IOWA BUSINESS GROUPS UNITE TO ADVOCATE FOR ELECTRIC RATE REFORM
Press Release
Thursday, October 31, 2024
The Iowa Economic Alliance, the Large Energy Group, the Iowa Business Energy Coalition, and Iowa Business for Clean Energy jointly call for the adoption of the reforms recommended by the rate review study done by the Iowa Utilities Board (now Iowa Utilities Commission), “Review of Current Iowa Code Provisions and Ratemaking Procedures” (the “Study”)*.
These four organizations advocate for business and energy users before the Iowa Utilities Commission and participated in numerous stakeholder sessions, called “charrettes,” in furtherance of the Study.
On September 17th, the Iowa Utilities Commission issued its Final Decision and Order approving new Alliant rate increases of 15% for Iowa businesses. Following this proceeding, it is important to assess how legislative initiatives could meaningfully improve future utility infrastructure deployment, ensure reasonable energy costs, and give the Commission additional tools to adjudicate future rate requests by Iowa’s utilities.
“Alliant’s residential and commercial rates in 2023 were higher than the average residential and commercial rates in 37 other states. Only the northeast, Michigan, California, Alaska and Hawaii had higher average rates. “This latest rate hike will make it increasingly difficult for Iowa businesses to compete,” stressed Delia Meier, EVP of Iowa 80 Group, in Walcott. (See attached comparisons).
The four basic reforms consist of the following:
1) Requiring a robust Integrated Resource Planning process, overseen and approved by the Iowa Utilities Commission.
2) Reforming advance ratemaking, which is a process that has resulted in Iowa’s investor-owned utilities receiving significantly higher returns than Iowa’s peer states.
3) Restricting automatic rate adjustments and requiring a regular cadence of rate cases, which gives the Iowa Utilities Commission adequate controls and comprehensive oversight; and
4) Enabling customers to be a part of the solution, through rates that value customer-owned generation and actions fairly compared to utility assets.
While the legislature debated bills during the 2024 session that addressed these issues, utility opposition stopped those reforms from moving forward. The single utility bill that passed expanded advance ratemaking without making any reforms to control customer rates. The legislation, HF 2279, will make it easier for Alliant to justify rate increases in the future due to the expanded capital expenses that will be eligible for advanced ratemaking and the higher Return on Equity on those expenses – which aren’t available in any other industry.
“Captive customers who are strapped with increasing bills need to know how the monopoly utilities are obligating them to future payments. Today, customers across the state are left in the dark but are still required to pay the bills. A robust integrated resource planning will provide existing and prospective businesses with the transparency needed to make future investment decisions,” noted RG Schwarm, Executive Director of the Iowa Economic Alliance.
“We ask legislators to be on the side of energy users – rather than taking the side of the utilities. For the future competitiveness of Iowa’s businesses as well as the pocketbooks of hardworking Iowa families, we ask legislators to stand with Iowa’s ratepayers and support these critical rate reforms endorsed by their own requested study,” stated Rob Taylor, owner/President of Revelton Distillery and former legislator.
“The Advanced Ratemaking statute solved a problem when it was enacted over 20 years ago, but that problem no longer exists. The present mechanism is costing Iowa ratepayers many millions of dollars in excess profits for Iowa’s utilities. No other state allows such inflated rates of return for technologies that are now well proven, and no other state allows such inflated rates of return to remain beyond challenge in perpetuity,” noted IBEC Executive Director Robert Palmer
* The Study can be found at https://iuc.iowa.gov/press-release/2023-12-21/iub-delivers-legislative-report-regarding-utility-ratemaking-laws-and-procedures. House File 617, passed in the 2023 Legislative Session, directed the Board to conduct the review.
For additional information, you may contact each group directly at:
· Iowa Business Energy Coalition – Robert Palmer, (515) 283-3139, rpalmer@nyemaster.com
· Iowa Economic Alliance – RG Schwarm, (515) 242-2474, rg.schwarm@brownwinick.com
· Iowa Business for Clean Energy – Bob Rafferty, (515) 314-9462, rafferty@raffertygroup.com
· Large Energy Group - Dave Vognsen – (319) 365-6488, dave@lev-energyadvisors.com
The following attachments contain Iowa utilities’ 2023 average residential and commercial rates comparison, from data that was realized recently by the Energy Information Administration. The last chart is a comparison of Alliant’s average 2023 residential rates with the overall state average residential rates.