The recent news stories of the potential for blackouts across the country create a super exclamation point (!) for why we need regulatory reform. While many entrenched interests are trying to blame renewables – the real driver is insufficient innovation, resulting from outdated regulations, better suited to the 1920s than the 2020s, and minuscule R&D investment from electric utilities that do not compete in a free market.

The Department of Energy just issued a report, The Role of Innovation in the Electric Utility Sector, highlighting how the lack of innovation in the utility sector threatens our access to a low cost, reliable, clean energy grid. The Report pointed to a McKinsey & Company 2020 study Building an R&D Strategy for Modern Times, which calculated each industries’ R&D investment (see graph below). To put it in perspective, the paltry energy utility sector R&D investment, by far the lowest of all the major industries, is one-sixth the level of the construction and infrastructure industry –an industry not known for its innovation.:

Most of us rarely think about electrical power until we flip the light switch and nothing happens. Or until we get the bill and it’s a lot higher than we were expecting.

But changes are coming that affect the way we use electrical power, from the rise of electric vehicles and renewable energy sources to the replacement of fossil fuels used in buildings. New expectations of the power grid have also emerged. Increasingly, customers want to see values like environmental justice and decarbonization reflected alongside historic expectations like reliability and affordability.

A group of Iowans is working to spark a discussion about how government regulation should adapt to respond to and manage those changes.

Iowa Business for Clean Energy launched in the fall of 2020 and is now starting to make its pitch for overhauling Iowa’s regulatory structure for electrical utilities.

At a workshop last week in Des Moines, Bob Rafferty, the group’s executive director, highlighted differences in rates paid by Iowa commercial and residential customers of MidAmerican Energy and Alliant Energy as a reason to consider regulatory changes.

Clean Energy for Iowa - What Business Needs to Know

The News Hour with Michael Libbie, Insights on Business

Bob Rafferty was invited to sit down with Mike Libbie to talk about the Iowa Business for Clean Energy. The News Hour radio show aired on April 1, 2022 on the Michael Libbie Podcast-Insights on Business from Des Moines Iowa. You can hear this broadcast by visiting the podcast page here.

Many topics were discussed during this 15-minute interview; including the origin of Iowa Business for Clean Energy and why the work they are doing is important for the future of Iowa and the competitiveness of our business and industry. In addition, they talk about the upcoming Reform the Grid Workshop. This workshop is an in-person event at the Greater Des Moines Botanical Garden on April 28th at 10:00 am.

Bob Rafferty was invited to sit down with Sabrina Ahmed to talk about the Iowa Business for Clean Energy. The This Week in Iowa TV show aired on April 10, 2022on WOI-TV Channel 5 in Des Moines Iowa. You can rewatch this broadcast by visiting the This Week In Iowa homepage here. The portion of the broadcast with Bob and Sabrina’s conversation starts at 8:12 and continues until 13:18

Many topics were discussed during this 5-minute segment of the popular weekend news program; including the origin of Iowa Business for Clean Energy and why the work they are doing is important for the future of Iowa and the competitiveness of our business and industry. In addition, they talk about the upcoming Reform the Grid Workshop. This workshop is an in-person event at the Greater Des Moines Botanical Garden on April 28th at 10:00 am.

The need for Iowa to reform its approach to regulating our electric grid has never been more urgent.

A few weeks ago, we highlighted an academic report that gave Iowa a “D” for the competitiveness of its electric grid, while giving Illinois an “A”. After digging through the U.S. Energy Information Office’s data, we also discovered that in 2010, Iowa’s average commercial electric rate was over 10% lower than Illinois' average rate, but in 2020, Iowa’s average rate was 14.4% higher than Illinois, a 25% swing in just 10 short years!

WEST DES MOINES, Iowa – A University of Texas study that gave Iowa a “D” for its electric competition raises questions about the state’s need for more free market forces in its electric utility market, the executive director of the business group for clean energy said today.

“ While we typically don’t think of Illinois as a model, our neighbor to the east was awarded an “A” while Iowa received its ‘D,” said Bob Rafferty of Iowa Business for Clean Energy. “Iowa’s average commercial rates are 14.4% higher than Illinois’ rates[i], so that should really get our attention, too. It is a wake-up call for Iowa to start questioning the status quo.”

[i] https://www.eia.gov/electricity/monthly/. (see Electric Power Monthly, Previous Issues, February, 2021 Table 5.6.B for Year-To-Date State Averages through December 2020). This version contains full calendar year data for 2020. By using a full year’s data, seasonal fluctuations in pricing and weather that impacts monthly comparisons are avoided for more accurate comparisons.

While electric utility regulation may put you to sleep, the impact on your businesses’ future energy costs may end up keeping you up at night. Given its importance, let us explain in layperson terms, why reform is critical for Iowa’s future energy competitiveness.

While complicated, in a nutshell, investor-owned utilities are allowed to make profits based on how much capital they invest, not necessarily on how efficiently the system operates. While this structure was well suited for yesterday’s power grid, it fails to address the needs of the electric grid of the future.

Iowa’s farmers reap a large bounty from growing corn for ethanol and soybeans for biodiesel. And as the future market for liquid fuels shrinks and as electric vehicle adoption increases, some voices are suggesting support for electric cars is counter to Iowa’s interests.

Whether or not one likes electric cars – for Iowa’s economic future – it will be critical that Iowa embraces both biofuels and electric vehicles. One might ask: But aren’t those interests diametrically opposed?