Read about the announcement in the Corridor for Business Innovation Watch newsletter.
Governor Reynolds introduced major new energy legislation over the past two weeks, House Study Bill 123 and Senate Study Bill 1112. The Governor’s bill includes several concepts which, if amended, can have a positive impact on the future electric rates of Iowa’s investor-owned electric utilities.
Unfortunately, as currently constructed, the bills are very pro-utility. These bills, if not amended, would:
allow utilities to determine future investment plans without the Utilities Commission evaluating whether investment decisions serve consumers' best interests,
increase the interest rate consumers have to pay utilities on new gas plants,
permit the utilities to retain 100% of the profits generated from innovative rate structures, revenue that would otherwise be allocated to mitigate future rate increases, and
allow incumbent utilities to build $3 billion in new transmission lines without competitive bidding.
All the ratepayer groups are united in advocating for amendments to change the pro-utility legislation into a pro-ratepayer bill. The groups range from AARP, representing Iowa’s seniors, to the National Federation of Business, which represents Iowa’s small businesses, to the Iowa Retail Federation and Iowa’s largest energy users.
Four Iowa business groups want state lawmakers to change the way its largest utilities raise rates, saying rising energy costs are hurting small businesses' ability to compete.
The groups — the Iowa Economic Alliance, the Iowa Business Energy Coalition, Iowa Business for Clean Energy and a large energy group that represents industrial users — say the state’s process is flawed and has led to Alliant Energy’s energy charges being among the highest nationally.
Four Iowa business groups are advocating for a reform of how both residential and business electric rates are set in the state.
The groups — the Iowa Economic Alliance, the Large Energy Group, the Iowa Business Energy Coalition and Iowa Business for Clean Energy — released a statement this week saying it is “important to assess how legislative initiatives could meaningfully improve future utility infrastructure deployment, ensure reasonable energy costs, and give the (Iowa Utilities) Commission additional tools to adjudicate future rate requests by Iowa’s utilities.”
Iowa’s business community was well represented on August 30th and 31st as the Iowa Utilities Board held its first meetings, referred to as charrettes, for its study of ratemaking initiated by the passage of House File 617. A few key themes emerged.
Theme # 1: Integrated Resource Planning is a Critical Need
If there was one theme that came out – Iowa suffers from a lack of Integrated Resource Planning ("IRP"). For those reading the comments submitted by the participants leading up to the event – this was not a surprise.
The business advocates for Integrated Resource Planning include the Iowa Business Energy Coalition (“IBEC”), which represents many of Iowa’s largest industrial energy users, the Iowa Economic Alliance ("IEA"), which represents large energy users including large technology ratepayers, and the Large Energy Group (“LEG”), which represents another group of Iowa’s largest energy users. As LEG noted, “Resource plans should be transparent, part of a stakeholder process which includes customers, and filed with the Board on a reoccurring basis to reflect changes in economics, the capacity of energy markets, customer demands, and the costs of potential resource additions.”
In February, the Iowa Utilities Board ordered the public release of a redacted Zero Emission Study that MidAmerican Energy had commissioned for its internal use. MidAmerican’s own study concluded that solar was the best option to meet summer peak demand needs in 2040. The company had fought against sharing this internal report as a part of its $3.9 billion proposal known as WindPrime (the proposal contained just 2% of new solar generation). The study also highlighted the expensive nature of maintaining its existing large coal fleet.
The internal study’s findings were not surprising. Iowa’s peak energy use is on hot summer afternoons, as air conditioning is cranking up. Solar produces its greatest power on these hot days, while wind slows down. Iowa Business for Clean Energy had intervened in this case and highlighted this fact in our submittals to the Board.
