The Iowa Utility Board on Dec. 4 approved a settlement determining ratemaking principles for MidAmerican Energy Company’s proposed 591-megawatt Wind XII Project. The settlement establishes a cost cap of $1.560 million per megawatt and a return on equity of 11 percent. For construction work in progress, an equity rate of 10 percent will be applied.

The Board found that proposed project is reasonable when compared to other sources of long-term electric supply. The settling parties agreed that coal is not a viable long-term source due to regulatory uncertainty, and biomass and hydroelectric generation are not feasible based on the economics of those generation sources.

Although environmental groups supported solar as a well-suited source for a summer-peaking utility like MidAmerican, the commission found that they did not show how solar would meet several other criteria used to evaluate the feasibility of wind generation.The agency underscored the favorable attributes of wind generation including cost, environmental factors, geopolitical uncertainty, diversity, and resource availability.

The board declined environmental groups’ principle that the company retire an equivalent amount of coal capacity and remove it from rate base observing that baseload generation like coal is needed to meet variable demand. The agency approved a 40-year depreciation life for ratemaking purposes.

The ratemaking principle will take effect in 2019 and remain until the project assets are reflected in rates in a future electric rate case, or the federal production tax credits expire. MidAmerican Energy is a subsidiary of MHC Inc.