What Happens in Iowa Won’t Stay in Iowa

by Martin Harris

Back when California was the national economic bellwether (a little medieval-English sheep-herder lingo, there) because of leadership (high) in industry and the arts, in cost of living and cost of government (low) it was said that whatever happened first there would soon be copied in the other 47 States. Now it isn’t; but because there are now 49 others (Prez 44 says 56) it may be that recent events in Iowa involving green energy and industry-government collaboration will similarly be replicated elsewhere. If distance is any measure, the time needed for cutting-edge change to move from the Left Coast to the near-Right Coast will be reduced by more than half for similar innovation to move from the heartland red-States to the Eastern coastal and near-coastal blue-States. If politics is the measure, it won’t happen, but that’s grist for a whole ‘nother commentary mill. If economics is the measure, even in States like Vermont, marginally concerned (at best) with economic growth and improvement, overtly hostile (at worst) to any significant replacement of grass and trees with power-using commerce, industry, and research, the results from a green-energy-subsidy court case in Iowa will indeed be a leading indicator.

The dispute between the established, government-regulated energy utility industry (in this case, industry power (no pun intended) Alliant Energy, and solar innovator Eagle Point Limited Liability Corporation, a new player in “green” energy with more depth in finance (it will fund as many roof-top solar-panel arrays as it can convince building-owners to sign up for) than employees (it has 18) focuses on several questions.

First: under traditional regulated public-utility law, recognized utilities are awarded monopoly customer-service areas and guaranteed Return-on-Investment, usually in the 10% range, in return for which they must reliably supply all power-user ratepayers, present and future. That historic agreement (most such in the US date back to the early 20th century) is now being breached, the utilities claim, by competitors such as Eagle Point setting up new generation (solar panels) and sales (to roof-owners) and thereby cutting into power sales which pay for the networks of generation, poles, and wires already in place and working, having previously been approved by State Public Service Boards under the monopoly agreement.

Second: the utilities argue that their historic PSB contracts are also being breached by the new requirement that any such solar power in excess of roof-owner needs can be sold back to the utility at prices-per-kilowatt well above the utilities’ own charges for equal power type and

quantity, reducing the utilities’ total sales and returns but not reducing at all the continuing (and expensive) requirement that they keep on-line power ready and available instantly whenever the sun goes behind a cloud or below the horizon, as happens with some regularity in Iowa.

And third: related to, but not a specific issue in, the dispute is the size of the subsidy-to-solar which the utilities (more precisely, all their rate-payers, who see it as a few-cents-per-kilowatt add-on to their basic bill, whether they have panels on their own roofs or not) are being required to fund, and without which, the entire financial structure whereby such no-economies-of-scale operation such as Eagle Point could never make their financial package of funding the panels and installation, to be paid back out of ratepayer billing, actually work in terms of essential net-profit-after-costs. The utilities have already argued elsewhere that the size of the economically-unjustifiable, but legally-approved, power sell-back (from panel-owners to utility) is driven by “green” politics and the ideology of artificially encouraging “green” power, not by analysis of real costs and fair competition with other power sources and systems. Example: coal, oil, gas, hydro, and nuclear are all less expensive per kw-hour. Minor irony: the rate-payer forced subsidy to solar users comes mostly from other non-solar users, not much from solar enthusiasts.

It happens in the other 56 States too (a little Humble Scribe deference to Prez-44 geo-political skills, there) which explains why this new point-of-issue between State-recognized utility Alliant (another industry power, Mid-American, has joined in this case) and the new competitor Eagle Point, is drawing national attention, precisely because whatever happens in Iowa won’t stay in Iowa.

So far, a local District Court has ruled for Eagle Point. It found in favor of an innovative “third-party deal” whereby the usual duo of utility power-seller and property-owner power-buyer is now supplemented by a (basically financial) outfit getting between the two by using its credit rating to get solar panels up on the roof, to get the rate-payer to buy the power as he needs it, and to empower (no pun intended) him to sell the excess, quite profitably, to the utility which doesn’t need it and, in fact, has to be prepared at all times to furnish from its own sources through its own poles-and-wires network wherever and whenever the sun doesn’t shine. Next step for Alliant and Mid-Am: the Iowa Supreme Court. Given the underlying political ideologies –“green” power, carbon footprint, buy-local, global warming, sustainability, Gaia-worship, and so on, it’s a safe HS prediction that, whichever side prevails in the forthcoming Des Moines octa-style marble-columned Greek-temple-with-copper-dome State Supreme Court case, will then be taken to the somewhat-similar octa-style-but-no-dome Federal Supreme Court building in the District of Columbia. Unless Vermont has seceded by that time, its own Golden Dome and Pavilion fifth-floor pols will have to accept the final results.