Buffett’s MidAmerican Won’t Go Nuclear in Iowa Just Yet
After regulatory hurdles began stacking up, Berkshire Hathaway-owned (NYSE:BRKA)(NYSE:BRKB) MidAmerican Energy Company decided to pull the plug on its plans to build new nuclear reactors in Iowa. In fact, many utilities companies have decided to hold off on building costly new nuclear reactors as the price of natural gas continues to remain cheap. Not only is it much less expensive to build gas-fired generators to create electricity, but the federal restrictions on carbon emissions are minimal.
In a statement made Tuesday, MidAmerican noted that its nuclear feasibility study concluded that moving forward with its construction plans would be “premature, given the uncertainty of carbon regulation and the extensive regulatory review for new nuclear reactor designs, to immediately pursue any additional site work on a future generation option, including a nuclear facility.”
The study’s results were reported to Iowa regulators on Monday.
Since 2010, MidAmerican has assessed the nuclear generation potential in Iowa. When the study first began, the company instituted a half-percent charge to support the research project. Now that the assessment has been concluded, the utility company — which is the state’s largest — asked the Iowa Utilities Board to approve a plan that allows MidAmerican to refund $8.8 million of the funds sourced from customers in the state and to stop collecting the half-percent assessment charge. The plan will go into effect on July 1, three months earlier than planned, and slightly decrease bill amounts for Iowa customers, according to MidAmerican.
During the assessment, the company identified various sites throughout the state that met nuclear regulatory requirements, eventually narrowing down the possibilities to two locations that underwent additional testing. In the fall of 2012, soil and environmental studies were conducted at both sites, which located in Fremont and Muscatine counties. But based on the results of these tests, MidAmerican said it would not buy any land on which to develop a nuclear facility. The land options in Fremont County will expire, and the company will not pursue an extension of its land options in Muscatine county.
Still, MidAmerican said it would assess and review all sources of generation “in order to continue finding ways to serve its customers and remain a low-cost energy provider.”
While MidAmerican — and several other utility companies — have put nuclear plans on hold, a few companies are going forward with construction in various locations throughout the United States, including The Southern Company (NYSE:SO) in Georgia, Scana (NYSE:SCG) in South Carolina, and the Tennessee Valley Authority (NYSE:TVE) in Tennessee.
Conversely, MidAmerican’s wind power plans are on track. Early last month, the company announced plans to invest $1.9 billion to build additional wind farms in Iowa, which will significantly increase the company’s wind generating capacity in the state. Once the project is complete, the utility company — which services 714,000 people in Illinois, Iowa, Nebraska, and South Dakota — has estimated its Iowa customers will receive 40 percent of their electricity for wind.