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Two major players are tilting over windmills

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Call this a friendly fight between two titans of wind.

MidAmerican Energy Co., Iowa’s largest producer of wind energy, and NextEra Energy Resources LLC, a subsidiary of the nation’s largest producer of wind energy, disagree over whether utility customers should bear the costs of MidAmerican’s plans to expand its wind-generating capacity by 1,001 megawatts between 2009 and 2012.

As it stands, MidAmerican’s proposal, called Wind VII, does not include detailed plans for immediate construction of wind farms, or where those wind farms would be located.

It does, however, include a request that the company be guaranteed a 12.2 percent return on investment in the project, which it believes is necessary to meet future energy needs and the state’s mission to discover non-polluting energy sources.

The consumer advocate of the state Department of Justice already has sided with MidAmerican, saying it should be allowed the 12.2 percent guarantee as well as a hedge against potential losses on the project.

In addition, the consumer advocate has essentially held that MidAmerican should be free from future oversight of its capital expenditures on the project, estimated to total about $2 billion.

That has raised the ire of NextEra, which operates seven wind farms in the state as well as the Duane Arnold nuclear power plant in eastern Iowa.

NextEra is a subsidiary of Florida-based FPL Group Inc., which is the largest producer of wind and solar energy in the country and the second-largest producer worldwide.

NextEra maintains that Mid-American will gain a competitive advantage if the Iowa Utilities Board allows it to rely in part on retail utility rates to pay for Wind VII.

Michael O’Sullivan, NextEra’s senior vice president, said Mid-American shareholders should bear the costs.

In order to avoid a competitive stalemate, NextEra also has offered to sell some of its wind-generation assets to MidAmerican.

MidAmerican has not replied to that offer, O’Sullivan said.

In an article last month, Bloomberg quoted Dean Crist, Mid-American’s vice president of regulatory affairs, as saying the NextEra offer could help his company meet the 1,001 megawatt goal.

Crist and other MidAmerican representatives have submitted testimony saying that with approval of ratemaking principles, it might be able to “obtain significant savings for retail customers.”

In addition, with assured rates the company will be able to move quickly when the economic conditions allow the company to move forward with the project.

MidAmerican also points out that the 12.2 percent return on investment is identical to rates previously approved for two other Mid-American wind projects.

However, NextEra has argued that MidAmerican currently sells much of its wind-generated energy outside the state.

In addition, it has argued that MidAmerican’s promise of potential rate savings and rebates could be illusory. NextEra has maintained that MidAmerican did not engage in revenue sharing with its customers last year when energy rates were high.

Meanwhile, NextEra has begun construction of a $20 million facility in Story City, where it will repair wind turbine gearboxes, some weighing 40 tons.

O’Sullivan said the repair facility, scheduled to open early next year, will service NextEra wind farms in Iowa, including its 100-turbine Story County wind farm, and elsewhere in the country.

The company, which employs 600 people in Iowa, is advertising to fill 23 positions at the Story City facility.