Iowa energy bills receive mixed reviews

The dome of the State Capitol building in Des Moines is shown on Tuesday, January 13, 2015. (Adam Wesley/The Gazette)
The dome of the State Capitol building in Des Moines is shown on Tuesday, January 13, 2015. (Adam Wesley/The Gazette)

A pair of duplicate bills in the Iowa Statehouse aim to change the way some energy rates are managed by utilities — as well as how some rates are approved by the Iowa Utilities Board.

Whether that’s good or bad for Iowans depends on whom you ask.

The utilities say the bills would increase efficiency and make them better able to respond to Iowa’s changing energy landscape.

Renewable energy and consumer advocates believe the proposals would increase utility bills and damage the solar industry and its customers.

Officials with Alliant Energy say Senate Study Bill 3093 and House Study Bill 595 would make the rate adjustment process more efficient, while also allowing for different rate structures based on customer needs.

Anne Lenzen, Alliant’s director of regulatory affairs, said the “energy landscape and industry” is changing with new technologies and the growth of renewable sources of energy, such as wind and solar.

The bills, she said, are an opportunity to provide feedback to legislators “on how we can continue to support that changing industry and continue to focus on benefits for our customers, efficiencies and more customer options as well as business development and job growth.”

Solar proponents and the state consumer advocate oppose the bills, arguing they could hurt Iowa’s growing solar industry, as well as undermine long-standing consumer protections.

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“From a big-picture perspective, this is a step back from our clean energy leadership. This bill undermines the development of renewable energy, it undermines energy efficiency and it erodes consumers’ protections,” Josh Mandelbaum, staff attorney with the Environmental Law and Policy Center, said of the two bills.

changes

So what would the bills change?

For one, the bills would allow utility companies to use a forward-looking test year approach — a process that combines historic data and cost forecasting — in rate cases, typically when seeking rate increases. Now, utilities use data pulled from the most recent calendar year.

Lenzen said the change would allow for better management of rates and, in some cases, potential cost savings.

But Mark Schuling, Iowa’s consumer advocate, said using a future test year would be based on unknown costs.

“The costs are estimates and assumptions,” he said. “The customers’ rates will increase with this change.”

power plants

The bills also would change procedures for advanced rate-making principles — how utilities request advance approval for construction of electric power generation facilities.

State law now gives the Iowa Utilities Board 180 days to review an advanced rate-making request, with the option of an extension if more time is needed. The bills would cut that to 90 days and add language that says the board must make a decision, Schuling said. The hearing alone takes 30 days, he added.

“That’s 60 days for us to gather information, analyze it, get experts, prepare testimony and have a hearing,” he said. “It’s impossible for us to do what we need to do on a project that large. It shortens a lot of the proceedings and says if the board doesn’t do anything, they (rate changes) are automatically passed.”

However, Lenzen said the change is meant to allow for more efficiencies and address needs faster.

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“There is no intent with this bill to change the regulatory oversight and management that the Iowa Utilities Board has,” she said. “Those rules and laws stay in place. This is just another way to look at managing our costs.”

solar response

Schuling, the state’s consumer advocate, said the bills would eliminate a statute that prohibits discrimination against renewable energy customers — which could mean special rates or charges for them.

Tyler Olson, founder of SiteGen Solar and a board member of the Iowa Solar Energy Trade Association, said the bills “could potentially have a devastating impact on solar in Iowa.”

But Lenzen said Alliant, which has nearly 2,500 distributed generation customers, many of whom use solar, is committed to renewables.

“We continue to be a strong proponent of the solar industry,” she said. “This is not intended to do what we’re hearing from those advocates.”

While the bills have some concerned, Alliant spokesman Justin Foss said the changes are meant to help the company address changes in the market and better serve customers.

“We need to make sure that our customers and advocates across the state know that we know the more our customers are successful, the more that we are successful,” Foss said. “It seems that sometimes that gets mixed up.”

Both omnibus bills — an omnibus bill is one that packages several measures into one — remain in committee.

ELIMINATE PROGRAMS?

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Meanwhile, a third bill in the Iowa Statehouse — Senate Study Bill 3078 — aims to eliminate Iowa’s existing energy efficiency plans and programs altogether.

The Environmental Law and Policy Center’s Mandelbaum said all three bills include language that would harm state energy efficiency programs, which, he said, benefit all customers by lowering overall rates while keeping them stable.

Those programs include offering rebates for customer use of energy-efficient appliances or practices.

Alliant and MidAmerican Energy have not taken a stance on the bill, which has remained in subcommittee since late January.

The amendments also run counter to the Iowa Energy Plan, which was issued about a year ago by now-Gov. Kim Reynolds, Mandelbaum said.

“One (bill) eliminates the program, the others essentially gut the program,” Mandelbaum said. “It’s essentially amputating a part of the governor’s energy plan.”

l Comments: (319) 339-3175; mitchell.schmidt@thegazette.com

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