Government

Energy saving plans in Iowa heading for big drop

Utilities: Rebate programs not needed as much anymore

A row of high-efficiency washers and dryers are on display Thursday at Home Appliance Center in northeast Cedar Rapids. Under a new state law, utilities will curtail energy efficiency programs that include giving rebates to consumers who choose energy efficient appliances. Utilities argue that such appliances are now ubiquitous on the market and it’s not as necessary as it once was to encourage consumers to pick them over a less efficient appliance. (Jim Slosiarek/The Gazette)
A row of high-efficiency washers and dryers are on display Thursday at Home Appliance Center in northeast Cedar Rapids. Under a new state law, utilities will curtail energy efficiency programs that include giving rebates to consumers who choose energy efficient appliances. Utilities argue that such appliances are now ubiquitous on the market and it’s not as necessary as it once was to encourage consumers to pick them over a less efficient appliance. (Jim Slosiarek/The Gazette)
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DES MOINES — Programs encouraging consumers to be more energy efficient — thereby saving electricity and natural gas — would be a shell of what they used to be under proposals from Iowa utility companies.

The scaled-back energy efficiency plans are a result of legislation passed last spring and signed into law by Gov. Kim Reynolds. The new law caps the percentage of a customer’s utility bill that can be put toward programs promoting energy efficiency.

The programs have offered consumers such incentives as rebates for purchasing efficient home appliances and adding insulation, or even discounts on buying shade trees.

Proponents of the law argue that technological advances have rendered some of the incentives unnecessary — but that all consumers were paying higher bills so a few could get the rebates.

Environmental advocates argue that such programs temper the need to generate more electricity and use more natural gas.

Under the new law, Iowa’s utility companies this summer detailed to regulators their new five-year energy efficiency plans starting with 2019. Some of the proposals show a dramatic reduction in efficiency program spending and, as a result, in energy savings.

The three-member Iowa Utilities Board must act on the proposals by March 31.

Richard Lozier Jr., a member of the Iowa Utilities Board, said at The Gazette’s Iowa Ideas conference last month that the new caps are a sign of the times — following trends in the market.

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“As the cost of generation of electricity has come down, with wind and solar and the much lower cost of natural gas we’ve experienced in recent years, the amount of savings that you get from energy efficiency also goes down,” Lozier said. “I think the Legislature recognized that and wants to keep the cost-benefit analysis in line.”

The utility companies say the new plans will result in lower bills for customers, a saving they could use to invest in energy efficiency if and in any way they choose.

Will customers have to pay more?

Critics, though, say it is turning out just as they warned during debate over the legislation: that it would gut the state’s energy efficiency programs, and that customers will pay more in the long run.

“It’s a huge cut and we’re really disappointed,” said Kerri Johannsen, energy program director with the Iowa Environmental Council, a nonpartisan coalition of organizations dedicated to preserving Iowa’s environment.

“The Iowa Environmental Council has a vision of 100 percent renewable energy for the state of Iowa, and we think that that goal is entirely achievable. But we need a wide variety of resources to get there,” Johannsen said.

MidAmerican Energy, the Des Moines-based utility company that serves more than 750,000 customers in Iowa, Illinois, Nebraska and South Dakota, in 2018 spent nearly $80 million on electric efficiency programs and nearly $31 million on gas efficiency programs.

Under its proposal, MidAmerican in 2019 would spend less than $43 million on electric efficiency programs, a cut nearly in half, and just more than $6 million on gas efficiency programs, or about 80 percent less.

MidAmerican’s energy savings would drop as well: its gas efficiency plan would save 80 percent less than in 2017 and its electricity plan would save nearly 50 percent less, according to calculations made by the Iowa Environmental Council.

Representatives of the utilities did not dispute such lower figures.

“Utilities have had really robust energy efficiency programs for many years in Iowa. Since 2009 alone the programs have saved the equivalent of building two-and-a-half baseload power plants,” Johannsen said. “The customers pay for the energy efficiency programs, but they’re paying less (overall). They haven’t had to pay for that generation.”

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Johannsen said on the new trajectory under the utilities’ plans, Iowans could have to pay more in the long run because less energy efficiency will lead to a need for more energy production to meet the demand.

Josh Mandelbaum, an attorney for the Environmental Law and Policy Center, said the curtailed programs also could threaten the jobs of more than 20,000 Iowans working in energy efficiency-related positions.

“In the past, Iowa has been a clean energy leader with strong energy efficiency plans, but this is a major step backward,” he said in a statement.

Companies SAY THEY’RE STILL committed

A MidAmerican spokeswoman said the company still offers a robust array of 14 efficiency programs while meeting the spending caps established by the law. The average residential customer with electric and gas service will save $81 per year, the company said.

“MidAmerican Energy’s proposed energy efficiency plan will put money back into our customers’ pockets and still provide a wide range of programs to encourage taking action to save energy,” Adam Wright, MidAmerican president and chief executive officer, said in a statement. “And, given the maturity of today’s energy efficiency marketplace, coupled with our continued 100 percent renewable energy commitment, it’s the perfect time to rebalance the program to match the times.”

MidAmerican spokeswoman Tina Hoffmann said the company remains committed to energy efficiency programs, and has proposed a plan that meets the requirements of the new law, which the company supported during its debate.

“We agree that energy efficiency programs are important and they have been successful. What we have proposed is robust, it will achieve energy savings, and it will also achieve cost savings for customers on our bill,” Hoffmann said. “It’s a balance.”

Alliant Energy ‘following trends’

Whereas MidAmerican previously spent roughly 7 percent on energy efficiency programs and must reduce that to 2 percent, the impact will not be as severe to Madison, Wis.-based Alliant Energy, which serves nearly 1 million electric customers in Iowa and Wisconsin. Alliant had been spending roughly 3 percent on energy efficiency.

Alliant spokesman Justin Foss said the company has been following trends in the energy efficiency market and in customer usage to tailor its efficiency plans.

Alliant’s new gas efficiency plan would save 75 percent less energy than in 2017 and its electricity plan would save 25 percent less energy, the Iowa Environmental Council calculated.

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“Our goal is to continue to offer programs that our customers want and that are benefiting our customers,” Foss said. “Our plan is following the trends that we’ve seen over the years.”

Foss said advances in technology and code requirements for new construction have made energy efficient homes and appliances much more mainstream and thus not as reliant on rebates offered by utility companies like Alliant.

“We’ve seen huge improvements and the market has transformed,” Foss said.

Anne Lenzen, director of regulatory affairs with Alliant Energy, said at the Iowa Ideas conference that future incentives need to keep up with trends.

“Our incentives to customers — to continue to promote and bring customers to energy efficiency — will move into new technologies, and that’s really what we’re seeing,” Lenzen said. “How do we continue to move forward and have vibrant programs with new technologies?”

Johannsen acknowledged technological advances have helped expand energy efficiency outside of programs mandated by the government, but that utilities’ energy efficiency programs still are needed.

She said the new Iowa law has forced environmental advocates like her to explore efficiency plans that do not rely as heavily on programs by the utilities that sell electric and gas energy.

“This does provide an opportunity for us as folks who work on law and policy, and for people who are interested in clean energy deployment, to take a look at how we do energy efficiency in Iowa and different policies that might be working in other states,” Johannsen said.

Mitchell Schmidt of The Gazette contributed to this report.

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