Iowa Open for Wealth Transfer to Warren Buffet

The nuclear power bills in the Iowa legislature, HF 561 and SF 390 are not as much about electricity as they are about serving a corporate agenda of transferring wealth from everyday people to the top percent of the wealthy in the United States. In this case, wealth would be transferred from Iowa utility rate payers to Omaha, where Warren Buffet's Berkshire Hathaway is located.

At first, this view seemed cynical, but at the Senate Commerce Subcommittee meeting at the Iowa State Capitol last Thursday, MidAmerican Energy President Bill Fehrman laid out the case for a wealth transfer.

Fehrman said that rate payers could see a $5 surcharge on their monthly utility bills as the estimated $1 billion cost of building a cluster of small modular reactors was repaid to investors over a 40 year period (amounts he quickly calculated on his smart phone). Whatever costs incurred by MidAmerican, in designing, certifying the technology, seeking Nuclear Regulatory Commission approval, in litigation against the project, and financing, building and operating the plant, would be paid beginning when the Iowa Utilities Board approved a design and rate structure. This, years before a reactor comes on line and beyond. If the reactor is not built, for any reason, rate payers would not get a refund.

No new nuclear reactor has been built in the United States in 30 years because investors find them too controversial and full of risks and cost overruns. Our Iowa government seeks to declare Iowa “open for business” for new nuclear reactors, and the bills in the legislature are designed to transfer the financial risks of a project from investors to rate payers so as to attract investment capital. With the financial risks of a nuclear reactor project largely removed from investors, the path will be cleared for capital to come into a project, earning a return on investment set by the Iowa Utilities Board in advance. Sweet for investors with cash sitting on the sidelines and seeking a place for long term, consistent and stable profitability.

What makes this particularly egregious is that normally, advanced rate making seeks to pay for the plant, up front, before it is built. This means much higher monthly surcharges than $5, but the substantial interest charges on construction loans would be eliminated or significantly reduced. Spreading the payment over the life of the nuclear reactor, for 40 years, could actually generate more interest charges, making the cost of building the plant higher for rate payers than under a conventional Construction Work in Progress arrangement like those in Georgia, Florida and South Carolina.

Somewhere, George Orwell must be smiling about all of the doublespeak in this proposed legislation.

Legislators have given inadequate consideration to the consequences of passing HF 561 and SF 390 for everyday people. We hope the Democrats in the legislature will take the time to consider this blatant attempt at a money grab from people who can least afford it. If passed, it would be one more bitter pill for everyday people to swallow in the post-Reagan society.

The Republican legislators? They may like a piece of the action once the bills become law, because it seems they were not serious when elected on a platform of Taxed Enough Already.

Urge your legislators to vote no on HF 561 and SF 390.

~Paul Deaton is a native Iowan living in rural Johnson County and weekend editor of Blog for Iowa. E-mail Paul Deaton