Testimony of Tom Wind, Wind Energy Consulting, PC, Jamaica, Iowa

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expensive fossil fueled generation. Herein lies the first key assumption that understates
MidAmerican’s true avoided costs. Wind generation’s zero fuel cost benefits only come
about because of its high capital cost, which MidAmerican completely ignores in its
avoided cost calculations. So, on the one hand MidAmerican uses the zero fuel cost of
wind generation to suppress the avoided energy costs it pays to QFs while completely
ignoring the billions of dollars of investments of obtaining this zero fuel cost resource.
This is like asking a QF or energy efficiency programs to compete with another shovel of
coal into the boiler of a fully depreciated power plant. I also believe that MidAmerican’s
avoided costs would be inappropriate for a QF with a solar PV facility. A solar PV
facility has a high upfront capital cost like wind generation and a very low operating cost
and thus would be in the same position as a wind generation QF.
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Q. What is the second key assumption that MidAmerican makes that understates their
true avoided costs?
A. MidAmerican includes a small amount of avoided capacity costs in its avoided cost filing
for QFs. MidAmerican claims its avoidable capacity cost is nearly zero since the MISO
capacity market is so low right now. It then gradually escalates this low capacity cost up
to the cost of a new combustion turbine by 2016. For a wind generation QF with little
firm capacity, these avoided capacity charges provide little revenue. In reality, these
offered capacity costs are essentially meaningless to a wind generation QF or a solar PV
QF. For example, if MidAmerican purchased power from a 2 MW wind generation QF,
it could avoid the installation of one of its own wind turbines. If we assume a cost of
$1.7 million per installed MW of wind generation, then MidAmerican could avoid an
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