S.F. 225 Section 1. NEW SECTION . 476.43A Alternate and renewable 1 energy incentive program. 2 1. It is the intent of the general assembly to encourage 3 the development of utility-owned and customer-owned alternate 4 and renewable energy production facilities. The board shall 5 establish and administer an alternate and renewable energy 6 incentive program to encourage the development of alternate 7 energy production projects across this state. 8 2. An alternate energy production facility with a nameplate 9 generating capacity of less than or equal to twenty megawatts 10 which seeks to enter into an interconnection and power sales 11 agreement with an electric utility may submit an application 12 for approval to the board. The board shall develop an 13 application form and establish approval criteria by rule. 14 3. a. Eligibility for the program shall be contingent upon 15 the following: 16 (1) Meeting the requirements of section 476C.1, subsection 17 6, paragraph “b” , subparagraphs (1) through (3), and 18 subparagraphs (6) and (7), with regard to fifty-one percent 19 ownership in the facility being comprised of one or more of 20 the individuals or entities identified pursuant to those 21 subparagraphs. 22 (2) Having applied for or obtained the necessary financing 23 to cover facility construction and operation costs. 24 (3) Completing a standard interconnection request form 25 established by the board by rule. 26 (4) Meeting the requirements for a qualifying facility 27 pursuant to the federal Public Utility Regulatory Policies Act 28 of 1978, 16 U.S.C. § 2601 et seq. 29 b. Notwithstanding the maximum ownership or purchase 30 requirements of section 476.44, an electric utility shall 31 interconnect with a facility which is approved by the board 32 for participation in the program and shall purchase energy 33 from that facility at the rates approved in the standard 34 offer contract filed pursuant to subsection 4 with the board. 35 -1- LSB 2436XS (4) 84 rn/nh 1/ 5

S.F. 225 However, an electric utility shall not be required to purchase 1 an amount of energy from new program participants in a given 2 year which exceeds fifty percent of its retail sales growth 3 during the previous year. Any amount of energy not purchased 4 from program participants in a single year may be carried 5 forward to subsequent years for at least five years. 6 4. The board shall develop a standard offer contract form 7 to facilitate interconnection between an electric utility and 8 a program participant. The form shall be subject to biannual 9 review and periodic adjustment by the board with respect to new 10 program participants. The board shall require all electric 11 utilities to file with the board standard offer contracts 12 consistent with the form, subject to modification and approval 13 by the board. Electric utilities shall make the contracts 14 available to any approved program participant. Standard offer 15 contracts shall continue in effect for a twenty-year period, 16 subject to termination provisions for failure to perform, to be 17 established by the board by rule. 18 5. The standard offer contracts shall be calculated on 19 a kilowatt-hour basis, and shall be based on each utility’s 20 cost, inclusive of its required rate of return, for the new 21 development of each form of technology and project size, 22 according to the following schedule: 23 a. For wind turbine facilities, separate standard offer 24 contracts shall be calculated for facilities of between zero 25 and one-half megawatt of nameplate generating capacity, and for 26 facilities larger than one-half megawatt but less than twenty 27 megawatts of nameplate generating capacity. The contracts 28 shall incorporate rates based on a single reference tower wind 29 speed, to be determined by the board by rule, and adjusted to 30 the wind speed of the project location. 31 b. For photovoltaic facilities, separate standard offer 32 contracts shall be calculated for facilities of between zero 33 and twenty kilowatts of nameplate generating capacity, and for 34 facilities larger than twenty kilowatts of nameplate generating 35 -2- LSB 2436XS (4) 84 rn/nh 2/ 5

S.F. 225 capacity. 1 c. For waste management facilities, agricultural crop and 2 residue facilities, and hydroelectric facilities, separate 3 standard offer contracts shall be calculated for facilities 4 of between zero and one-half megawatt of nameplate generating 5 capacity, and for facilities larger than one-half megawatt and 6 less than twenty megawatts of nameplate generating capacity. 7 6. Standard offer contracts shall be in lieu of rates 8 otherwise determined by the board pursuant to section 476.43. 9 An unsuccessful applicant, or an alternate energy production 10 facility with larger than twenty megawatts of nameplate 11 generating capacity, shall be governed by the rates established 12 in section 476.43. 13 7. The board shall submit a report to the general assembly 14 by January 1 annually regarding participation levels and 15 program results. 16 EXPLANATION 17 This bill establishes an alternate and renewable energy 18 incentive program applicable to alternate energy production 19 facilities approved for participation in the program. 20 The bill provides that an alternate energy production 21 facility with a nameplate generating capacity of less 22 than or equal to 20 megawatts which seeks to enter into an 23 interconnection and power sales agreement with an electric 24 utility may submit an application for approval to the Iowa 25 utilities board. To be eligible to apply for the program, a 26 facility must meet certain percentage ownership requirements 27 specified in Code section 476C.1, subsection 6, paragraph “b”, 28 have applied for or obtained the necessary financing to cover 29 facility construction and operation costs, complete a standard 30 interconnection request form established by the board by rule, 31 and meet the requirements for a qualifying facility pursuant to 32 the federal Public Utility Regulatory Policies Act of 1978. 33 The bill provides that notwithstanding the maximum ownership 34 or purchase requirements of Code section 476.44, an electric 35 -3- LSB 2436XS (4) 84 rn/nh 3/ 5

S.F. 225 utility shall be required to interconnect with a facility 1 approved by the board for the program, but shall not be 2 required to purchase an amount of energy from new program 3 participants in a given year which exceeds 50 percent of its 4 retail sales growth during the previous year. The bill states 5 that amounts not purchased from program participants in a 6 single year may be carried forward to subsequent years for at 7 least five years. 8 The bill directs the board to develop a standard offer 9 contract form to facilitate interconnection between an electric 10 utility and a program participant, which shall be subject to 11 biannual review and periodic adjustment by the board with 12 respect to new program participants. All electric utilities 13 shall file with the board standard offer contracts consistent 14 with this form, subject to modification and board approval, and 15 shall make these contracts available to any approved program 16 participant. The bill provides that standard offer contracts 17 shall continue in effect for 20 years, subject to termination 18 provisions for failure to perform, to be established by the 19 board by rule. 20 The bill specifies that standard offer contracts shall be 21 calculated on a kilowatt-hour basis, and shall be based on 22 each utility’s cost, inclusive of its required rate of return, 23 for the new development of each form of technology and project 24 size, varying by the type of alternate and renewable energy 25 production facility involved. For wind turbine facilities, 26 the bill provides that separate standard offer contracts shall 27 be calculated for facilities of between zero and one-half 28 megawatt, and for facilities larger than one-half megawatt but 29 less than 20 megawatts, and shall incorporate rates based on a 30 single reference tower wind speed to be determined by the board 31 by rule and adjusted to the wind speed of the project location. 32 For photovoltaic facilities, the bill provides that separate 33 standard offer contracts shall be calculated for facilities of 34 between zero and 20 kilowatts, and for facilities larger than 35 -4- LSB 2436XS (4) 84 rn/nh 4/ 5

S.F. 225 20 kilowatts. For waste management facilities, agricultural 1 crop and residue facilities, and hydroelectric facilities, the 2 bill provides that separate standard offer contracts shall 3 be calculated for facilities of between zero and one-half 4 megawatt, and for facilities larger than one-half megawatt and 5 less than 20 megawatts. 6 The bill states that standard offer contracts shall be 7 in lieu of alternate and renewable energy rates otherwise 8 determined by the board pursuant to Code section 476.43, 9 and that an unsuccessful applicant, or an alternate energy 10 production facility with larger than 20 megawatts of nameplate 11 generating capacity, shall be governed by the Code section 12 476.43 rates. 13 The bill requires the board to submit a report to the general 14 assembly by January 1 annually regarding program participation 15 levels and results. 16 -5- LSB 2436XS (4) 84 rn/nh 5/ 5