Senate Study Bill 3078 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON FEENSTRA) A BILL FOR An Act eliminating provisions relating to energy efficiency 1 plans and programs for public utilities. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 5728XC (3) 87 gh/rn

S.F. _____ Section 1. Section 476.1A, subsection 1, paragraph g, Code 1 2018, is amended by striking the paragraph. 2 Sec. 2. Section 476.1B, subsection 1, paragraph l, Code 3 2018, is amended by striking the paragraph. 4 Sec. 3. Section 476.1C, subsection 1, paragraph c, Code 5 2018, is amended by striking the paragraph. 6 Sec. 4. Section 476.2, subsection 5, Code 2018, is amended 7 to read as follows: 8 5. Each rate-regulated gas and electric utility operating 9 within the state shall maintain within the state the utility’s 10 principal office for Iowa operations. The principal office 11 shall be subject to the jurisdiction of the board and shall 12 house those books, accounts, papers, and records of the utility 13 deemed necessary by the board to be housed within the state. 14 The utility shall maintain within the state administrative, 15 technical, and operating personnel necessary for the delivery 16 of safe and reasonably adequate services and facilities as 17 required pursuant to section 476.8 . A public utility which 18 violates this section shall be subject to the penalties 19 provided in section 476.51 and shall be denied authority to 20 recover, for a period determined by the board, the costs of an 21 energy efficiency plan pursuant to section 476.6, subsection 8 . 22 Sec. 5. Section 476.2, subsection 6, Code 2018, is amended 23 by striking the subsection. 24 Sec. 6. Section 476.6, subsections 13, 15, and 17, Code 25 2018, are amended by striking the subsections. 26 Sec. 7. Section 476.8, subsection 1, Code 2018, is amended 27 to read as follows: 28 1. Every public utility is required to furnish reasonably 29 adequate service and facilities. “Reasonably adequate service 30 and facilities” for public utilities furnishing gas or 31 electricity includes programs for customers to encourage the 32 use of energy efficiency and renewable energy sources. The 33 charge made by any public utility for any heat, light, gas, 34 energy efficiency and renewable energy programs, water or 35 -1- LSB 5728XC (3) 87 gh/rn 1/ 6

S.F. _____ power produced, transmitted, delivered or furnished, sanitary 1 sewage or storm water collected and treated, or communications 2 services, or for any service rendered or to be rendered in 3 connection therewith shall be reasonable and just, and every 4 unjust or unreasonable charge for such service is prohibited 5 and declared unlawful. In determining reasonable and just 6 rates, the board shall consider all factors relating to value 7 and shall not be bound by rate base decisions or rulings made 8 prior to the adoption of this chapter . 9 Sec. 8. Section 476.10, subsection 3, Code 2018, is amended 10 to read as follows: 11 3. Whenever the board shall deem it necessary in order 12 to carry out the duties imposed upon it in connection with 13 rate regulation under section 476.6 , investigations under 14 section 476.3 , or review proceedings under section 476.31 , 15 the board may employ additional temporary or permanent staff, 16 or may contract with persons who are not state employees for 17 engineering, accounting, or other professional services, or 18 both. The costs of these additional employees and contract 19 services shall be paid by the public utility whose rates 20 are being reviewed in the same manner as other expenses are 21 paid under this section . Beginning on July 1, 1991, there 22 is appropriated out of any funds in the state treasury not 23 otherwise appropriated, such sums as may be necessary to enable 24 the board to hire additional staff and contract for services 25 under this section . The board shall increase quarterly 26 assessments specified in subsection 1 , paragraph “b” , by 27 amounts necessary to enable the board to hire additional staff 28 and contract for services under this section . The authority to 29 hire additional temporary or permanent staff that is granted to 30 the board by this section shall not be subject to limitation 31 by any administrative or executive order or decision that 32 restricts the number of state employees or the filling of 33 employee vacancies, and shall not be subject to limitation 34 by any law of this state that restricts the number of state 35 -2- LSB 5728XC (3) 87 gh/rn 2/ 6

S.F. _____ employees or the filling of employee vacancies unless that 1 law is made applicable to this section by express reference 2 to this section . Before the board expends or encumbers an 3 amount in excess of the funds budgeted for rate regulation and 4 before the board increases quarterly assessments pursuant to 5 this subsection , the director of the department of management 6 shall approve the expenditure or encumbrance. Before approval 7 is given, the director of the department of management shall 8 determine that the expenses exceed the funds budgeted by the 9 general assembly to the board for rate regulation and that 10 the board does not have other funds from which the expenses 11 can be paid. Upon approval of the director of the department 12 of management the board may expend and encumber funds for 13 the excess expenses, and increase quarterly assessments to 14 raise the additional funds. The board and the office of 15 consumer advocate may add additional personnel or contract 16 for additional assistance to review and evaluate energy 17 efficiency plans and the implementation of energy efficiency 18 programs including, but not limited to, professionally trained 19 engineers, accountants, attorneys, skilled examiners and 20 inspectors, and secretaries and clerks. The board and the 21 office of consumer advocate may also contract for additional 22 assistance in the evaluation and implementation of issues 23 relating to telecommunication competition. The board and the 24 office of the consumer advocate may expend additional sums 25 beyond those sums appropriated. However, the authority to add 26 additional personnel or contract for additional assistance 27 must first be approved by the department of management. The 28 additional sums for energy efficiency shall be provided to the 29 board and the office of the consumer advocate by the utilities 30 subject to the energy efficiency requirements in this chapter . 31 Telephone companies shall pay any additional sums needed for 32 assistance with telecommunication competition issues. The 33 assessments shall be in addition to and separate from the 34 quarterly assessment. 35 -3- LSB 5728XC (3) 87 gh/rn 3/ 6

S.F. _____ Sec. 9. Section 476.10A, subsection 1, paragraph b, Code 1 2018, is amended to read as follows: 2 b. The amounts collected pursuant to this section shall be 3 in addition to the amounts permitted to be assessed pursuant 4 to section 476.10 . The board shall allow inclusion of these 5 amounts in the budgets approved by the board pursuant to 6 section 476.6, subsection 15 , paragraph “e” . 7 Sec. 10. Section 476.52, Code 2018, is amended to read as 8 follows: 9 476.52 Management efficiency. 10 It is the policy of this state that a public utility shall 11 operate in an efficient manner. If the board determines in the 12 course of a proceeding conducted under section 476.3 or 476.6 13 that a utility is operating in an inefficient manner, or is 14 not exercising ordinary, prudent management, or in comparison 15 with other utilities in the state the board determines that the 16 utility is performing in a less beneficial manner than other 17 utilities, the board may reduce the level of profit or adjust 18 the revenue requirement for the utility to the extent the board 19 believes appropriate to provide incentives to the utility to 20 correct its inefficient operation. If the board determines in 21 the course of a proceeding conducted under section 476.3 or 22 476.6 that a utility is operating in such an extraordinarily 23 efficient manner that tangible financial benefits result to 24 the ratepayer, the board may increase the level of profit or 25 adjust the revenue requirement for the utility. In making its 26 determination under this section , the board may also consider a 27 public utility’s pursuit of energy efficiency programs. The 28 board shall adopt rules for determining the level of profit or 29 the revenue requirement adjustment that would be appropriate. 30 The board shall also adopt rules establishing a methodology 31 for an analysis of a utility’s management efficiency. 32 Sec. 11. Section 476.53, subsection 3, paragraph c, Code 33 2018, is amended to read as follows: 34 c. In determining the applicable ratemaking principles, the 35 -4- LSB 5728XC (3) 87 gh/rn 4/ 6

S.F. _____ board shall make the following findings: 1 (1) The rate-regulated public utility has in effect a 2 board-approved energy efficiency plan as required under section 3 476.6, subsection 15 . 4 (2) The find that the rate-regulated public utility 5 has demonstrated to the board that the public utility has 6 considered other sources for long-term electric supply 7 and that the facility or lease is reasonable when compared 8 to other feasible alternative sources of supply. The 9 rate-regulated public utility may satisfy the requirements 10 of this subparagraph paragraph through a competitive bidding 11 process, under rules adopted by the board, that demonstrate 12 the facility or lease is a reasonable alternative to meet its 13 electric supply needs. 14 Sec. 12. REPEAL. Sections 476.63 and 476.82, Code 2018, 15 are repealed. 16 EXPLANATION 17 The inclusion of this explanation does not constitute agreement with 18 the explanation’s substance by the members of the general assembly. 19 This bill eliminates provisions in the Code relating to 20 energy efficiency plans and programs for public utilities. 21 The bill strikes Code sections 476.1A(1)(g), 476.1B(1)(l), 22 and 476.1C(1)(c), which require specified nonregulated public 23 utilities to file energy efficiency plans with the Iowa 24 utilities board. 25 The bill strikes Code section 476.6(13), which requires 26 rate-regulated electric and gas utilities to offer energy 27 efficiency programs to customers through energy efficiency 28 plans. 29 The bill strikes Code section 476.6(15), which establishes 30 requirements, implementation and review procedures, and cost 31 recovery mechanisms applicable to rate-regulated electric and 32 gas utilities, as well as certain requirements and review 33 procedures applicable to non-rate-regulated electric and gas 34 utilities, with respect to such energy efficiency plans and 35 -5- LSB 5728XC (3) 87 gh/rn 5/ 6

S.F. _____ energy efficiency programs. 1 The bill strikes Code section 476.6(17), which permits the 2 board to require rate-regulated gas and electric utilities 3 to offer energy efficiency program financing to qualified 4 customers. 5 The bill makes conforming changes by removing references to 6 public utility energy efficiency plans and energy efficiency 7 programs throughout Code chapter 476. 8 -6- LSB 5728XC (3) 87 gh/rn 6/ 6