MidAmerican Energy Commissions O'Brien County's Highland Wind Farm

March 14, 2016

By Loren G. Flaugh

MidAmerican Energy Company (MEC) announced in a Feb. 3, 2016 news release that it had recently commissioned the Highland Wind Farm in O’Brien County and an Adams County wind farm. MEC said wrapping up these two major projects added more that 1,200 megawatts (MW) of wind generation capacity for customers.

The news release noted that the 502 MW Highland project was placed into service on Dec. 3, 2015 and it’s the fifth and largest wind farm of MEC’s Wind VIII initiative. Announced in 2013, the $1.9 billion Wind VIII proposal was promoted as the largest economic development project in Iowa’s history.

The Adams wind farm is part of MEC’s Wind IX program and it was placed into service on Jan. 30, 2016. MEC said the Wind VIII and Wind IX programs combined means that MEC now has a total wind generation capacity of 3,500 MW. MEC has 42% of its generation capacity derived from wind energy. MEC owns and operates more wind turbines than any other energy utility in the nation.

“Slightly more than 10 years ago, MEC didn’t own any wind energy generation,” said MEC’s Mike Gehringer, vice president, renewable energy. “As a company, we committed to develop wind as a resource for our customers. Today, wind makes up the largest share of our generation portfolio, and we project that by 2017, we will generate an amount equal to 57% of our total load with clean, non-carbon energy from our wind projects in Iowa.”

Gehringer noted in the MEC release the fact that wind is a free and abundant energy resource in Iowa and it helps to stabilize the rates that customers pay for their electricity.

“Our investment in wind farms has put us in a strong position to comply with future environmental requirements without placing significant financial burdens for that compliance on customers,” said Gehringer. Gehringer concluded, “Without a doubt, our investment in wind projects has been good for our customers, good for communities, good for the environment and good for the state of Iowa.”

MEC said the two recent wind energy expansion projects created thousands of temporary construction jobs, and meant almost 200 permanent jobs for rural Iowa. Over the next 30 years, the wind farms will generate more than $1.5 billion in lease payments to landowners and property tax payments to schools, cities and counties.

In its Nov. 6, 2013 news release, MEC detailed the impact that the massive Wind VIII expansion program would have for Iowa. With the 502-MW Highland project now being the largest wind farm in Iowa, other wind farms were built in Webster, Grundy, Madison and Marshall Counties from 2013 to 2015.

MEC selected Siemens Energy as the supplier of the 2.34 MW turbines for the 5 wind farms. Siemens manufactured all 448 nacelles at its Hutchinson, Kansas facility. All 1,344 of the 173-foot long blades were made at the Siemens facility in Fort Madison, Iowa. Minnesota based Mortenson Construction Company built 3 wind farms and North Dakota based Wanzek Construction built two projects. The O’Brien County Assessment of Wind Energy Conversion Property Tax Ordinance #19 that the supervisors approved in Sept. of 2003 requires that MEC provide the O’Brien County Assessor’s Office figures showing the total net acquisition cost of the Highland Wind Farm by February 1st of each year once the last turbine is commissioned.

The ordinance specifically states that the taxpayer shall file with the county assessor by Feb. 1 of the assessment year in which the wind energy conversion property is first assessed for property tax purposes the value of the property. The property tax rate is set at zero % that first year and increases by 5% ‘til the 7th year. For example, the 3rd year rate is 10% and peaks at 30% at the 7th year. About 52% of that figure will go to the school districts where the turbines are located and the balance goes into county coffers.

MEC filed those net acquisition cost figures with Lowell Dykstra, the O‘Brien County Assessor, on Feb. 1, 2016. While questioning Dykstra recently, he reported the breakdown of MEC’s final wind farm cost figures.

MEC reported that the final cost for the Highland Wind Farm came in at $820,195,459.00. That figure includes the $20,264,061.00 cost for the wind farm interconnection substation located north of Paullina and the $1,673,390.00 cost for the MEC Operations & Maintenance facility located in the Primghar Industrial Park.

By dividing the 502 MW nameplate rating for MEC’s Highland Wind Farm into the $820,195,459 net acquisition cost figure, the result shows that the per MW cost for building the wind farm came to $1.63 million for this particular wind farm.

Back in 2007, the American Wind Energy Association (AWEA) pegged the cost of building wind energy at $2 million per MW. By 2014, the AWEA figures showed the cost of building new wind farms had fallen to $1.8 million per MW. A comparison of that 2014 AWEA figure to the 2016 MEC figure of $1.63 million appears to confirm that new wind energy construction costs are still falling.

MEC Supervisor Adam Jablonski may have noted a reason for these falling costs at an MEC hosted media event on Oct. 1, 2015 at the Highland site east of Primghar.

While addressing the falling costs, Jablonski said, “It is coming down. When you do these on the scale that MEC does, you do get some bulk discounts there. We’ve never built a small 5 to 10 turbine project. But yes, we’re below the national average and we do see the price is coming down.”

MEC noted in its recent news release the beneficial impact that the property tax revenue from these wind farms will be for local schools, cities and county governments. For example, Dykstra took a moment to calculate out what the property tax payment will be at 10% when the Highland wind farm reaches its 3rd year.

With the Highland wind farm net acquisition cost of $820,195,459.00, and taxed at 10%, Dykstra calculated that the 3rd year property tax payment due in 2019 figures out to right at $1,900,065.00. Dykstra then calculated the 30% 7th year property tax figure at $5,700,194.00. That figure will continue for the life of the wind farm, possibly another 20 years or more.

According to information from Barb Rohwer at the county auditor’s office, the largest property tax paying entity is the huge Valero Renewable Fuels Co., LLC ethanol production facility at Hartley. Valued at $30,348,790.00, Valero’s current yearly property tax payment stands at $645,280.00.

The 2nd highest property tax payer is AG Partners LLC with a yearly property tax bill of $319,762.00. Interestingly, MidAmerican Energy’s current property tax payment ranks third at $317,463 for the electrical transmission and distribution infrastructure in the county. Two interstate pipeline systems that pass through the county have yearly property tax bills of just over $100,000 each. While noting the future financial benefit due to property tax revenues from the Highland Wind Farm, Dykstra said, “It’s going to be huge.” Work on the 250 MW O’Brien Wind Energy Project in north central O’Brien County will begin this spring with completion expected by the end of this year.