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1 1 Section 1. NEW SECTION. 476B.1 TITLE.
1 2 This chapter shall be known and may be cited as the "Iowa
1 3 Electric Industry Restructuring Act".
1 4 Sec. 2. NEW SECTION. 476B.2 STATEMENT OF PURPOSE.
1 5 The general assembly finds and declares the following:
1 6 1. Iowa is dependent upon the availability of reliable,
1 7 low-cost energy, which is essential to the economic viability
1 8 of Iowa.
1 9 2. Restructuring the electric power supply industry to
1 10 provide greater competition and more efficient regulation is a
1 11 nationwide trend and Iowa must aggressively pursue
1 12 restructuring and increased customer choice to provide
1 13 electric service at the lowest possible rates to the
1 14 businesses and citizens of this state.
1 15 3. Power supply, including the generation of electricity,
1 16 is not a natural monopoly and it is not in the public interest
1 17 to regulate power supply as if it were a natural monopoly.
1 18 The general assembly finds that it is in the public interest
1 19 for all retail electric customers to choose their power supply
1 20 provider in a competitive market and to continue to regulate
1 21 transmission and distribution services to provide safe and
1 22 reliable electric services at the lowest possible rates for
1 23 all customers.
1 24 4. Restructuring the electric power supply industry to
1 25 facilitate retail competition will result in economic
1 26 benefits, including lower prices, increased customer choice,
1 27 more efficient use of resources, and improved quality and
1 28 variety of power supply services available.
1 29 5. It is technically and administratively practical to
1 30 restructure the electric industry in Iowa to promote retail
1 31 customer choice as wholesale customer choice is now promoted
1 32 in the wholesale bulk power marketplace.
1 33 6. A restructured electric utility industry, with multiple
1 34 power supply providers, must have adequate safeguards to
1 35 assure universal service. Residential customer service
2 1 safeguards and protections should be maintained or improved.
2 2 Sec. 3. NEW SECTION. 476B.3 DEFINITIONS.
2 3 As used in this chapter, unless the context otherwise
2 4 requires:
2 5 1. "Affiliate" means a party that directly, or indirectly,
2 6 through one or more intermediaries, controls, is controlled
2 7 by, or is under common control with a utility.
2 8 2. "Aggregator" means a person, partnership, business
2 9 association, corporation, domestic or foreign, or political
2 10 subdivision which buys, sells, or arranges on behalf of
2 11 customers for power supply services through a purchasing
2 12 group, contract, or other means.
2 13 3. "Board" means the utilities board within the department
2 14 of commerce created in section 474.1.
2 15 4. "Comparable service" means a local distribution
2 16 utility's authorization to provide access to the local
2 17 distribution utility's system to third parties for purposes of
2 18 retail transmission and distribution and related services,
2 19 implemented by the local distribution utility on the same or
2 20 functionally equivalent basis, and under the same or
2 21 functionally equivalent terms and conditions, as applicable to
2 22 the local distribution utility.
2 23 5. "Competitive power supply provider" means a person,
2 24 partnership, business association, corporation, domestic or
2 25 foreign, or political subdivision providing power supply
2 26 services, including an electric generator and broker,
2 27 aggregator, power marketer, and purchasing group that arranges
2 28 for power supply services to meet retail customer demand.
2 29 6. "Control" means the possession, direct or indirect, of
2 30 the power to direct or cause the direction of the management
2 31 and policies of an enterprise through ownership, by contract,
2 32 or otherwise.
2 33 7. "Customer" means a person, firm, association,
2 34 purchasing group, corporation, agency of the federal, state,
2 35 or local government, or other legal entity responsible for
3 1 payment for electric services.
3 2 8. "Default provider" means the provider of power supply
3 3 services to a customer that has not chosen a competitive power
3 4 supply provider.
3 5 9. "Demand" means electric power measured in kilowatts.
3 6 10. "Distribution line" means any single or multiphase
3 7 electric power line, regardless of the functional service
3 8 provided by the line, operating at nominal voltage in either
3 9 of the following ranges:
3 10 a. Two thousand to twenty-six thousand volts between
3 11 ungrounded conductors.
3 12 b. One thousand one hundred fifty-five to fifteen thousand
3 13 volts between grounded and ungrounded conductors.
3 14 11. "Energy" means electric energy measured in kilowatt-
3 15 hours.
3 16 12. "Local distribution utility" means a utility providing
3 17 electric transmission and distribution facilities and services
3 18 to the public for compensation within exclusive service
3 19 territories established by the board.
3 20 13. "Obligation to connect" means the duty to provide
3 21 transmission and distribution facilities and services to the
3 22 public for compensation within the exclusive service
3 23 territories established by the board. The obligation to
3 24 connect does not include the obligation to provide power
3 25 supply services.
3 26 14. "Open access" means the duty of an owner, operator, or
3 27 provider of transmission and distribution facilities and
3 28 services, including a federal, state, and local public power
3 29 agency, to provide comparable service.
3 30 15. "Power supply services" means services provided to
3 31 customers related to the following:
3 32 a. The usage, measurement, purchase, and sale of electric
3 33 capacity and energy, including generation and ancillary
3 34 services, and firm and interruptible energy.
3 35 b. Revenue cycle services, including metering, billing,
4 1 collection, accounting, and customer services.
4 2 c. Such other services related to electric service as the
4 3 board determines are subject to effective competition. In
4 4 determining whether a service is or becomes subject to
4 5 effective competition, the board shall consider, among other
4 6 factors, whether a comparable service or facility is available
4 7 from another provider and whether market forces are sufficient
4 8 to assure just and reasonable rates without regulation.
4 9 16. "Stranded costs" means the costs, as offset by
4 10 stranded benefits, of net investment and costs in generation
4 11 plant, regulatory assets, and other power supply devoted to
4 12 public service, if such plant, assets, or other power supply
4 13 is no longer used and useful as a demonstrable consequence of
4 14 the implementation of this chapter.
4 15 "Stranded costs" do not include costs associated with such
4 16 plant, assets, or other power supply which is no longer used
4 17 and useful as a result of changes in usage in the normal
4 18 course of business, including cyclical business changes,
4 19 termination of operations, weather, reduced production,
4 20 changes in manufacturing processes, installation of new self-
4 21 generation or cogeneration equipment, performance of existing
4 22 self-generation or cogeneration equipment, energy conservation
4 23 efforts, or other similar factors.
4 24 "Stranded costs" do not include the cost of investments
4 25 made by a utility within three years prior to July 1, 1998.
4 26 17. "Stranded cost transition charges" means the sole rate
4 27 mechanism by which stranded costs may be recovered by a
4 28 utility.
4 29 18. "Stranded cost transition period" means the period
4 30 from July 1, 1998, until January 1, 2003.
4 31 19. "Transmission line" means a single or multiphase
4 32 electric power line at nominal voltages in excess of either
4 33 twenty-six thousand volts between ungrounded conductors, or
4 34 fifteen thousand volts between grounded and ungrounded
4 35 conductors, regardless of the functional service provided by
5 1 the line.
5 2 20. "Unbundled rates" means the separate charges for power
5 3 supply services, transmission services, and distribution
5 4 services, derived from the financial separation and reporting
5 5 by the utility providing such services for each service which
5 6 becomes subject to effective competition.
5 7 21. "Unbundled services" means power supply services,
5 8 separately available from the provision of transmission and
5 9 distribution services, which are provided subject to open
5 10 access, comparable service for all users, and
5 11 nondiscriminatory pricing.
5 12 22. "Utility" means a person, partnership, business
5 13 association, corporation, domestic or foreign, or political
5 14 subdivision owning or operating facilities for furnishing
5 15 electric services to the public for compensation and subject
5 16 to rate or service jurisdiction of the board pursuant to
5 17 chapter 476.
5 18 Sec. 4. NEW SECTION. 476B.4 STANDARDS FOR RETAIL
5 19 ELECTRIC COMPETITION PLAN.
5 20 1. COMPETITIVE MARKET. Power supply services shall be
5 21 deregulated and subject to competition as provided in this
5 22 chapter by no later than January 1, 2000.
5 23 2. PLAN. The board shall adopt and publish a plan no
5 24 later than April 1, 1999, restructuring the electric industry
5 25 in this state, consistent with this chapter, with the
5 26 objective of having full customer choice no later than January
5 27 1, 2000. The board plan shall establish appropriate steps to
5 28 achieve an orderly transition to a competitive market,
5 29 including collection of stranded cost transition charges, if
5 30 any, within the stranded cost transition period.
5 31 3. UNIVERSAL SERVICE. The board, in the plan, shall
5 32 provide adequate safeguards to assure universal service. The
5 33 plan shall assure the continued protection of residential
5 34 customer service safeguards.
5 35 4. CONTENTS OF PLAN. The plan, in addition to specific
6 1 requirements of this chapter, may include other provisions
6 2 consistent with this chapter as the board deems appropriate
6 3 and necessary to expedite the transition to full customer
6 4 choice. The plan shall address relevant issues including all
6 5 of the following:
6 6 a. Stranded cost transition charges, during the stranded
6 7 cost transition period, shall not cause the total delivered
6 8 price for power supply services, transmission services, and
6 9 distribution services for any customer not served by a
6 10 competitive power supply provider to exceed the cost per
6 11 kilowatt-hour paid on July 1, 1998.
6 12 b. Reliability of the transmission and distribution
6 13 systems within this state shall be maintained or improved.
6 14 c. Customer bill of rights. The plan, at a minimum, shall
6 15 include the following requirements:
6 16 (1) "Plain English" standards for all contracts between
6 17 competitive power supply providers and residential and small
6 18 commercial customers, including full disclosure of pricing,
6 19 contract length, and termination provisions.
6 20 (2) Education and marketing materials to enable customers
6 21 to make meaningful price and service comparisons and
6 22 decisions.
6 23 (3) The right of customers to change competitive power
6 24 supply providers with minimum notice to affected competitive
6 25 power supply providers, but only upon the prior notice to and
6 26 informed consent of the customer.
6 27 (4) The right for customers to be billed for all services
6 28 and charges by means of a separate bill, which is furnished by
6 29 the competitive power supply provider.
6 30 (5) Minimum standards for service content, truthful
6 31 advertising, and customer contacts associated with rates or
6 32 service identified with renewable resources, or other
6 33 environmentally or socially beneficial matters.
6 34 (6) Appropriate action against a competitive power supply
6 35 provider which fails to comply with this chapter, including
7 1 withdrawal of the registration of a competitive power supply
7 2 provider if the board determines, after notice and hearing,
7 3 that such action is a reasonable means by which customers can
7 4 be protected as provided in this chapter.
7 5 5. CODE OF CONDUCT. A utility shall not directly or
7 6 indirectly include in regulated rates or charges any costs or
7 7 expenses of an affiliate engaged in any business other than a
7 8 utility business unless the affiliate provides goods or
7 9 services to the utility. Any included costs shall be
7 10 reasonably necessary and appropriate for a utility business,
7 11 and directly related to such goods or services provided. A
7 12 utility shall only provide nonutility services in a manner
7 13 that prevents the possibility of cross-subsidization or unfair
7 14 competitive advantage.
7 15 a. A utility, and an affiliate through the utility, shall
7 16 provide the board with access to books, records, accounts,
7 17 documents, and other data and information which the board
7 18 finds necessary to effectively administer this chapter. The
7 19 board may require an affiliate to keep separate records.
7 20 b. The board shall provide for the examination and
7 21 inspection of the books, records, accounts, documents, and
7 22 other data and information as necessary to enforce this
7 23 chapter.
7 24 c. The board shall periodically retain an independent
7 25 auditing firm to conduct an audit of the transactions between
7 26 a utility and its affiliates. The cost of the audit shall be
7 27 paid by the utility to the independent auditing firm and shall
7 28 be included in its regulated rates and charges, unless
7 29 otherwise ordered by the board for good cause after providing
7 30 the utility the opportunity for a hearing on the board's
7 31 decision.
7 32 d. A rate-regulated electric utility shall not directly or
7 33 indirectly include any costs or expenses attributable to
7 34 providing service other than utility service in regulated
7 35 rates or charges. A rate-regulated electric utility or its
8 1 affiliates shall not use vehicles, service tools and
8 2 instruments, or employees, the costs, salaries, or benefits of
8 3 which are recoverable in the regulated rates for electric
8 4 service to install, service, or repair residential or
8 5 commercial electric heating, ventilating, or air conditioning
8 6 systems, or interior lighting equipment. For the purpose of
8 7 this paragraph, "commercial" means a place of business
8 8 primarily used for the storage or sale, at wholesale or
8 9 retail, of goods, wares, services, or merchandise. This
8 10 paragraph shall not be construed to prohibit a rate-regulated
8 11 electric utility from using its utility vehicles, service
8 12 tools, instruments, and employees to provide utility services
8 13 or to eliminate a customer emergency or threat to public
8 14 safety.
8 15 e. Specific standards of conduct required to be included
8 16 in the plan adopted by the board include all of the following:
8 17 (1) A local distribution utility, through a tariff
8 18 provision or otherwise, shall not give its affiliated
8 19 competitive power supply provider or customers of such
8 20 affiliate preference over nonaffiliated competitive power
8 21 supply providers or customers of such nonaffiliate relating to
8 22 any product or service.
8 23 (2) All products and services offered by a local
8 24 distribution utility shall be available to all customers and
8 25 competitive power supply providers simultaneously, to the
8 26 extent technically possible, and on a comparable service
8 27 basis. A discount, rebate, or fee waiver for a product or
8 28 service offered by a local distribution utility shall be
8 29 publicly offered to all customers and competitive power supply
8 30 providers simultaneously and on a comparable service basis.
8 31 (3) A local distribution utility shall not condition or
8 32 tie the provision of any product, service, or rate agreement
8 33 by the local distribution utility to the provision of any
8 34 product or service in which an affiliated competitive power
8 35 supply provider is involved.
9 1 (4) A local distribution utility shall process all similar
9 2 requests for products, services, and information in the same
9 3 manner and within the same period of time. A local
9 4 distribution utility shall not provide information to an
9 5 affiliated competitive power supply provider without a request
9 6 if the same information is made available to nonaffiliated
9 7 competitive power supply providers only upon request. A local
9 8 distribution utility shall not provide affiliated competitive
9 9 power supply providers or nonaffiliated competitive power
9 10 supply providers any preferential access to nonpublic
9 11 information, including information regarding the transmission
9 12 or distribution system or customers receiving service from the
9 13 local distribution utility.
9 14 (5) An employee of a local distribution utility shall not
9 15 share with an affiliated competitive power supply provider or
9 16 any nonaffiliated competitive power supply provider any market
9 17 information acquired from an affiliated competitive power
9 18 supply provider or a nonaffiliated competitive power supply
9 19 provider, or any market information developed by the local
9 20 distribution utility in the course of responding to requests
9 21 for transmission and distribution service.
9 22 (6) A local distribution utility shall not promote, or
9 23 give the appearance of promoting, an affiliated competitive
9 24 power supply provider. A local distribution utility or an
9 25 affiliated competitive power supply provider shall not in any
9 26 way represent that any advantage accrues to a customer or any
9 27 other person in the use of the local distribution utility's
9 28 services as a result of such customer or other person dealing
9 29 with the affiliated competitive power supply provider. A
9 30 local distribution utility shall not engage in joint
9 31 advertising or marketing programs of any sort with its
9 32 affiliated competitive power supply provider, or promote or
9 33 market any product or service offered by such affiliate.
9 34 (7) An employee of a local distribution utility shall not
9 35 be shared with, and shall be physically separated from
10 1 employees of, an affiliated competitive power supply provider.
10 2 (8) The local distribution utility must maintain in a
10 3 public place, and file with the board, current written
10 4 procedures implementing the standards of conduct established
10 5 in this paragraph "e" in such detail as will enable customers
10 6 and the board to determine that the local distribution utility
10 7 is in compliance with this section.
10 8 (9) A local distribution utility shall not allow the use
10 9 by its affiliate of such utility's name.
10 10 f. The board shall establish a penalty for a violation of
10 11 this section which reflects the actual or potential injury to
10 12 retail customers. In addition to any other penalty, the board
10 13 shall also impose on the violator, and award reasonable
10 14 attorney fees and costs, including expert witness fees,
10 15 incurred by the challenging party.
10 16 Sec. 5. NEW SECTION. 476B.5 ELECTRIC UTILITY
10 17 RESTRUCTURING PLANS.
10 18 An electric utility, no later than November 1, 1998, shall
10 19 file a utility restructuring plan for review and public
10 20 comment before the board providing for customer choice as
10 21 provided in this chapter. The plan shall include a protocol
10 22 for the unbundling of utility services as required by this
10 23 chapter. The plan shall include both of the following:
10 24 1. A schedule for the introduction of customer choice for
10 25 all customers currently served by the electric utility.
10 26 2. The manner in which the electric utility will comply
10 27 with each requirement under this chapter.
10 28 Sec. 6. NEW SECTION. 476B.6 RETAIL CUSTOMER CHOICE.
10 29 A retail customer may choose a provider for power supply
10 30 services pursuant to one of the following:
10 31 1. BILATERAL CONTRACT. A retail customer may individually
10 32 or collectively negotiate a bilateral contract with a
10 33 competitive power supply provider to provide power supply
10 34 services to the retail customer, subject to this chapter.
10 35 2. MARKET AGGREGATION. A retail customer may choose to
11 1 receive power supply services from a market aggregator.
11 2 3. DEFAULT PROVIDER. A default provider shall be a
11 3 provider for any local distribution utility customer who has
11 4 not chosen a competitive power supply provider. The board
11 5 shall establish default providers in an open,
11 6 nondiscriminatory manner. The board shall establish universal
11 7 service standards to ensure the participation of default
11 8 providers serving all classes of customers. The board
11 9 biannually shall review the method of selecting default
11 10 providers.
11 11 The board shall provide for customer choice under this
11 12 section by no later than January 1, 2000.
11 13 Sec. 7. NEW SECTION. 476B.7 REGISTRATION OF COMPETITIVE
11 14 POWER SUPPLY PROVIDERS.
11 15 1. A person shall register with the board as a condition
11 16 of providing power supply services as a competitive power
11 17 supply provider in this state. Registration under this
11 18 section is renewed periodically, as determined by the board,
11 19 unless revoked for good cause shown. A person filing for
11 20 registration under this section shall submit evidence of all
11 21 of the following:
11 22 a. The applicant's technical ability to obtain and deliver
11 23 power supply services.
11 24 b. Documentation of financial capability of the applicant
11 25 to provide and reliably sustain the proposed power supply
11 26 services.
11 27 c. A description of the form of ownership, including any
11 28 affiliates.
11 29 d. Compliance with the board's uniform system of accounts.
11 30 2. The board may reject an application for registration
11 31 within thirty days if the application does not contain
11 32 sufficient information for the board to evaluate the proposed
11 33 registration. The board shall fully describe any deficiencies
11 34 in such application that is rejected for filing. The board
11 35 shall rule upon an application for registration within sixty
12 1 days of filing with the board, inclusive of time spent by the
12 2 board considering a filing ultimately found defective.
12 3 3. The board shall not limit market entry or regulate
12 4 power supply services prices, but may make a determination as
12 5 to whether a proposed service furthers the purposes of this
12 6 chapter.
12 7 Sec. 8. NEW SECTION. 476B.8 UNBUNDLING OF SERVICES.
12 8 1. GENERAL RULE. The plan adopted by the board pursuant
12 9 to section 476B.4 shall require that all existing electric
12 10 utilities functionally separate facilities, operations,
12 11 services, and rates for power supply services, transmission
12 12 services, distribution services, and other competitively
12 13 provided services.
12 14 2. COMPARABLE SERVICES AND NONDISCRIMINATORY PRICING
12 15 STANDARDS.
12 16 a. A local distribution utility or an entity that is not a
12 17 local distribution utility or an electric utility may own
12 18 transmission facilities.
12 19 b. An affiliate of an electric utility of a local
12 20 distribution utility may provide competitive power supply
12 21 services. Such affiliate may sell competitive power supply
12 22 services directly to a customer, provided that competitive
12 23 power supply services of an affiliate are operationally
12 24 separate from a transmission or distribution affiliate, if
12 25 any.
12 26 c. An affiliate of an electric utility or a local
12 27 distribution utility may offer unbundled power supply services
12 28 as approved by the board. Prices for unbundled power supply
12 29 services shall not be established by the board, but shall be
12 30 determined by competitive market forces.
12 31 d. The board's plan shall be designed to permit all
12 32 providers of power supply services to compete fairly in this
12 33 state and to mitigate concentrations of undue market power.
12 34 Sec. 9. NEW SECTION. 476B.9 OPEN ACCESS.
12 35 1. An owner, operator, or provider of transmission and
13 1 distribution facilities and ancillary services, including a
13 2 federal, state, or local public power agency, shall provide
13 3 access to such facilities and ancillary services to any
13 4 customer or seller on a nondiscriminatory and comparable
13 5 service basis. The board shall adopt rules providing for such
13 6 comparable service and nondiscriminatory open access to the
13 7 electric system for wholesale and retail transactions.
13 8 2. An entity providing transmission or distribution
13 9 services shall file with the federal energy regulatory
13 10 commission or the board, as appropriate, comparable service
13 11 tariffs that provide open access for all competitive power
13 12 supply providers. The board shall monitor entities providing
13 13 transmission and distribution services and take necessary
13 14 measures to ensure that a supplier does not have an unfair
13 15 advantage in offering access to and pricing of such services.
13 16 3. The board, by rule, shall establish standards and
13 17 conditions for the exchange of reciprocal rights consistent
13 18 with federal law for transmission and distribution access
13 19 between a local distribution utility located in this state and
13 20 a local distribution utility located outside this state.
13 21 4. As of July 1, 1998, an intrastate owner or operator of
13 22 transmission or distribution facilities and a competitive
13 23 power supply provider, other than an entity that does not
13 24 elect to be subject to this chapter under section 476B.10,
13 25 shall be permitted comparable service and reciprocal access to
13 26 the transmission and distribution customers of other
13 27 transmission and distribution facility owners and operators
13 28 and competitive power supply providers, for the purpose of
13 29 providing power supply services to such customers. This
13 30 section shall not be construed to impede any transaction
13 31 involving interstate commerce.
13 32 Sec. 10. NEW SECTION. 476B.10 MUNICIPALLY OWNED
13 33 UTILITIES AND ELECTRIC COOPERATIVE CORPORATIONS AND
13 34 ASSOCIATIONS – JURISDICTIONAL ELECTION.
13 35 1. Except as provided in subsection 2, this chapter, other
14 1 than section 476B.13, subsection 3, does not apply to a
14 2 municipally owned utility or electric cooperative corporation
14 3 or association.
14 4 2. A municipally owned utility or electric cooperative
14 5 corporation or association may elect to be subject to this
14 6 chapter by filing a petition with the board. The board shall
14 7 promptly rule upon the petition and, should the petition be
14 8 granted, determine the effective date for the board's
14 9 jurisdiction under this chapter.
14 10 Sec. 11. NEW SECTION. 476B.11 OBLIGATION TO CONNECT.
14 11 1. A local distribution utility is relieved of its
14 12 obligation to provide power supply services but is obligated
14 13 to connect and provide distribution services to all customers
14 14 within the utility's exclusive service territory on
14 15 nondiscriminatory and comparable service terms and conditions.
14 16 2. A customer may select a provider of power supply
14 17 services. Upon making the selection, such provider shall be
14 18 provided nondiscriminatory and comparable service access to
14 19 interconnection with the transmission and distribution system
14 20 of the local distribution utility for the purpose of
14 21 transporting the customer's electric power supply to the
14 22 customer's point of delivery on such system.
14 23 3. Failure by a customer to select a provider of power
14 24 supply services shall be deemed to be a request to be assigned
14 25 a default provider as provided by the board.
14 26 Sec. 12. NEW SECTION. 476B.12 EMINENT DOMAIN.
14 27 The rights and powers conferred under chapter 478,
14 28 including the right of eminent domain, shall not be used for
14 29 any of the following:
14 30 1. To deny physical access or interconnection to
14 31 transmission or distribution facilities.
14 32 2. To restrict the construction of new transmission or
14 33 distribution facilities by any qualified entity.
14 34 3. To otherwise limit competition as provided for in this
14 35 chapter.
15 1 Sec. 13. NEW SECTION. 476B.13 TRANSMISSION AND
15 2 DISTRIBUTION PRICING.
15 3 1. The board, to the extent the board has jurisdiction
15 4 over transmission and distribution pricing, shall encourage
15 5 pricing mechanisms which enhance reliability, compensate
15 6 transmission owners fairly, allow for the widest possible
15 7 markets, and relieve transmission congestion.
15 8 2. The board shall establish just, reasonable, and
15 9 nondiscriminatory rates for unbundled services provided by a
15 10 local distribution utility on a comparable service basis.
15 11 Such rates, on an unbundled basis, shall account for the costs
15 12 of providing transmission and distribution services. Rates
15 13 shall be based upon cost of service or performance-based
15 14 incentives combined with other considerations to promote
15 15 efficient, safe, and reliable service at the lowest possible
15 16 cost.
15 17 3. An electric utility shall file unbundled service
15 18 tariffs to provide services to customers in a
15 19 nondiscriminatory manner and on a comparable service basis.
15 20 Additionally, a municipally owned utility and an electric
15 21 cooperative corporation or association shall file such tariffs
15 22 for information purposes only.
15 23 4. The board has jurisdiction over transmission rates and
15 24 services not subject to the exclusive jurisdiction of the
15 25 federal energy regulatory commission. Standards for such
15 26 rates and services are as follows:
15 27 a. Rates for transmission and distribution services, to
15 28 the maximum extent possible, shall be designed to reasonably
15 29 reflect the costs of providing such services to each customer
15 30 class. Methods used to determine class costs of service, to
15 31 the maximum extent practical for each class of electric
15 32 customers, shall permit identification of differences in cost-
15 33 incurrence attributable to daily and seasonal time of use of
15 34 service, and attributable to differences in demand, energy,
15 35 voltage delivery level, and customer components of cost.
16 1 b. The design of rates should reasonably approximate a
16 2 pricing methodology for any individual utility that would
16 3 reflect the price system that would exist in a competitive
16 4 market environment. For purposes of determining revenue
16 5 requirements among customer classes, embedded costs shall be
16 6 used. For purposes of determining rate designs within
16 7 customer classes, long-run marginal cost approaches are
16 8 preferred, but embedded costs may be used.
16 9 Sec. 14. NEW SECTION. 476B.14 ENVIRONMENTAL AND SOCIAL
16 10 PROGRAMS.
16 11 The costs for environmental, social, and other related
16 12 programs shall be unbundled from electric rates. The board,
16 13 by rule, shall establish programs and mechanisms that enable
16 14 low-income electric customers to afford electric power supply
16 15 and services, including low-income rate discounts, for the
16 16 purpose of providing universal service.
16 17 Sec. 15. NEW SECTION. 476B.15 RECOVERY OF STRANDED
16 18 COSTS.
16 19 1. The board, in making a determination regarding the
16 20 recovery of stranded costs during the stranded cost transition
16 21 period, shall balance the interests of customers and utility
16 22 investors. This section is not intended to provide any
16 23 greater opportunity for stranded cost recovery than is
16 24 available under applicable law or rule as of July 1, 1998. It
16 25 is the intent of the general assembly that recovery of
16 26 stranded costs be considered only for power supply services,
16 27 including generation assets. The utility shall have the
16 28 burden of proving such costs, and that power supply costs are
16 29 not shifted to transmission and distribution services.
16 30 2. a. The board shall require that a utility discharge
16 31 prudently, thoroughly, and aggressively the duty to mitigate
16 32 stranded costs. Mitigation of such costs may include, but is
16 33 not limited to, the determination of market value through the
16 34 sale of assets.
16 35 b. (1) A utility may file a recovery plan within three
17 1 months after adoption of a plan by the board pursuant to
17 2 section 476B.4. The recovery plan shall document anticipated
17 3 stranded costs, mitigation proposals, and offsetting increases
17 4 in the value of other assets and offsetting cost savings,
17 5 including those from mergers not disapproved by the board.
17 6 (2) If the recovery plan proposes stranded cost transition
17 7 charges, the proposed stranded cost transition charges shall
17 8 be allocated to all customers pursuant to the most recent cost
17 9 study and rate design approved by the board, subject to
17 10 subparagraph (4), and shall propose collection of stranded
17 11 cost transition charges to recover net stranded costs after
17 12 mitigation over a period of no more than three years.
17 13 (3) The recovery plan shall establish net stranded costs
17 14 after mitigation and a limited recovery period designed to
17 15 recover such costs expeditiously, provided that the recovery
17 16 period and the amount of qualified net stranded costs shall
17 17 yield stranded cost transition charges that shall not directly
17 18 cause the total price for electric power, including
17 19 transmission and distribution services, for any customer to
17 20 exceed the cost per kilowatt-hour paid as of July 1, 1998.
17 21 (4) Recovery mechanisms that impede competition such as
17 22 entry and exit fees shall not be utilized.
17 23 c. In addition to other regulatory remedies, an electric
17 24 utility has a duty to cooperate with the board in the
17 25 implementation of this chapter as a precondition for recovery
17 26 of any stranded costs. Approval of a recovery plan and
17 27 collection of any stranded cost transition charge is deemed a
17 28 resolution of all such claims by a utility. A utility seeking
17 29 to establish claims for recovery of stranded costs through any
17 30 other means is not eligible for recovery pursuant to a
17 31 recovery plan or through the collection of stranded cost
17 32 transition charges.
17 33 3. a. NET STRANDED COSTS AFTER MITIGATION. An electric
17 34 utility, as determined by the board, may recover from
17 35 customers a portion of the net stranded costs after
18 1 mitigation, costs associated with required environmental
18 2 mandates currently approved for cost recovery, and costs
18 3 associated with power acquisitions mandated by federal
18 4 statutes.
18 5 b. NET BASIS. Stranded costs do not include transmission
18 6 and distribution assets, shall be determined on a net basis,
18 7 shall be verifiable, and shall be reconciled annually to
18 8 actual electric market conditions by the board.
18 9 c. POWER PURCHASE CONTRACTS. Power purchase contract
18 10 obligations shall continue for the duration of the contracts.
18 11 Costs, offset by benefits of sales agreements, arising
18 12 pursuant to such contracts or associated with any prudent buy-
18 13 out, buy-down, or prudent renegotiation of the contracts shall
18 14 be eligible for recovery in stranded cost transition charges.
18 15 d. STRANDED COST RECOVERY. A recovery of stranded costs
18 16 shall be through nonbypassable, nondiscriminatory transition
18 17 charges that are fair to all customer classes. Such charges
18 18 shall be limited in duration and consistent with the
18 19 transition to a fully competitive market. Recovery mechanisms
18 20 that impede competition, such as entry and exit fees, shall
18 21 not be utilized. Stranded cost transition charges do not
18 22 apply to a wheeling-through transaction or a competitive
18 23 alternative, including but not limited to self-generation and
18 24 sales of nonfirm power supply services.
18 25 e. STRANDED COST RECOVERY COLLECTION. The board may allow
18 26 electric utilities to collect stranded cost transition
18 27 charges, subject to its determination pursuant to a rate case
18 28 proceeding that such charges are equitable, appropriate, and
18 29 balanced, are in the public interest, and are consistent with
18 30 this chapter. The burden of proof for any stranded cost
18 31 recovery claim shall be borne by the electric utility making
18 32 such claim. An electric utility shall not exceed its allowed
18 33 rate of return as a result of the collection of stranded cost
18 34 transition charges.
18 35 Sec. 16. NEW SECTION. 476B.16 RELIABILITY AND SAFETY.
19 1 1. The board shall ensure reliable and safe electric
19 2 service, and adopt policy safeguards that maintain or improve
19 3 the quality, convenience, and responsiveness of electric
19 4 service to customers.
19 5 2. An electric utility and a provider of electric
19 6 transmission, distribution, and power supply services shall
19 7 have in place sufficient measures, as approved by the board,
19 8 to preserve the integrity, safety, reliability, and quality of
19 9 electric service in Iowa.
19 10 3. A provider shall not discriminate against a residential
19 11 customer or customer group because of differences in income or
19 12 other personal or household characteristics. Discrimination
19 13 among otherwise similar customers shall not be allowed with
19 14 regard to price, access to service, credit and collection
19 15 practices, and customer service.
19 16 Sec. 17. NEW SECTION. 476B.17 REMEDIES.
19 17 1. LIMITATION OF LIABILITY. A local distribution utility
19 18 is not liable for any damages to a current or future customer
19 19 if the competitive power supply provider or provider of
19 20 unbundled services chosen by such customer pursuant to section
19 21 476B.6 fails to deliver such services pursuant to the terms of
19 22 its bilateral contract with such customer. This section shall
19 23 not be construed to limit the liability of a local
19 24 distribution utility for damages caused by such utility's own
19 25 actions or failure to act.
19 26 2. CIVIL PENALTIES. A competitive power supply provider
19 27 which, after written notice by the board of a specific
19 28 violation, commits the same violation is subject to a civil
19 29 penalty, which shall be levied by the board, in an amount of
19 30 not less than one hundred dollars and not more than five
19 31 thousand dollars per violation.
19 32 A competitive power supply provider which, after written
19 33 notice by the board of a specific violation, willfully commits
19 34 the same violation is subject to a civil penalty, which shall
19 35 be levied by the board, in an amount of not less than one
20 1 thousand dollars and not more than ten thousand dollars per
20 2 violation. For purposes of this section, "willful" means
20 3 knowing and deliberate, with a specific intent to violate.
20 4 Each violation is a separate offense. In the case of a
20 5 continuing violation, each day a violation continues, after
20 6 the time specified for compliance in a written notice by the
20 7 board, is a separate and distinct offense. A civil penalty
20 8 may be compromised by the board. In determining the amount of
20 9 the penalty, or the amount agreed upon in a compromise, the
20 10 board may consider the appropriateness of the penalty in
20 11 relation to the size of the entity, the gravity of the
20 12 violation, the good faith of the entity in attempting to
20 13 achieve compliance following notification of a violation, and
20 14 any other relevant factors.
20 15 The written notice given by the board to an entity under
20 16 this section shall specify an appropriate time for compliance.
20 17 Civil penalties collected pursuant to this section shall be
20 18 forwarded by the board to the treasurer of state to be
20 19 credited to the general fund of the state and shall be used
20 20 only for the low-income home energy assistance program
20 21 administered by the division of community action agencies of
20 22 the department of human rights.
20 23 Civil penalties paid pursuant to this section shall be
20 24 excluded from the costs of any jurisdictional rate
20 25 determination.
20 26 Sec. 18. CONTRACT RIGHTS. This chapter shall not affect
20 27 the rights and duties of parties under a contract in effect on
20 28 the effective date of this Act.
20 29 EXPLANATION
20 30 This bill creates new Code chapter 476B relating to the
20 31 choice of electric utility provider by consumers.
20 32 New Code section 476B.1 provides the title of the chapter.
20 33 New Code section 476B.2 provides a statement of purpose
20 34 associated with the chapter.
20 35 New Code section 476B.3 establishes definitions of terms
21 1 used in the chapter.
21 2 New Code section 476B.4 establishes standards for retail
21 3 electric competition.
21 4 New Code section 476B.5 provides that an electric utility
21 5 must file a utility restructuring plan for customer choice.
21 6 New Code section 476B.6 provides for retail customer choice
21 7 of an electric power provider.
21 8 New Code section 476B.7 provides that a person must
21 9 register with the board as a condition of providing power
21 10 supply services as a competitive power supply provider in this
21 11 state.
21 12 New Code section 476B.8 provides that the utilities board
21 13 is to require all existing electric utilities to functionally
21 14 separate facilities, operations, services, rates for power
21 15 supply services, transmission services, distribution services,
21 16 and other competitively provided services.
21 17 New Code section 476B.9 provides for open and equal access
21 18 to transmission and distribution facilities of a utility by
21 19 another for the purpose of engaging in wholesale and retail
21 20 transactions.
21 21 New Code section 476B.10 provides that a municipally owned
21 22 utility or electric cooperative corporation or association,
21 23 which is not subject to this chapter, may elect to be subject
21 24 to this chapter by filing a petition with the board.
21 25 New Code section 476B.11 provides that a local distribution
21 26 utility is relieved of its obligation to provide power supply
21 27 services but is obligated to connect and provide distribution
21 28 services to all customers within the utility's exclusive
21 29 service territory on nondiscriminatory and comparable service
21 30 terms and conditions.
21 31 New Code section 476B.12 establishes limits on the exercise
21 32 of the power of eminent domain.
21 33 New Code section 476B.13 provides that the board is to
21 34 establish just, reasonable, and nondiscriminatory rates for
21 35 unbundled services provided by a local distribution utility on
22 1 a comparable service basis.
22 2 New Code section 476B.14 provides that the costs for
22 3 environmental, social, and other related programs shall be
22 4 unbundled from electric base rates.
22 5 New Code section 476B.15 provides for the recovery of the
22 6 stranded costs of a utility which result from implementing
22 7 consumer choice and establishing competition in the electric
22 8 industry.
22 9 New Code section 476B.16 provides that the board is to
22 10 ensure reliable and safe electric service.
22 11 New Code section 476B.17 limits the liability of a local
22 12 distribution utility if a competitive power supply provider
22 13 fails to deliver services to a customer, and establishes civil
22 14 penalties for violations of the chapter.
22 15 LSB 3771XC 77
22 16 mj/jw/5.1
Text: SSB02211 Text: SSB02213 Text: SSB02200 - SSB02299 Text: SSB Index Bills and Amendments: General Index Bill History: General Index
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