said the association is trying to determine whether the decision applies to all Iowa RECs, but acknowledged it may.

Midland Power General Manager Roger Wieck said the REC will comply with the ruling, but feels that it will be required to purchase power from the customers at a higher cost than it could purchase from regular suppliers. He said the REC fought the request because it will ship distribution and maintenance costs to other customers.

-----

To see more of The Gazette, or to subscribe to the newspaper, go to http://www.gazetteonline.com .

(c) 2004, The Gazette, Cedar Rapids, Iowa. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com. LNT.