As work on a wind-energy transmission line moves forward in other states, developers say the regulatory process in Iowa is holding back the project.
The hotly debated Rock Island Clean Line, designed to ferry new wind energy from northwest Iowa to the Chicago area and points east, is a fundamentally different type of transmission project. As such, the developer says, it requires a fundamentally different sort of regulatory process.
Iowa law calls for the state's utility regulator to rule on transmission projects by holding a single hearing where it decides on several matters: the need for the project, the project's route, and any requests to use eminent domain to gain access to any parcels along the route.
That process requires a heavy up-front investment – not an issue for utilities that can simply pass the cost along to customers, but a substantial financial risk for companies like Clean Line. The company has unsuccessfully petitioned twice to have the process changed.
On Nov. 30, Clean Line for a third time asked the regulator to split the approval process in two, to first decide on the project's necessity, route, and in general whether the developer would have the right to use eminent domain to gain access to properties where owners are unwilling to grant an easement.
At a second hearing, Clean Line would then address the use of eminent domain on any specific parcels where it has not gained a voluntary easement.
The distinction might sound trivial, but according to Clean Line's general counsel, Cary Kottler, the future of the project is hanging in the balance.
“There is no regulatory or legal mechanism in place today that would allow us to use the model that traditional utilities use for smaller local projects where, as long as they are acting prudently, they can recover all their costs,” Kottler said. “That process don't exist because this is inter-regional infrastructure.”
Lines carrying large amounts of electricity across two or more states are in short supply, a reality that is limiting the growth of large-scale renewable power generation like wind farms, said Kottler, adding, “That's the gap we are trying to fill.”
Process designed for utilities
For the majority of transmission projects, Kottler said, Iowa's approach works just fine. The electric utility spends many hours and a large budget contacting landowners along the route. Afterwards, the utility finds out if the regulator is signing off on the project.
Whichever way it goes, Kottler said, a regulated utility that has spent funds carefully can be pretty confident that the state will give it permission to recoup its costs by billing its customers.
Clean Line is in a much more tenuous situation. It has no customers it can bill, instead relying on investors to pony up cash for a large transmission project like the Rock Island. If Clean Line invests lots of resources in contacting landowners, and then finds out that it doesn't have the requisite approval from the state, the investors have no way to recoup their losses.
In Illinois, for example, where the Rock Island project was approved by the state's commerce commission, a spokesman said that project approval typically comes first, followed by right-of-way acquisition later.
In Iowa, Kottler said, “This project won't move forward if all the right-of-way has to be acquired before the route is approved.” The developer is required either to have a voluntary easement for each parcel along the route, or to have assembled documentation that is a prerequisite to seeking the power of condemnation.
'It's still the process'
The Iowa Utilities Board has been steadfast in its position, and an organization of project opponents is adamant that Clean Line should follow the state's existing process.
Clean Line's claim that Iowa's process is the reverse of those in many states “is correct to a degree,” said Carolyn Sheridan, president of the Preservation of Rural Iowa Alliance, which opposes the project. “But if you think process is backwards, it's still the process.”
“(Clean Line) knew that when they put this project forward,” Sheridan added. “This is not a surprise. What's a surprise is they haven't been able to get voluntary easements at a high level.”
Kottler said Clean Line has collected voluntary easements for about 200 of the approximately 1,500 parcels that the line would traverse. Asked how many parcels the company had attempted to get voluntary access to, Kottler said he did not know. He said attempts to gain voluntary easements stopped at least several months ago.
If Clean Line truly wants to work with landowners, Sheridan said, it needs to continue attempting to get voluntary easements.
Pursuing easements is costly, as is putting together the documentation to condemn a property, Kottler said. Without any guarantee that it can recoup those costs, Clean Line decided to stop that development work until it has a decision from the utilities board on its latest request to alter the process.
Sheridan, speaking for the opponents, said that the cost of the project should be borne by Clean Line and its investors, and does not justify a redesign of the process in a way that diminishes the leverage that landowners have in negotiations.
As it now stands, Sheridan said, any attempts to negotiate with landowners would be grounded in uncertainty about whether the state would allow the project to proceed. That uncertainty gives more power to the landowners.
“If you have the right to eminent domain, you have more power [over] landowners,” Sheridan said. “And having the franchise gives them a huge amount of power. If the project's (already) approved ... you might as well sign.”
An IUB spokesman said that the board will decide on Clean Line's latest request whenever all interested parties have had an opportunity to share their views.