SENATE FILE 225

BY  BEALL, BOLKCOM, HOGG, HOUSER, and KIBBIE

A BILL FOR

An Act relating to alternate and renewable energy production by establishing an alternate and renewable energy incentive program applicable to alternate energy production facilities under specified circumstances.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

   Section 1.  NEW SECTION.  476.43A  Alternate and renewable energy incentive program.
   1.  It is the intent of the general assembly to encourage the development of utility-owned and customer-owned alternate and renewable energy production facilities. The board shall establish and administer an alternate and renewable energy incentive program to encourage the development of alternate energy production projects across this state.
   2.  An alternate energy production facility with a nameplate generating capacity of less than or equal to twenty megawatts which seeks to enter into an interconnection and power sales agreement with an electric utility may submit an application for approval to the board. The board shall develop an application form and establish approval criteria by rule.
   3.
  a.  Eligibility for the program shall be contingent upon the following:
   (1)  Meeting the requirements of section 476C.1, subsection 6, paragraph “b”, subparagraphs (1) through (3), and subparagraphs (6) and (7), with regard to fifty-one percent ownership in the facility being comprised of one or more of the individuals or entities identified pursuant to those subparagraphs.
   (2)  Having applied for or obtained the necessary financing to cover facility construction and operation costs.
   (3)  Completing a standard interconnection request form established by the board by rule.
   (4)  Meeting the requirements for a qualifying facility pursuant to the federal Public Utility Regulatory Policies Act of 1978, 16 U.S.C. § 2601 et seq.
   b.  Notwithstanding the maximum ownership or purchase requirements of section 476.44, an electric utility shall interconnect with a facility which is approved by the board for participation in the program and shall purchase energy from that facility at the rates approved in the standard offer contract filed pursuant to subsection 4 with the board. However, an electric utility shall not be required to purchase an amount of energy from new program participants in a given year which exceeds fifty percent of its retail sales growth during the previous year. Any amount of energy not purchased from program participants in a single year may be carried forward to subsequent years for at least five years.
   4.  The board shall develop a standard offer contract form to facilitate interconnection between an electric utility and a program participant. The form shall be subject to biannual review and periodic adjustment by the board with respect to new program participants. The board shall require all electric utilities to file with the board standard offer contracts consistent with the form, subject to modification and approval by the board. Electric utilities shall make the contracts available to any approved program participant. Standard offer contracts shall continue in effect for a twenty-year period, subject to termination provisions for failure to perform, to be established by the board by rule.
   5.  The standard offer contracts shall be calculated on a kilowatt-hour basis, and shall be based on each utility’s cost, inclusive of its required rate of return, for the new development of each form of technology and project size, according to the following schedule:
   a.  For wind turbine facilities, separate standard offer contracts shall be calculated for facilities of between zero and one-half megawatt of nameplate generating capacity, and for facilities larger than one-half megawatt but less than twenty megawatts of nameplate generating capacity. The contracts shall incorporate rates based on a single reference tower wind speed, to be determined by the board by rule, and adjusted to the wind speed of the project location.
   b.  For photovoltaic facilities, separate standard offer contracts shall be calculated for facilities of between zero and twenty kilowatts of nameplate generating capacity, and for facilities larger than twenty kilowatts of nameplate generating capacity.
   c.  For waste management facilities, agricultural crop and residue facilities, and hydroelectric facilities, separate standard offer contracts shall be calculated for facilities of between zero and one-half megawatt of nameplate generating capacity, and for facilities larger than one-half megawatt and less than twenty megawatts of nameplate generating capacity.
   6.  Standard offer contracts shall be in lieu of rates otherwise determined by the board pursuant to section 476.43. An unsuccessful applicant, or an alternate energy production facility with larger than twenty megawatts of nameplate generating capacity, shall be governed by the rates established in section 476.43.
   7.  The board shall submit a report to the general assembly by January 1 annually regarding participation levels and program results.
EXPLANATION
   This bill establishes an alternate and renewable energy incentive program applicable to alternate energy production facilities approved for participation in the program.
   The bill provides that an alternate energy production facility with a nameplate generating capacity of less than or equal to 20 megawatts which seeks to enter into an interconnection and power sales agreement with an electric utility may submit an application for approval to the Iowa utilities board. To be eligible to apply for the program, a facility must meet certain percentage ownership requirements specified in Code section 476C.1, subsection 6, paragraph “b”, have applied for or obtained the necessary financing to cover facility construction and operation costs, complete a standard interconnection request form established by the board by rule, and meet the requirements for a qualifying facility pursuant to the federal Public Utility Regulatory Policies Act of 1978.
   The bill provides that notwithstanding the maximum ownership or purchase requirements of Code section 476.44, an electric utility shall be required to interconnect with a facility approved by the board for the program, but shall not be required to purchase an amount of energy from new program participants in a given year which exceeds 50 percent of its retail sales growth during the previous year. The bill states that amounts not purchased from program participants in a single year may be carried forward to subsequent years for at least five years.
   The bill directs the board to develop a standard offer contract form to facilitate interconnection between an electric utility and a program participant, which shall be subject to biannual review and periodic adjustment by the board with respect to new program participants. All electric utilities shall file with the board standard offer contracts consistent with this form, subject to modification and board approval, and shall make these contracts available to any approved program participant. The bill provides that standard offer contracts shall continue in effect for 20 years, subject to termination provisions for failure to perform, to be established by the board by rule.
   The bill specifies that standard offer contracts shall be calculated on a kilowatt-hour basis, and shall be based on each utility’s cost, inclusive of its required rate of return, for the new development of each form of technology and project size, varying by the type of alternate and renewable energy production facility involved. For wind turbine facilities, the bill provides that separate standard offer contracts shall be calculated for facilities of between zero and one-half megawatt, and for facilities larger than one-half megawatt but less than 20 megawatts, and shall incorporate rates based on a single reference tower wind speed to be determined by the board by rule and adjusted to the wind speed of the project location. For photovoltaic facilities, the bill provides that separate standard offer contracts shall be calculated for facilities of between zero and 20 kilowatts, and for facilities larger than 20 kilowatts. For waste management facilities, agricultural crop and residue facilities, and hydroelectric facilities, the bill provides that separate standard offer contracts shall be calculated for facilities of between zero and one-half megawatt, and for facilities larger than one-half megawatt and less than 20 megawatts.
   The bill states that standard offer contracts shall be in lieu of alternate and renewable energy rates otherwise determined by the board pursuant to Code section 476.43, and that an unsuccessful applicant, or an alternate energy production facility with larger than 20 megawatts of nameplate generating capacity, shall be governed by the Code section 476.43 rates.
   The bill requires the board to submit a report to the general assembly by January 1 annually regarding program participation levels and results.