2001 Summary of Legislation ENERGY AND PUBLIC UTILITIES Published by the Iowa General Assembly -- Legislative Service Bureau

ENERGY AND PUBLIC UTILITIES LEGISLATION

SENATE FILE 279 - Expenses Related to Regulation of Public Utilities -- Assessments (full text of act)

   BY COMMITTEE ON COMMERCE. This Act amends Code Section 476.10, which deals with allocation of expenses incurred by the Utilities Board of the Department of Commerce and the Consumer Advocate.

   The Act provides that the board may allocate and directly charge to persons bringing or participating in a proceeding or matter before the board expenses attributable to the respective duties of the board and the Consumer Advocate. The board and the Consumer Advocate may consider the financial resources of the parties, the impact of assessment on participation by intervenors, the nature of the proceeding or matter, and the contribution to the public interest in making such direct assessments, and may decline to charge persons who intervene in a proceeding in good faith without expanding the scope of the proceeding. The board may bill the person during a proceeding or at the conclusion. Presentation of a bill constitutes notice of direct assessment and a demand for payment according to the time frame established in the Act.

   This direct assessment procedure in the Act provides specific criteria for the board to consider in making an allocation, or in declining to allocate any expenses to intervenors; applies to all proceedings and matters for which the board is responsible under the law rather than a limited list of activities; applies to all persons before the board rather than just public utilities; and contains no limit on the yearly amount that a person may be assessed, rather than an annual limit of two-tenths of 1 percent of a public utility’s gross operating revenues.

   The Act also addresses quarterly assessments based on the actual expenses of the Utilities Division of the Department of Commerce, less the direct charges made to persons involved in proceedings or other matters before the board. This quarterly remainder assessment is made to all persons providing service over which the board has jurisdiction, in proportion to their respective gross operating revenues. Electric and gas public utilities that are not subject to rate regulation by the board under Code Chapter 76 are assessed at one-half the rate of other persons.

   This quarterly remainder assessment procedure differs from current Code language on quarterly remainder assessments by applying the assessment process to all persons providing service over which the board has jurisdiction, rather than public utilities; by permitting expenses allocable to a particular type of utility to be assessed only to that type of entity over which the board has jurisdiction; by using fiscal year guidelines only and deleting references to specific dates in the procedure; and by not limiting the yearly amount that a person may be assessed, rather than an annual limit of two-tenths of 1 percent of a public utility’s gross operating revenues from intrastate public utility operations during the calendar year, and a total of three-tenths of 1 percent of the gross operating revenues in the last preceding year for both the direct and remainder assessments.

   The Act requires direct charges or remainder assessments to be paid within 30 days of notice of the amount due, unless an objection is filed. The board is required to set the matter of a filed objection for hearing and issue an order in accordance with the procedures in Code Chapter 476. The order is subject to review according to the procedures in the Code chapter. The Act differs from current Code language regarding payment by requiring that the board provide notice, instead of mailing notice.

   The Act requires the Utilities Board to submit a written report to the General Assembly on or before March 1, 2002, regarding the effect of statutory changes on the direct and remainder assessments actually made on utilities. The report shall address the amount of the assessment, the party to whom it was assessed, a comparison of the assessments made to the same party under the previous statute, and any additional information the board deems useful to the General Assembly in evaluating the statutory changes.

   The Act takes effect March 14, 2001.

SENATE FILE 462 - Energy Loan Fund -- Eligible Improvements (full text of act)

   BY COMMITTEE ON NATURAL RESOURCES AND ENVIRONMENT. This Act amends a provision of the Energy Loan Fund administered by the Department of Natural Resources (DNR). Out of the fund, the DNR makes loans to the state, state agencies, political subdivisions, school districts, area education agencies, community colleges, and nonprofit organizations for implementing energy conservation measures identified in a comprehensive engineering analysis. The Act strikes language requiring recoupment of energy conservation costs within an average of six years and provides that a loan shall be made for all cost-effective management improvements.

SENATE FILE 515 - Public Utility Crossings -- Railroad Rights-of-Way (full text of act)
BY IVERSON AND GRONSTAL. This Act creates new Code Section 476.27, providing definitions and procedures for crossings of railroad rights-of-way by public utilities.

   The Act directs the Utilities Board of the Department of Commerce, in consultation with the Iowa Department of Transportation, to adopt rules prescribing the terms and conditions for a railroad crossing. The rules are to address notification requirements, maintenance and repair requirements, insurance requirements, procedures for payment of certain costs and damages, emergency repair and maintenance requirements, engineering standards, expedited construction, and other necessary terms and conditions. The Act requires the railroad and public utility to each bear responsibility for each person’s own acts and omissions, except that the public utility shall be responsible for any bodily injury or property damage typically covered by a standard railroad protective liability insurance policy.

   A standard crossing fee of $750 is established to cover the direct expenses of a railroad, to be paid by a public utility seeking to commence a crossing. The fee is a one-time charge per crossing in lieu of any license or other fee or charge and shall apply to all crossings except for crossings along the public roads of the state pursuant to Code Chapter 477. The utility shall also reimburse the railroad for any actual flagging expenses in addition to the standard crossing fee.

   The Act provides that any rules adopted by the board shall not prevent a railroad and a public utility from negotiating different terms and conditions applicable to a crossing. The Act states that the new provisions shall not impair the authority of a public utility to secure crossing rights by easement pursuant to the exercise of the power of eminent domain.

   The Act allows a railroad or public utility that believes special circumstances exist for a particular crossing to petition the board for relief, pursuant to which the board shall determine whether special circumstances exist that necessitate either a modification of the direct expenses to be paid or the need for additional terms and conditions for the crossing. A railroad or public utility that claims to be aggrieved by a determination of the board on the issue of damages for the rights granted to a public utility with respect to a crossing may appeal in essentially the same procedural manner as a party may appeal an appraisement of damages by a county compensation commission under the procedures in Code Chapter 6B for eminent domain. An appeal of any other determination regarding crossings by the board shall proceed pursuant to the provisions of the Iowa Administrative Procedure Act in Code Chapter 17A.

   The Act provides that, pending resolution of a claim of special circumstances by the board, a public utility, upon securing the payment of any damages, may proceed with a crossing in accordance with rules adopted by the board unless the board determines, upon application for emergency relief, that intervention is necessary either to prevent a crossing that involves a significant and imminent likelihood of danger to the public health or safety, or to prevent a crossing that is a serious threat to the safe operation of the railroad or to the current use of the railroad right-of-way.

   The Act also provides that new Code Section 476.27 applies to all public utility crossings as provided in the Code section, and that the provision governs over any other conflicting provision of law.

   The Act applies to a crossing commenced prior to July 1, 2001, if an agreement concerning the crossing has expired or is terminated, and to a crossing commenced on or after July 1, 2001.

HOUSE FILE 577 - Electric Power Generation and Transmission -- Miscellaneous Provisions -- EXTRAORDINARY SESSION (full text of act)

   BY COMMITTEE ON COMMERCE AND REGULATION. This Act makes changes to provisions related to electric utilities in Code Chapters 476 and 476A, as well as making related changes in other parts of the Code.

   A new subsection is added to Code Section 476.6 regarding emissions from electric power generating facilities. Coal-fired facilities located in the state on July 1, 2001, are required to develop multiyear plans and budgets for managing regulated emissions from the facility in a cost-effective manner. The initial plan and budget must be filed by April 1, 2002, and updates shall be filed at least every 24 months. Copies of the initial plan, budget and updates shall be served on the Environmental Protection Division of the Department of Natural Resources (DNR) and the Consumer Advocate. The plan, budget and updates shall be considered in a contested case proceeding, and the DNR and the Consumer Advocate shall participate as parties. The DNR shall state whether the plan or update meets applicable state environmental requirements for regulated emissions, and if not, shall recommend amendments to bring the plan into compliance with requirements.

   The Utilities Board of the Department of Commerce shall not approve a plan that does not meet applicable state requirements for regulated emissions. The board shall approve a plan or update and the associated budget if it is consistent with the legislative intent expressed under Code Section 476.53, and reasonably balances costs, environmental requirements, economic development potential, and the reliability of the electric utility and generation system. The board shall issue an order approving or rejecting a plan or update and the associated budget within 180 days after the filing, except that 30-day extensions may be granted upon a showing of good cause. The reasonable costs incurred in preparing and filing the plan or update and associated budget shall be included in regulated retail rates. The board may limit investments or expenditures under a plan, update or budget that are proposed to be undertaken prior to the time the related environmental benefit would be required under federal or state law. The board shall report to the General Assembly by January 21, 2003, on requiring the municipal utilities and rural electric cooperatives to comply with emission management requirements comparable to those required by this Code section.

   The Act adds new Code Section 476.47, regarding alternate energy purchase programs. Beginning January 1, 2004, all electric utilities are required to offer an alternate energy purchase program to customers based on energy produced by alternate energy production facilities in Iowa, and to file plans for such programs with the Utilities Board. Sixty days’ notice to customers of the plan or any modification is required. Certain exceptions may be applicable, and consumer-owned utilities may apply for a waiver of the requirements.

   The Act also amends Code Section 476.53 by inserting completely new language which states the intent of the General Assembly to attract the development of electric power generating facilities within the state in sufficient quantity to ensure reliable electric service to Iowa consumers and provide economic benefits to the state, implemented in a manner that is cost-effective and compatible with the environmental policies of the state, as expressed in the Code. The Act provides that if a rate-regulated utility files an application to construct in Iowa a baseload generating facility equal to or greater than 300 megawatts or a combined cycle facility, or an alternate energy production facility, or if a rate-regulated public utility leases or owns in Iowa in whole or in part a new such facility, the board shall specify in advance, by order issued after a contested case proceeding, the ratemaking principles that will apply when the costs of the facility are included in retail rates. The board is not limited to traditional ratemaking principles or cost-recovery mechanisms. The board must find that the utility has a board-approved energy efficiency plan in effect, and that the utility has demonstrated to the board that it has considered other sources for long-term electric supply and that the facility or lease is reasonable when compared to other feasible alternative sources of supply. These proof requirements may be met through a competitive bidding process established by rule. The utility may proceed with construction or withdraw its application for certification upon issuance of the order setting forth the ratemaking principles. The principles apply to the facility in any subsequent ratemaking proceeding.

   The Act amends Code Section 476A.6 to provide that the board shall issue a certificate if it finds three criteria have been met: (1) the services and operations resulting from the construction of the facility are compatible with the electric energy policy and the economic development policy of the state as expressed in the Code and will not be detrimental to the provision of adequate and reliable electric service; (2) the applicant is willing to construct, maintain and operate the facility pursuant to the provisions of the certificate and Code Chapter 476A; and (3) the construction, maintenance and operation of the facility will be consistent with reasonable land use and environmental policy, and consonant with reasonable utilization of air, land and water resources, considering reasonably available technology.

   These criteria replace prior statements regarding present or future public convenience, use and necessity; minimum adverse land use; aesthetic impact; beneficial purposes considering the economics of available alternatives; details of a comprehensive energy management program by the public utility, including load management, interruptible service, wheeling agreements and other energy sharing agreements, and energy efficiency and renewable energy services and programs; long-term electric supply; and nongeneration alternatives.

   The Act amends Code Section 476A.15, to allow waiver by the Utilities Board of any of the requirements of Code Chapter 476A if it determines that the public interest would not be adversely affected. The Code currently allows waivers only for facilities with a capacity of 100 or fewer megawatts.

   This Act creates a new subchapter of Code Chapter 476A, regarding electric power generators, that addresses joint agreements for the acquisition of ownership, and for the planning, financing, operation, and maintenance of joint facilities devoted to electric power generation and transmission, and providing for the bonding authority of electric power agencies. The new Code sections shall govern in the event of conflict.

   The Act creates new Code Section 476A.20, which provides definitions for "electric power agency," "facility," and "public bond or obligation." "Electric power agency" means an entity as defined in Code Section 28F.2, which is an entity financing or acquiring electric power facilities pursuant to Code Chapter 28F or Code Chapter 28E. "Public bond or obligation" means an obligation as defined in Code Section 76.14, which is any obligation issued by or on behalf of the state, an agency of the state, or a political subdivision of the state. A "facility" is an electric power generating plant, or transmission line or system, as defined in Code Section 476A.1.

   The Act creates new Code Section 476A.21, providing for the general authority of an electric power agency to enter into and carry out joint agreements with other participants for the acquisition of ownership of a joint facility, and for the planning, financing, operation, and maintenance of the joint facility.

   The Act creates new Code Section 476A.22, providing for the electric power agency to exercise all powers necessary and appropriate that might be exercised by a natural person or private corporation for constructing or acquiring an electric power facility.

   The Act adds new Code Section 476A.23, providing for the issuance of public bonds to carry out any purposes and powers, including the following: (1) the acquisition or construction of any project to be owned or leased by the electric power agency, or any interest in, or any right to the capacity of, such project; (2) the funding or refunding of the principal, interest, or redemption premiums relating to any public bonds or obligations issued by the electric power agency, whether or not the public bonds or obligations or interest have become due; (3) the establishment or increase of reserves to secure or to pay the public bond or obligations or interest; and (4) the payment of all other costs or expenses of the electric power agency necessary to carry out its purposes and powers. A transmission facility shall not be financed with the proceeds from public bonds or obligations, the interest on which is exempt from federal income tax, unless the public issuer of such public bonds or obligations promises that the issuer shall comply with the requirements of the Internal Revenue Code to preserve the tax exemption of interest payable on the bonds or obligations.

   An electric power generating facility shall not be financed under the subchapter unless the following conditions are met: (1) the electric power generating facility is not designed to serve the requirements of retail customers of members that are municipal electric utilities established in Iowa after January 1, 2001; and (2) the electric power agency files annually with the board information regarding sales in sufficient detail to determine compliance with these provisions. The board shall report to the General Assembly if any provision is violated.

   The Act enacts new Code Section 476A.24, regarding public bonds or obligations authorized by resolution of the board of directors of the electric power agency, or under a trust indenture or other security agreement, that must specifically address a list of facts about the bonds. The bonds may be issued in one or more series, and must not be subject to any restriction under other law regarding the amount, maturity, interest rate, or other terms of obligation of a public agency or private person. Code Chapter 75, regarding the authorization and sale of public bonds, does not apply to public bonds or obligations authorized under Code Section 476A.24.

   This Act creates new Code Section 476A.25, regarding public bonds or obligations payable solely from agency revenues or funds. The principal of and interest upon any public bonds and obligations issued by an electric power agency shall be payable solely from the revenues or funds pledged or available for their payment. Each public bond or obligation shall contain all of the following terms: (1) that the principal of or interest on such public bonds or obligation is payable solely from revenues or funds of the electric power agency; (2) that neither the state, or a political subdivision of the state other than the electric power agency, nor a public agency that is a member of the electric power agency is obligated to pay the principal or interest on such public bonds or obligations; and (3) that the full faith and credit or the taxing power of the state or any political subdivision of the state or of any such public agency is not pledged to the payment of the principal of or the interest on the public bonds or obligations.

   The Act creates new Code Section 476A.26, regarding sources for payment and security for public bonds and obligations. Public bonds or obligations are payable from the revenues or funds of the electric power agency, subject to any agreements with holders of particular public bonds or obligations pledging any particular revenues or funds. An electric power agency may issue types of public bonds or obligations as it may determine, including that where the principal and interest are payable exclusively from the revenues from one or more projects or from interest in such project or projects, or a right to capacity of such project or projects, or from any revenue-producing contract made by the electric power agency with any person. Any public bonds or obligations may be secured by a pledge of any grant, subsidy or contribution from any public agency or other person, or a pledge of any income or revenues, funds or moneys of the electric power agency from any other source.

   The Act creates new Code Section 476A.27, which provides that public bonds or obligations of an electric power agency may be issued pursuant to the new Code sections established under Code Chapter 476A, and rates may be established in the same manner as provided in Code Section 28F.5 without the consent of any department of the state. New Code Section 476A.28 provides that all public bonds or obligations of an electric power agency shall be negotiable within the meaning of the Uniform Commercial Code.

   New Code Section 476A.29 provides that the electric power agency may issue temporary bonds or obligations that shall be exchanged for the definitive bonds or obligations upon their issuance, and that public bonds or obligations may be issued and delivered notwithstanding that one or more of the officers executing them shall have ceased to hold office at the time when the public bonds or obligations are actually delivered.

   New Code Section 476A.30 provides that public bonds or obligations of an electric power agency may be sold at public or private sale for a price and in a manner determined by the electric power agency. New Code Section 476A.31 provides that the following persons may legally invest any debt service funds, money, or other funds belonging to such person or within such person’s control in any public bonds or obligations issued pursuant to the new Code sections added to Code Chapter 476A: (1) a bank, trust company, savings association, building and loan association, savings and loan association, or investment company; (2) an insurance company, insurance association, or any other person carrying on an insurance business; (3) an executor, administrator, conservator, trustee, or other fiduciary; and (4) any other person authorized to invest in bonds or obligations of the state.

   The Act creates new Code Section 476A.32, providing that the resolution, trust indenture, or other security agreement under which any public bonds or obligations are issued shall constitute a contract with the holders of the public bonds or obligations. Code Section 476A.32 also provides that the document may contain provisions, among others, that address the following terms: (1) the terms and provisions of the public bonds or obligations; (2) the mortgage or pledge of and the grant of a security interest in any real or personal property and all or any part of the revenue from any project or any revenue-producing contract made by the electric power agency with any person to secure the payment of the public bonds or obligations, subject to any agreements with the holders of public bonds or obligations which might then exist; (3) the custody, collection, securing, investment, and payment of any revenues, assets, money, funds, or property with respect to which the electric power agency may have any rights or interest; (4) the rates or charges for electric energy sold by, or services rendered by, the electric power agency, the amount to be raised by the rates or charges, and the use and disposition of any or all revenue; (5) the creation of reserves or debt service funds and the regulation and disposition of such reserves or funds; (6) the purposes to which the proceeds from the sale of any public bonds or obligations to be issued may be applied, and the pledge of the proceeds to secure the payment of the public bonds or obligations; (7) limitations on the issuance of any additional public bonds or obligations, the terms upon which additional public bonds or obligations may be issued and secured, and the refunding of outstanding public bonds or obligations; (8) the rank or priority of any public bonds or obligations with respect to any lien or security; (9) the creation of special funds or moneys to be held for operating expenses, payment or redemption of public bonds or obligations, reserves, or other purposes, and the use and disposition of moneys held in these funds; (10) the procedure by which the terms of any contract with or for the benefit of the holders of the public bonds or obligations may be amended or abrogated, the amount of public bonds or obligations the holders of which must consent to such amendment or abrogation, and the manner in which consent may be given; (11) the definition of the acts or omissions to act that shall constitute a default in the duties of the electric power agency to holders of its public bonds or obligations, and the rights and remedies of the holders in the event of default, including, if the electric power agency so determines, the right to accelerate the due date of the maturation of the public bonds or obligations or the right to appoint a receiver of the property or revenues; (12) any other agreements for the benefit of the holders of the public bonds or obligations; (13) the custody, safekeeping and insurance for any of the electric power agency’s property or investments, including the use and disposition of insurance proceeds; (14) the vesting of rights, powers and duties in a trustee; the limiting or abrogating of the rights of the holders of any public bonds or obligations to appoint a trustee; or the limiting or the rights, powers and duties of such trustee; and (15) the appointment and establishment of duties and obligations of any paying agent or other fiduciary.

   The Act creates new Code Section 476A.33, providing that the electric power agency may mortgage or execute deeds of trust of the whole or any part of its property for the security of public bonds or obligations issued or to be issued.

   New Code Section 476A.34 provides that an official, director, member of an electric power agency, or any person executing public bonds or obligations shall not be personally liable on the public bonds or obligations, or be subject to personal liability or accountability by issuance of the public bonds or obligations.

   New Code Section 476A.35 provides that an electric power agency may purchase public bonds or obligations out of any funds available for such purchase, and may hold, pledge, cancel, or resell the public bonds or obligations in accordance with any agreements with the holders.

   New Code Section 476A.36 provides that an electric power agency may pledge its rates, rents, and other revenues as security for the repayment and payment of moneys due and owed by it under any contract.

   The Act provides that the Code Editor may change the use of the term "this chapter" in the remainder of Code Chapter 476A to accommodate the addition of the new subchapter.

   The Act also amends Code Section 478.3, regarding petitions for electric transmission lines, to address the federal regulatory process that governs many of the same activities regulated under state law, and to specify that the definition of "public" should not be limited to consumers of the state of Iowa.

   The Act takes effect July 3, 2001.

RELATED LEGISLATION

SENATE FILE 65 -- Appropriations -- Supplemental Funding for Low-Income Home Energy Assistance (Complete summary under APPROPRIATIONS.)

   This Act provides supplemental appropriations from state sources for the federal block grant for the Low-Income Home Energy Assistance Program for FY 2000-2001. The Act takes effect February 6, 2001.

SENATE FILE 168 -- City Cable Television Franchises (Complete summary under LOCAL GOVERNMENT.)

   This Act provides that if a city grants more than one cable television franchise, the terms and conditions shall not give undue preference or advantage to the new franchisee and the new franchisee shall be granted the same territory as the existing franchisee and a reasonable amount of time to build the new system throughout the territory.

SENATE FILE 525 -- Federal Block Grant Appropriations (Complete summary under APPROPRIATIONS.)

   This Act appropriates federal block grant and other nonstate moneys to state agencies for the federal fiscal year beginning October 1, 2001, and ending September 30, 2002. The Act includes funding for the Low-Income Home Energy Assistance Program known as LIHEAP.

HOUSE FILE 1 -- Limited Sales and Use Tax Exemption for Residential Metered Gas and Electricity or Heating Fuel (Complete summary under TAXATION.)

   This Act exempts from the sales and use taxes, for approximately two months, the sale or furnishing of metered gas and of heating fuel for residential customers. The exemption applies to the sale of metered gas if the utility billing date is during March 2001 or April 2001 and applies to the sale of heating fuel if the sale or furnishing of it occurs during the period beginning on February 5, 2001, and ending March 31, 2001. A utility that cannot adjust its billing system to provide for the exemption in March can charge the tax but must give the customer a credit on the customer’s next billing. The Act also provides for the phaseout of the sales tax, over a five-year period, on the sale and furnishing of metered gas and electricity residential customers and on the sale and furnishing of fuel, including propane and heating fuel, used in residential dwellings. The Act takes effect February 5, 2001.

HOUSE FILE 301 -- Rural Fire Protection (Complete summary under LOCAL GOVERNMENT.)

   This Act requires a rural water district or association to establish a rural fire protection program that provides access to designated soft-hose fill stations, periodic updated maps of soft-hose fill stations, and periodic informational meetings for all affected fire departments on procedures and facilities to enhance rural fire protection.

HOUSE FILE 698 -- Appropriations -- Regulatory and Expenditure Matters -- EXTRAORDINARY SESSION (Complete summary under APPROPRIATIONS.)

   This Act relates to regulatory and expenditure matters and includes an appropriation for additional regulatory staffing, contingent upon the passage of H.F. 577, relating to energy-generating facilities.

HOUSE FILE 705 -- Taxation of Electricity, Natural Gas, and Fuels Used for Residential Energy (Complete summary under TAXATION.)

   This Act exempts from the sales and use taxes the charges paid to deliver electricity or natural gas if the sale or use is exempt from sales and use taxes. The Act also amends a previously enacted sales tax exemption that phases out the sales tax on the sale or furnishing of metered gas, electricity and fuel (see H.F. 1 in Taxation).

HOUSE FILE 706 -- Appropriations -- Energy Conservation Programs Funding (Complete summary under APPROPRIATIONS.)

   This Act appropriates moneys for FY 2001-2002 from the Energy Conservation Trust to the Division of Community Action Agencies of the Department of Human Rights for energy conservation programs for low-income persons and to the Department of Natural Resources for the State Energy Program and for administration of petroleum overcharge programs.

HOUSE FILE 731 -- Utility Replacement Tax (Complete summary under TAXATION.)

   This Act makes various changes to Code Chapter 437A, “Taxes on Electricity and Natural Gas Providers,” based on the proposal of the Utility Replacement Tax Task Force.

© 1998 Cornell College and League of Women Voters of Iowa

Comments about this site or page? webmaster@legis.iowa.gov.
Please remember that the person listed above does not vote on bills. Direct all comments concerning legislation to State Legislators.

Last update: 03-Sep-2001 10:55 PM
sw/rc