The following is an Iowa View column published in the Des Moines Register
“If passed by the Iowa Senate, the law would provide an opening for what will effectively be the largest publicly-sanctioned, but privately-imposed, fleecing of Iowa consumers in the state’s history.”
by Jim Larew
According to Greek mythology, the 10-year Trojan War between the Greeks and the citizens of Troy was ended when Odysseus, the crafty leader of the Greeks, his heart set on plundering Troy’s riches, devised a plan.
Odysseus had a huge, hollow wooden horse constructed and filled it with his bravest warriors, pushed it to the gates of Troy and left it there, an apparent peace offering to the Trojans.
Despite urgent warnings of Trojan citizens to “beware the gifts of Greeks,” Troy’s leaders wheeled the giant horse through the city gates. At night, the hidden warriors emerged from the belly of the Trojan Horse and opened the city’s gates to Odysseus and his returning troops. The conquering Greek forces won in a single night the victory that a decade of battles had failed to achieve.
The Trojan Horse myth continues to instruct moral truths. Powerful interests who seek great riches often mask those aspirations in the guise of gifts. Leaders who are unable to deny the gift, even when warned of the perils, place the interests of citizens at great risk.
MidAmerican Energy’s nuclear power bill is a Trojan Horse, an old-fashioned get-rich, risk-shifting Wall Street investor scheme disguised as a progressive new energy policy aimed to serve a larger public purpose. If passed by the Iowa Senate, the law would provide an opening for what will effectively be the largest publicly-sanctioned, but privately-imposed, fleecing of Iowa consumers in the state’s history.
There is good reason why nearly 3 out of 4 Iowans oppose this corporate-subsidy-disguised-as-an-energy-bill and why opposition to it has united odd bed-fellows ranging from the Iowa chapter of the American Association of Retired Persons to Walmart to the Iowa Environmental Council.
In the last session of the Legislature, MidAmerican’s lobbyists proposed the legislation after the 2010 elections — thereby assuring that its merits would not be scrutinized by the public in the course of campaign debates.
The bill passed quickly and quietly in the Iowa House, a chamber filled with many new and inexperienced members, and without any meaningful discussion. As the session progressed, and as adverse public reaction caused members of the Senate to read the bill’s fine print, the legislative process ground to a halt.
The bill, in slightly modified form, now resides with the Iowa Senate, where Democratic leaders who control that body’s legislative calendar will have much to say about its fate. If passed, even as minimally modified, this measure will direct the Iowa Utilities Board to create unprecedented rate-making rules that will result in the most lopsided and unfair arrangement ever created between an Iowa utility company and its customers.
Even a Cyclops can see that the mandated arrangement will involve MidAmerican’s displacement of virtually all of its financial and legal risks upon ratepayers in exchange for the ratepayers’ duty to transfer their funds, as described on monthly bills, over to the utility company’s coffers.
The new regulatory rate-making regime would allow MidAmerican to be fully reimbursed, with high interest, not only for its the construction costs, but also for its planning and regulatory approval costs.
Audaciously, under the bill’s “guaranteed costs recovery provisions,” if MidAmerican fails to get its nuclear plant plans approved by state or federal regulators, or if the company simply changes its mind and decides not to build one or more plants, Iowa’s ratepayers and taxpayers will have no recourse to get their money back.
The costs of this scheme, if passed, will be staggering. In addition to the billions of dollars to be transferred from private citizens, businesses and industries to MidAmerican, it is estimated that governmental jurisdictions that are also ratepayers, using public taxpayer funds, will be assessed up to $10 million annually for the next 40 years for each $1 billion in nuclear project investment.
The “tweaks” to the legislation that MidAmerican’s lobbyists and consultants made after last year’s legislative session were no doubt intended to shield legislators from the heated consumer opposition.
The amended bill ostensibly removes final authority for approving the scheme from the Legislature to the Iowa Utilities Board, an agency filled with new gubernatorial appointees whose majority consists of persons who supported utility company laws during their previous service as legislators.
In an extraordinary move, the professional staff of the IUB, people who do not switch positions with each election, conducted their own independent evaluation of the bill and, on Dec. 23, issued a scathing report which included the following findings:
The IUB has insufficient staff to evaluate carefully the new advance rate-making principles that the legislation mandates, within the time period that the law will allow.
The board lacks the expertise on nuclear power plants to assure that the public’s interests will be protected.
In discussions with the U.S. Nuclear Regulatory Commission, the federal agency voiced multiple concerns about this bill.
The legislation is fraught with what it described as “unintended consequences.”
If passed into law, great inequities among different classes of ratepayers and users would be created. MidAmerican’s consumers would be required to pay the advance costs of nuclear power plant design, regulatory approval and construction, even though there are third parties (municipal utilities and electric cooperatives) that will benefit from the electricity generated by any new facilities.
The “guaranteed” cost provisions do nothing to discourage cost overruns. Since MidAmerican will have transferred all economic risk to consumers, and since all costs, plus interest, are to be recouped from those consumers, the company will have few, if any, incentives to “negotiate vigorously with vendors.”
You can be certain that Berkshire Hathaway, MidAmerican’s parent company, is well aware of risks to property and to people associated with nuclear power. Much of Berkshire’s vast fortunes have come from its insurance companies.
It is no accident that most insurance companies exclude from coverage all risks caused by nuclear power accidents. One of the great ironies of the MidAmerican bill is that it purports to build facilities — at the sole financial risk of MidAmerican’s consumers — whose operations will create the very types of indemnification risks that insurance companies, such as those owned by Berkshire Hathaway, refuse to take.
The bill does not represent sound energy policy for Iowa.
In a short time we will learn whether the calls of Iowans who oppose this bill will be heard or whether, as was case of ancient Troy, the Senate’s leaders will open the pro