Guest Columnist

A historical perspective on energy efficiency

Electricity transmission towers stand over a farm (Paulo Whitaker/Reuters)
Electricity transmission towers stand over a farm (Paulo Whitaker/Reuters)

For the past 16 years, I have gratefully served the people of Dallas and Polk County in the Iowa House of Representatives. Over these years, I’ve had the opportunity to vote on hundreds of legislative proposals for the well-being of our state and its people. Before I retire from my service in the Legislature this year, I hope the Legislature will pass and Gov. Kim Reynolds will sign Senate File 2311, one of the most significant legislative proposals on energy this state has seen in decades. This legislation contains important provisions to lower our utility bills, help rural areas and continue Iowa’s leadership in energy.

Before my service in the Iowa Legislature, I spent 31 years in the Iowa utility industry, having moved here after graduation with a degree in electrical engineering. Needless to say, a lot has changed in the utility industry since we came to Iowa. The National Academy of Engineering recently named electricity the greatest engineering achievement of the 20th century. I am proud to have been even a small part of those advancements. Today, Iowa is a national leader in energy and energy delivery and Iowa’s utilities are continually investing in the state to help ensure we remain in that position. That is why our state is ranked first in the nation for wind energy. That is why power outages are rare and when they do occur, we can usually blame Mother Nature.

Senate File 2311 won’t change Iowa’s winter storms nor hot summers, but it will modernize outdated laws and add common-sense policies, such as expanding natural gas service to rural areas and by allowing rural electric cooperatives and municipal utilities more freedom from excessive regulation. When communities have access to affordable natural gas and electricity, they are more attractive to business expansion, job creation and home locations for new families. It’s about helping rural areas thrive and giving them the energy tools to do so.

Iowa’s public utilities are subject to the rules and regulations of the Iowa Utilities Board, a bipartisan state agency, and they can only change rates after a lengthy process, where their requests are thoroughly contested. Contrary to the misinformation that has been raised around SF2311, the changes being discussed have nothing to do with the established tariffs of the utilities, and it will result in a decrease on utility bills. Yes, a decrease.

This is how that decrease can be made. In 1990, the Iowa Legislature passed a bill requiring utility companies to charge at least a 2 percent energy efficiency fee on all customers. The revenue from those fees was to be used to finance rebates of an undefined nature to consumers who make energy efficient purchases. This was simply an adder on our bills that is completely outside the contested tariffs charged by the regulated utilities.

When the energy efficiency charge started showing up on bills after 1990, the public reaction was vocal in opposition. In a following legislative session, another bill was passed that continued the charge but mandated that utility companies not disclose it to consumers. In 1996, the Legislature again intervened by removing the 2 percent minimum but left the fee in place. The original 2 percent adder now is in excess of 5 to 9 percent of the bill depending on the customer being billed, commercial and industrials getting the higher fees.

In 1990, more than $4 million was collected through these fees. In 2016, more than $241 million was collected. The total collected since its inception is over $2.5 billion. This is in addition to what Iowans paid in their usual bills for energy consumption. When that growth is examined, it is apparent that since 2009 the annual growth of these fees was in excess of 32 percent per year.

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Needless to say, this fee on consumers, imposed by the Legislature in the 1990s, has gotten out of control. Senate File 2311 addressed this issue head on.

This legislation not only right-sizes the energy efficiency fee to 2 percent, which still is more than our neighboring states, it requires utilities to disclose this charge on customer bills, and, in addition, affords the consumers a choice whether they desire to participate.

I applaud my colleague in the Iowa Senate, Sen. Jake Chapman, for bringing this much needed legislation forward.

In the coming weeks, I hope my colleagues in the House will continue to move Senate File 2311 forward to help grow our rural economy and ensure Iowans across the state continue to enjoy reliable, affordable energy.

• Ralph Watts is a Republican state representative from Adel.

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