The Winds of Change: How Nebraska Law Has Stalled the Development of Wind Energy and What Can Be Done to Spur Growth

• Jurisdiction: Nebraska,United States
• Citation: Vol. 47
• Publication year: 2022

47 Creighton L. Rev. 477. THE WINDS OF CHANGE: HOW NEBRASKA LAW HAS STALLED THE DEVELOPMENT OF WIND ENERGY AND WHAT CAN BE DONE TO SPUR GROWTH

THE WINDS OF CHANGE: HOW NEBRASKA LAW HAS STALLED THE DEVELOPMENT OF WIND ENERGY AND WHAT CAN BE DONE TO SPUR GROWTH

ALLAN M. WILLIAMS(fn*)

I. INTRODUCTION

Strong prairie winds are a fact of life in Nebraska. Nebraskans have to cope with the common nuisance of blowing dirt, snow, and trash across the State. Gusts of fifty and sixty miles per hour winds have tipped semi-trucks, knocked down light poles, and caused power outages.(fn1) Unlike surrounding states, Nebraska has failed to fully utilize its abundant source of wind to generate energy. The State's desire to provide consumers with electric services at the lowest overall cost possible has hindered the development of renewable energy, causing Nebraska to lag behind its neighboring states in generating wind energy.(fn2) While Nebraska has made some necessary changes to its laws,(fn3) lawmakers must explore additional measures to reach Nebraska's wind energy potential.

Public power and irrigation districts have been a staple of the energy industry in Nebraska since the passage of the Enabling Act in 1933.(fn4) The Enabling Act granted the newly-created, publicly-owned power systems an exemption from property taxes and the ability to incur indebtedness that could be secured by the revenue they produced.(fn5) In addition, the Enabling Act explicitly prohibited publicly-owned power systems, or any property owned by a publicly-owned power system, from becoming the property of a private utility company, even through foreclosure or bankruptcy.(fn6) The creation of several hydroelectric, publicly-owned power systems occurred shortly after the passage of the Enabling Act. These publicly-owned power systems aided Nebraska farmers in irrigating their fields while generating hydroelectric power used to illuminate the State. The acquisition of privately held energy producers by publicly-owned power systems completed the State's conversion to public power in 1946.(fn7)

Currently, Nebraska has the distinction as the only State in the country that generates and provides electricity to consumers entirely by publicly-owned power systems. Publicly-owned power systems have played a crucial role in keeping rates substantially lower than the national average and lower than the vast majority of the Midwest. In October 2013, the nation had an average energy price seventeen percent higher than Nebraska.(fn8)

While public power has kept rates low, it has hindered the development of wind energy in Nebraska, even though the flat terrain and abundance of windy Nebraska days makes a perfect setting for the generation of wind energy. According to the National Renewable Energy Laboratory, Nebraska has the potential to produce over 3.2 million gigawatt-hours of wind energy each year, the third highest potential in the nation.(fn9) As a result, wind power in Nebraska is capable of producing over one hundred times the current electric needs of the entire State.(fn10) However, in 2013, Nebraska ranked twenty-third in the nation for installed wind capacity.(fn11) With a current wind capacity of 534 megawatts, Nebraska is utilizing a mere 0.06% of its potential.(fn12)

Part I of this Article discusses the history of public power in the State. Part II addresses how the protection of the public power system has affected the development of wind energy in Nebraska and caused recent changes in State law intended to spur development of such energy. Part III suggests additional measures the Nebraska Legislature should adopt to encourage further development of wind energy projects in Nebraska in order to carry out its stated policy objectives.(fn13)

II. THE RISE OF PUBLIC POWER IN NEBRASKA

A. MUNICIPAL ELECTRIC SYSTEMS

Nebraskans at the end of the nineteenth century had two choices for how electric power would be generated and distributed to consumers: private ownership or public ownership.(fn14) For much of America, private investment was the logical choice to provide electric service. It was, after all, private investment that was at the forefront of building steel mills, manufacturing plants, and railroads during the Industrial Revolution. However, many on the Great Plains had a growing uneasiness about "the unregulated nature of private capital in the 1890s" which many believed caused the Panic of 1893.(fn15) Public ownership of electric systems would ensure the economic benefits of energy stayed within the community. Private companies are in the business of maximizing investors' wealth by generating revenue. Conversely, publicly-owned power systems used any excess income for the benefit of the community.

As electricity became more popular, publicly-owned power systems, owned and operated by local municipalities, became the source of electricity for many. In 1880, Wabash, Indiana became the first municipality in the nation to own an electric generation system, which powered the city's arc street lighting system,(fn16) and was designed to illuminate the streets of the city.(fn17) Over the next few decades many municipalities followed Wabash's example. Crete, Nebraska became the first Nebraska community to own and operate a municipal light plant.(fn18) The growth of municipally-owned power systems started slowly but quickly gained speed during the first two decades of the twentieth century. Fourteen years after the establishment of the Crete power system, Nebraska had eleven municipally-owned power systems, while nearly four times that many privately held power companies operated in the State.(fn19) By 1910, the number of municipal electric systems grew to fifty-nine.(fn20) The spread of public power flourished during the second decade of the twentieth century, and by 1926 the 282 municipally-owned power companies in the State constituted the largest in the nation.(fn21)

Three major factors led to the rise of municipally-owned power companies in Nebraska. First, Nikolo Tesla and George Westing-house's refinement of the alternating current system made it easier and more efficient to distribute energy generated at a central station generation plant to individual homes and businesses throughout a community.(fn22) Alternating current, unlike direct current, could transmit electricity for miles without the loss of voltage, which plagued the direct current systems designed by Thomas Edison.(fn23) "Alternating current was the underlying component that made possible the spread of electric power across Nebraska and the Great Plains in the first two decades of the twentieth century."(fn24)

The early twentieth century brought prosperity to the State's agricultural economy as a result of plentiful rainfall and consistently high commodity prices.(fn25) The economic success in the region provided the spark needed to spur the growth of electric companies in the State. As a result of the growing progressive political movement in Nebraska, municipalities created municipally-owned power systems to meet the increasing demand for electric power.(fn26) Private electric companies failed to provide adequate service for many small and rural cities. Numerous publicly-held electric companies fiercely competed with one another to serve larger Nebraska cities, such as Omaha and Lincoln. However, in many smaller cities, private electric companies refused to make necessary investments to increase electric power service.(fn27) Cities such as Grand Island and Oshkosh voted to raise money to purchase the private electric companies serving their communities so that they could meet their growing demands.(fn28)

In 1893, Fairbanks Morse Engine successfully marketed gasoline powered engines capable of generating sufficient energy needed to power a municipal light plant.(fn29) The "Hot Bulb" or semi-diesel engine, developed by Fairbanks Morse Engine in 1914,(fn30) allowed small cities across the State to generate reliable electric power at much lower costs than the steam plants previously used.(fn31) The technological advances in gasoline and diesel powered engines aided in the rapid expansion of municipally-owned electric companies. The combination of the new technologies of the early twentieth century, the political climate, and the growing demand for energy across the State helped to create over 150 new municipally-owned electric companies between 1911 and 1920.(fn32)

B. GROWTH OF THE ELECTRIC INDUSTRY

Economies of scale(fn33) in the electric industry went under a period of rapid change during the 1920s. Electric generation and transmission became more efficient during the era following the First World War. In 1903, the longest transmission line ran for approximately seventy-five miles from the Shawinigan Water and Power Company's hydroelectric generator south through the province of Quebec and could route fifty thousand volts of electricity.(fn34) The engineers realized that higher voltages could transmit larger amounts of electricity further than ever before. By 1923, engineers operated transmission lines capable of transmitting 110,000 volts due to advancements in suitable insulation for the utilization equipment.(fn35) The transmission of electricity at higher voltages reduced the problem of line loss caused by the heating of line wires by the transmission of the current.(fn36) In addition, the early twentieth century saw major technological advances in the...