April 28, 2023
DES MOINES — Today, the Iowa Supreme Court issued an opinion in favor of three environmental groups’ position in a challenge to an Iowa Utilities Board (IUB) order that limited its ability to review the cost-effectiveness of MidAmerican Energy’s coal plants. The court reversed the Board’s order and sent the case back to the IUB.
State law requires the IUB to evaluate MidAmerican and Alliant’s plans to manage emissions from their coal plants, as well as the costs associated with those plans. Once approved, the utilities can then recover the costs of those plans from customers. The Iowa Environmental Council (IEC), Environmental Law & Policy Center (ELPC), and Sierra Club appealed an IUB ruling that excluded evidence showing that retiring two coal plants was a cost-effective way for MidAmerican to manage its emissions.
The environmental groups provided independent analysis showing that it would be cost-effective for MidAmerican to retire two uneconomic coal plants and replace them with clean energy, rather than continuing to spend money on coal plant pollution controls at plants that are already losing money. Rather than considering that evidence, the IUB said that consideration of coal plant retirements was outside the scope of the statute — even though utilities had decided to retire coal plants as an emissions management strategy in past cases. The Board’s order indicated that it would consider coal plant retirements only where the utility proposed to do so.
“The state Supreme Court’s decision is a common sense recognition that sometimes the most cost-effective way to manage air pollution is to stop emitting it,” said Michael Schmidt, IEC Staff Attorney. “The Neal North and South coal plants are extremely expensive sources of electricity, and the evidence shows that the least-cost way to manage their emissions is to retire the plants.”
“The state Supreme Court recognized the significant implications for customers if MidAmerican can avoid scrutiny of its coal plants,” said ELPC Senior Attorney Josh Mandelbaum, who argued before the Supreme Court on March 22, 2023. “If the utility can determine what evidence is relevant from plan filing to plan filing, coal plant retirements that could save customers money while providing greater environmental benefits would be inappropriately excluded from consideration.”
The state Supreme Court held that the text of the statute, contested case format, and past consideration of similar evidence by the Board showed that the environmental groups’ evidence regarding coal plant retirements was relevant and that the Board should have considered it. On remand, the IUB will have to consider the environmental groups’ evidence when evaluating MidAmerican’s plan.
“The Court’s well-reasoned decision ensures oversight by the Utilities Board to protect customers from unnecessary costs associated with keeping these two polluting and uneconomic coal plants online,” said Laurie Williams, Senior Attorney for the Sierra Club Beyond Coal Campaign. “Whenever MidAmerican is proposing to spend money on its coal plants, customers deserve to know whether it would instead save money to retire them and replace them with clean, emissions free electricity resources like wind, solar, and battery storage that also help fuel Iowa’s economy.”