Iowa Supreme Court blocks law favoring in-state electric grid developers

(Reuters) - The Iowa Supreme Court on Friday temporarily blocked a state law that it said would limit competition for electric transmission projects, just as bidding is set to begin on multi-million-dollar contracts to connect renewable energy projects to the Midwest's power grid.

Reversing lower court orders, the state’s high court said the 2020 law giving electric utilities already operating in Iowa the right of first refusal to build proposed transmission projects would stifle competition and harm business interests of out-of-state companies.

The stakes are high, the court said. Regional planners have already approved billions of dollars for projects to connect wind, solar and other renewables to the Midwest grid, and billions more were allocated for electric transmission projects in the 2021 bipartisan infrastructure law and 2022 Inflation Reduction Act.

The Friday decision reversed rulings from two lower courts that said out-of-state energy developer LS Power Midcontinent, which sued the Iowa Utilities Board in 2020, did not have standing to challenge the state’s statute since it had not yet been formally barred from a bid. The court blocked the law from being implemented while a district court considers LC Power's case further.

The company is harmed by the “loss of opportunity to compete,” wrote Justice Thomas Waterman for the court’s four participating justices.

LS Power spokesperson Sharon Segner said Friday that the company is "grateful" for the court's order and called it "great news for the state of Iowa."

A representative for the state declined to comment on pending litigation.

Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School, said the decision is “huge” and could be particularly important as bidding starts on $10.3 billion in transmission projects that were approved by the region’s grid operator last year.

The case is LS Power Midcontinent LLC et al. v. State of Iowa et al., in the Supreme Court of Iowa, case No. 21-0696.

For LS Power Midcontinent: Charles Becker, Michael Reck and Erika Bauer of Belin McCormick

For Iowa: Iowa Assistant Attorneys General David Ranscht and Benjamin Flickinger

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