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  2003 Summary of Legislation

ENERGY AND PUBLIC UTILITIES

SENATE FILE 275 - Property Tax and Taxation of Utilities
SENATE FILE 368 - Telecommunications Services and Public Utility Regulation
SENATE FILE 405 - Electric Energy Transmission - Investments by Cities Operating Electric Utilities
HOUSE FILE 391 - Electric Power Generation Facilities - Cogeneration Pilot Program
HOUSE FILE 659 - Electric Utilities Regulation - Alternate Energy Production or Small Hydro Facilities

RELATED LEGISLATION

SENATE FILE 458 - Miscellaneous Appropriations, Reductions, Revenue Adjustments, and Other Matters
SEE APPROPRIATIONS. Division VII of this Act requires the Utilities Board to consider for inclusion in utility rates the capital infrastructure investments that will not produce significant revenues and directs the Utilities Board to review the current ratemaking procedures.
HOUSE FILE 472 - Federal Block Grant Appropriations
SEE APPROPRIATIONS. This Act appropriates federal block grant and other nonstate moneys to state agencies for the federal fiscal year beginning October 1, 2003, and ending September 30, 2004. The Act includes funding for the Low-Income Home Energy Assistance Program, known as LIHEAP.

ENERGY AND PUBLIC UTILITIES

SENATE FILE 275 - Property Tax and Taxation of Utilities (full text of bill)
BY COMMITTEE ON COMMERCE. This Act amends various provisions of Code Chapter 437A, relating to the replacement generation tax on persons generating electricity, as well as related provisions in Code Section 426B.2. The Act also makes conforming amendments to various replacement generation tax provisions relating to new electric power generating plants to be built in Iowa, and the allocation of replacement generation taxes for stand-alone new electric power generating plants, the natural gas delivery tax attributable to those plants, and the allocation of the natural gas delivery tax attributable to those plants. The Act also amends certain transmission tax provisions, addresses an annual adjustment to the assessed value for gas and electric utility property, and provides an extension for the Utility Replacement Tax Task Force.

  • The Act includes new definitions for "new electric power generating plant," "cogeneration facility," and "local amount," and, in Code Section 437A.5, establishes a new statewide natural gas delivery rate for natural gas delivered to or consumed by new electric power generating plants. Natural gas delivered to new electric power generating plants is not subject to the threshold recalculation for certain increases and decreases in total taxable therms of natural gas under Code Section 437A.5, subsection 8.
  • The Act redefines the natural gas competitive service area for the city of Waukee to include a two-mile radius around the city limits, excluding any part of the cities of Clive, Urbandale, or West Des Moines.

A municipal utility whose anticipated tax revenue exceeded its replacement transmission tax by more than $100,000 in tax year 1999 is subject to increased rates for transmission lines owned by or leased to the municipal utility by the last day of tax year 2000.

The Act provides a method for allocation of replacement generation tax incurred by a stand-alone new electric power generating plant that involves payment of the tax attributed to the local amount to the county treasurer, and the remaining tax, if any, is paid to the director, who deposits the tax receipts in the Property Tax Relief Fund. The Act also provides a method of allocation of replacement generation tax incurred by stand-alone electric power generating plants of municipal utilities financed under Code Chapter 28F or 476A. Changes to Code Section 437A.15 address the assessed value of a new electric power generating plant owned by a municipal utility.

Code Section 437A.19 annually adjusts the assessed value for all gas and electric utility property by determining a taxable value of such property on an annual basis, in order to bring the general property tax equivalent for properties subject to the replacement tax more in balance with the actual replacement tax generated by those properties. The Act provides a formula to determine taxable value and definitions limited in application only to that Code section.

The Act extends the Utility Replacement Tax Task Force for two years, requiring that it report its activities to the General Assembly by January 1 of each year through January 1, 2005.

The Act applies retroactively to tax years beginning on or after January 1, 2003.

SENATE FILE 368 - Telecommunications Services and Public Utility Regulation (full text of bill)
BY COMMITTEE ON COMMERCE. This Act creates the Iowa Broadband Initiative, which provides access to advanced telecommunications services in exchanges served by rate-regulated local exchange carriers where such services are not already available. The Act provides for a single increase in monthly rates by a carrier of no more than $2 per month for residential or business dial tone service, which shall be included in the monthly bill as an unidentified part of the overall rate for service, and which shall be used to provide advanced telecommunications services where currently not available. Further requirements include approval by the Iowa Utilities Board of a plan for each carrier for use of the revenue resulting from the rate increase, annual reports, and application of a credit by the carrier for qualified applicants for low-income lifeline assistance programs.

  • Changes made to the provision on civil penalties provide that civil penalties collected from telecommunications companies shall be used only for consumer education programs administered by the Iowa Utilities Board. A Code provision regarding waiver of directory assistance charges for the blind, as approved by the board, is eliminated.

SENATE FILE 405 - Electric Energy Transmission - Investments by Cities Operating Electric Utilities (full text of bill)
BY COMMITTEE ON COMMERCE. This Act allows any city operating a city utility as of January 1, 2003, to acquire equity interests in independent transmission companies in which they are participating, which companies are approved by the Federal Regulatory Energy Commission, for the purpose of mitigating expenses associated with procurement of electric transmission service, but not for general city or city utility investment purposes.

HOUSE FILE 391 - Electric Power Generation Facilities - Cogeneration Pilot Program (full text of bill) BR>BY COMMITTEE ON COMMERCE, REGULATION AND LABOR. This Act establishes a pilot program within the Iowa Department of Economic Development (IDED) for the development of cogeneration facilities in Iowa, along with special advance ratemaking principles and rates developed by the Iowa Utilities Board. The Act is repealed effective July 1, 2007.

  • The pilot program provides for two cogeneration projects of 200 megawatts of electricity or less, constructed in Iowa, chosen by and with the support of IDED. A rate-regulated utility engaging in a pilot project may obtain advance ratemaking principles by meeting certain conditions, filing an application, and going through a process for the Utilities Board to consider the terms of the utility's cogeneration energy sales agreement. Following issuance of an order by the Utilities Board related to the energy sales agreement, the rate-regulated utility has the option to implement the energy sales agreement or withdraw its application and decline to proceed with the cogeneration pilot project.
  • The Act also provides a process for the initiation of an avoided cost determination under the federal Public Utility Regulatory Policies Act of 1978 and related federal regulations.

HOUSE FILE 659 - Electric Utilities Regulation - Alternate Energy Production or Small Hydro Facilities (full text of bill)
BY GIPP AND MYERS. This Act permits public utilities to own alternate energy production facilities or small hydro facilities located in Iowa, as well as enter into long-term contracts to purchase or wheel electricity from such types of facilities within the utility's service area, under terms and conditions that the Utilities Board finds are just and reasonable for utility customers, are nondiscriminatory to alternate energy producers, and will further certain statutory policy.

  • The Act makes related changes, including explicitly authorizing the Utilities Board to consider the cost of a utility's alternate energy production facilities and other generating facilities when valuing an electric utility's property. The Act also provides for limits on the utility's ability to seek rate increases for at least three years after the generating facility begins providing service.
  • The Act takes effect April 11, 2003.