Senate File 390 S-3298 Amend Senate File 390 as follows: 1 1. By striking everything after the enacting clause 2 and inserting: 3 < Section 1. Section 476.6, subsection 22, Code 4 2011, is amended by adding the following new paragraph: 5 NEW PARAGRAPH . d. A rate-regulated electric 6 utility that was subject to a revenue sharing 7 settlement agreement with regard to its electric 8 base rates as of January 1, 2010, shall file an 9 application for ratemaking principles applicable to 10 the construction of a nuclear generating facility 11 with the board. The application shall comply with the 12 provisions of section 476.53. In addition, the utility 13 shall remain bound by the commitments described in the 14 March 11, 1999, board order in Docket No. SPU-98-8, 15 unless such restrictions are eased by subsequent board 16 order. 17 Sec. 2. Section 476.53, Code 2011, is amended to 18 read as follows: 19 476.53 Electric generating and transmission 20 facilities. 21 1. It is the intent of the general assembly to 22 attract the development of electric power generating 23 and transmission facilities within the state in 24 sufficient quantity to ensure reliable electric service 25 to Iowa consumers and provide economic benefits to 26 the state. It is also the intent of the general 27 assembly to encourage rate-regulated public utilities 28 to consider altering existing electric generating 29 facilities, where reasonable, to manage carbon emission 30 intensity in order to facilitate the transition to a 31 carbon-constrained environment. 32 2. a. The general assembly’s intent with regard 33 to the development of electric power generating and 34 transmission facilities, or the significant alteration 35 of an existing generating facility, as provided in this 36 subsection 1 , shall be implemented in a manner that is 37 cost-effective and compatible with the environmental 38 policies of the state, as expressed in Title XI . 39 b. The general assembly’s intent with regard to the 40 reliability of electric service to Iowa consumers, as 41 provided in this subsection 1 , shall be implemented by 42 considering the diversity of the types of fuel used to 43 generate electricity, the availability and reliability 44 of fuel supplies, and the impact of the volatility of 45 fuel costs. 46 2. a . It is also the intent of the general 47 assembly to encourage the safe and prudent development 48 of baseload nuclear electric power generation, at a 49 reasonable cost to ratepayers. Nuclear generation 50 -1- SF390.2898 (1) 84 rn/nh 1/ 10 #1.

has a long-term proven record of providing a safe, 1 reliable, and secure source of electricity in the 2 United States and offers the potential for significant 3 job creation, substantial economic development 4 benefits, and the production of electricity at 5 significantly reduced levels of regulated air emissions 6 when compared to output from other thermal generation 7 sources. Further, the general assembly recognizes 8 that meeting stringent environmental permit and 9 public health and safety requirements is expensive 10 and creates significant cost burdens on customers 11 and employers attributable to the imposition of 12 additional comprehensive and costly regulations by the 13 United States environmental protection agency that 14 dramatically increase costs to customers. Finally, 15 the general assembly recognizes that development of 16 nuclear electric power generation requires significant 17 capital investment, ongoing operating expenses, and 18 decommissioning expenses, including storage or disposal 19 of used nuclear fuel, and a substantial period of time 20 for successful nuclear generation development, siting, 21 permitting, licensing, and deployment. 22 b. The general assembly recognizes that to maximize 23 the potential for significant job creation, economic 24 development, and competitive advantage derived from a 25 robust nuclear industry, a significant workforce is 26 required to construct and operate new nuclear power 27 plants. Such jobs include skilled trades, such as 28 welders, pipe fitters, masons, carpenters, millwrights, 29 sheet metal workers, electricians, and heavy equipment 30 operators, in addition to nuclear reactor operators, 31 radiation protection specialists, and nuclear, 32 mechanical, and electrical engineers. In order for 33 this state to lead the nation in developing this 34 skilled workforce and to maximize economic development 35 related to nuclear electric power generation, the 36 general assembly intends for the state to undertake the 37 following: 38 (1) Create and implement plans to assess and 39 enhance educational and training systems to develop a 40 next-generation nuclear workforce. 41 (2) Assess the adequacy and potential expansion 42 of supply chain infrastructure to support the growing 43 nuclear industry. 44 (3) Recommend steps to attract new nuclear-related 45 businesses. 46 (4) Evaluate the economic development impact 47 affordable nuclear electric power generation will have 48 on the expansion and retention of existing industry. 49 3. a. The board shall specify in advance, by 50 -2- SF390.2898 (1) 84 rn/nh 2/ 10

order issued after a contested case proceeding, the 1 ratemaking principles that will apply when the costs 2 of the electric power generating facility or alternate 3 energy production facility are included in regulated 4 electric rates , whether collected through base rates 5 or through a rider approved under paragraph “b” , 6 subparagraph (2), subparagraph division (a), whenever 7 a rate-regulated public utility does any of the 8 following: 9 (1) Files an application pursuant to section 476A.3 10 to construct do any of the following in Iowa a : 11 (a) Construct a baseload electric power generating 12 facility with a nameplate generating capacity equal to 13 or greater than three hundred megawatts or a . 14 (b) Construct a combined-cycle electric power 15 generating facility , or an . 16 (c) Construct an alternate energy production 17 facility as defined in section 476.42 , or to 18 significantly . 19 (d) Significantly alter an existing generating 20 facility. 21 (i) For purposes of this subparagraph division (d) , 22 a significant alteration of an existing generating 23 facility must, in order to qualify for establishment of 24 ratemaking principles, fall into one of the following 25 categories: 26 (a) (A) Conversion of a coal fueled facility into 27 a gas fueled facility. 28 (b) (B) Addition of carbon capture and storage 29 facilities at a coal fueled facility. 30 (c) (C) Addition of gas fueled capability to a 31 coal fueled facility, in order to convert the facility 32 to one that will rely primarily on gas for future 33 generation. 34 (d) (D) Addition of a biomass fueled capability to 35 a coal fueled facility. 36 (ii) With respect to a significant alteration of 37 an existing generating facility, an original facility 38 shall not be required to be either a baseload or 39 a combined-cycle facility. Only the incremental 40 investment undertaken by a utility under subparagraph 41 divisions (a), (b), (c), or (d) subdivision (i), 42 subparagraph part (A), (B), (C), or (D) shall be 43 eligible to apply the ratemaking principles established 44 by the order issued pursuant to paragraph “e” . 45 Facilities for which advanced ratemaking principles are 46 obtained pursuant to this section shall not be subject 47 to a subsequent board review pursuant to section 476.6, 48 subsection 21 to the extent that the investment has 49 been considered by the board under this section . To 50 -3- SF390.2898 (1) 84 rn/nh 3/ 10

the extent an eligible utility has been authorized to 1 make capital investments subject to section 476.6, 2 subsection 21 , such investments shall not be eligible 3 for ratemaking principles pursuant to this section . 4 (2) Expresses its intent, upon completion of 5 analyses authorized pursuant to section 476.6, 6 subsection 22, for a rate-regulated utility that was 7 subject to a revenue-sharing settlement agreement with 8 regard to its electric base rates as of January 1, 9 2010, to file an application pursuant to section 476A.3 10 to build a nuclear generating facility including but 11 not limited to small modular reactor technology, or 12 expresses its intent to seek authority pursuant to a 13 combined construction and operating license or an early 14 site permit from the United States nuclear regulatory 15 commission. 16 (2) (3) Leases or owns in Iowa, in whole or in 17 part, a any of the following: 18 (a) A new baseload electric power generating 19 facility with a nameplate generating capacity equal to 20 or greater than three hundred megawatts or a . 21 (b) A combined-cycle electric power generating 22 facility , or a . 23 (c) A new alternate energy production facility as 24 defined in section 476.42 . 25 (d) A new nuclear generating facility including but 26 not limited to small modular reactor technology. 27 b. In determining the applicable ratemaking 28 principles, the board shall not be limited to 29 traditional ratemaking principles or traditional cost 30 recovery mechanisms. 31 (1) Among the principles and mechanisms the board 32 may consider, the board has the authority to approve 33 ratemaking principles proposed by a rate-regulated 34 public utility that provide for reasonable restrictions 35 upon the ability of the public utility to seek a 36 general increase in electric rates under section 476.6 37 for at least three years after the generating facility 38 begins providing service to Iowa customers. 39 (2) In determining the applicable ratemaking 40 principles for a nuclear generating facility or for 41 a license or permit from the United States nuclear 42 regulatory commission, a ratemaking principles order 43 issued by the board shall incorporate all of the 44 following: 45 (a) Enable the utility to recover upon issuance of 46 the order, through a rider pursuant to a tariff filing, 47 a return on and a return of all prudent capitalized 48 costs and a return of all prudent noncapitalized 49 costs associated with the permitting, licensing, and 50 -4- SF390.2898 (1) 84 rn/nh 4/ 10

construction of a nuclear generating facility. The 1 amount of such cost recovery from utility customers 2 shall be reduced by the amount of any funding of such 3 costs borne by the United States department of energy 4 or any other governmental entity, and costs recovered 5 from any joint owners of the nuclear generating 6 facility. A determination of all prudent costs 7 recoverable pursuant to this subparagraph division 8 shall be made and the level and rate of the recovery 9 of such charges reset annually to reflect the level 10 of reasonable costs related to pursuit of a United 11 States nuclear regulatory commission permit or license 12 or construction costs expected to be incurred in 13 the next twelve months. A determination shall also 14 be made of any adjustment required to balance the 15 preceding period’s actual expenditures and financing 16 costs with what had been projected and included 17 in costs recoverable for the preceding period. If 18 applicable, the utility shall report to the board 19 annually the budgeted and actual costs as compared to 20 the estimated total in-service cost of the nuclear 21 generating facility that was presented in the last 22 annual filing, as projected through the expected 23 in-service date of the nuclear generating facility. 24 Following issuance of the board’s ratemaking principles 25 order, the utility shall file an application with the 26 board on an annual basis providing such information, 27 with the understanding that some cost components may be 28 higher than estimated and other cost components may be 29 lower. Each annual proceeding shall be completed by 30 the board within ninety days from the date of filing 31 the application. The board, for good cause shown, may 32 extend the deadline for completing an annual proceeding 33 for an additional period not to exceed ninety days. 34 The complete methodology for determination of prudent 35 costs shall be addressed as a ratemaking principle. 36 All United States nuclear regulatory commission 37 permitting or licensing costs are to be recovered over 38 a period not to exceed the estimated construction 39 period for a nuclear generating facility as determined 40 by the board. All nuclear generating facility 41 construction costs are to be recovered over a period 42 not to exceed the sum of the estimated construction 43 period for a nuclear unit, plus its useful life as 44 determined by the board. A utility’s commencement of 45 cost collection shall begin promptly after completion 46 of the ratemaking principles proceeding, allowing for 47 such additional time as may be needed by the board to 48 review a compliance rider tariff filing. 49 (b) Enable the utility to recover in rates all 50 -5- SF390.2898 (1) 84 rn/nh 5/ 10

prudently incurred expenses and costs, including but 1 not limited to ongoing operations and maintenance 2 costs, decommissioning funding and site restoration 3 costs, and taxes for such a new nuclear generating 4 facility. 5 (c) Base the allowed debt, preferred stock, 6 and equity percentages on a capital structure 7 calculated using the average of the utility’s actual 8 thirteen-month balances for long-term debt, preferred 9 stock, and common equity. The long-term debt and 10 preferred stock thirteen-month balances shall include 11 adjustments for thirteen-month balances of unamortized 12 discount, premium, expense, and any gain or loss on 13 reacquired securities. The costs of long-term debt 14 and preferred stock shall reflect the actual embedded 15 interest and dividend rate for each issue as well 16 as any annual amortization of unamortized discount, 17 premium, expense, and any gain or loss on reacquired 18 securities or interest rate hedges as approved by the 19 board as a ratemaking principle. The costs of common 20 equity shall reflect the following: 21 (1) The risks to which the investor’s capital 22 is exposed and not the investor’s source of funds by 23 comparing returns on investments in other enterprises 24 having corresponding risks. 25 (2) The investor-required cost of capital of the 26 rate-regulated utility so as to maintain its credit and 27 ability to attract capital. 28 (3) Neither directly or indirectly include 29 additional debt of the rate-regulated utility’s parent 30 or other affiliates in the rate-regulated utility’s 31 capital structure or cost of service, so long as 32 the utility equity ratio does not exceed fifty-five 33 percent as determined in this subparagraph division 34 (c). If the rate-regulated utility’s equity ratio 35 exceeds this cap, or it is anticipated it will exceed 36 this cap, the rate-regulated utility may provide a 37 rationale to the board as to why the actual capital 38 structure is reasonable for maintaining its credit, 39 attracting capital on reasonable terms, and results in 40 reasonable costs to the rate-regulated utility’s retail 41 customers. The board shall rule upon any such request 42 in a contested case proceeding. 43 (d) Allow the utility to recover return on and a 44 return of all prudent preconstruction and construction 45 costs incurred if the utility elects not to complete 46 or is precluded from completing construction of the 47 nuclear generating facility. Costs determined to be 48 prudent in prior annual review proceedings shall not 49 subsequently be redetermined to be imprudent. The 50 -6- SF390.2898 (1) 84 rn/nh 6/ 10

utility shall recover such costs over a period not to 1 exceed the sum of the estimated construction period for 2 a nuclear unit plus its useful life as determined by 3 the board. 4 (e) Allow the utility to recover the net book value 5 of any coal-fired generating facility entered into 6 service prior to 1974 and owned by the utility as of 7 January 1, 2010, that the utility commits to retire 8 in anticipation of the operation of a new nuclear 9 generating facility, and that the board determines to 10 be prudent. The board shall allow for the recovery of 11 a return on, and a return of the book value of, the 12 retired generating facility over a period not greater 13 than the remaining useful life of the facility prior to 14 a determination to retire the facility. 15 c. In determining the applicable ratemaking 16 principles, the board shall make the following 17 findings: 18 (1) The rate-regulated public utility has in effect 19 a board-approved energy efficiency plan as required 20 under section 476.6, subsection 16 . 21 (2) The Except for an application for ratemaking 22 principles subject to paragraph “a” , subparagraph (2), 23 the rate-regulated public utility has demonstrated 24 to the board that the public utility has considered 25 other sources for long-term electric supply and that 26 the facility or lease is reasonable when compared 27 to other feasible alternative sources of supply. 28 The rate-regulated public utility may satisfy the 29 requirements of this subparagraph through a competitive 30 bidding process, under rules adopted by the board, 31 that demonstrate the facility or lease is a reasonable 32 alternative to meet its electric supply needs. 33 (3) For an application for ratemaking principles 34 subject to paragraph “a” , subparagraph (2), the 35 rate-regulated utility has demonstrated through a 36 detailed business case filed with the board that it 37 is prudent to build the proposed nuclear generating 38 facility. 39 d. The applicable ratemaking principles shall 40 be determined in a contested case proceeding, which 41 proceeding may be combined with the proceeding for 42 issuance of a certificate conducted pursuant to chapter 43 476A . 44 e. The order setting forth the applicable 45 ratemaking principles shall be issued prior to the 46 commencement of construction or lease of the facility. 47 f. Following issuance of the order, the 48 rate-regulated public utility shall have the option of 49 proceeding according to either of the following: 50 -7- SF390.2898 (1) 84 rn/nh 7/ 10

(1) Withdrawing its application for a certificate 1 pursuant to chapter 476A or withdrawing its ratemaking 2 principles application . 3 (2) Proceeding with the construction or lease 4 of the facility or efforts to pursue a United States 5 nuclear regulatory commission permit or license . 6 g. Notwithstanding any provision of this chapter 7 to the contrary, the ratemaking principles established 8 by the order issued pursuant to paragraph “e” shall 9 be binding with regard to the specific electric power 10 generating facility in any subsequent rate proceeding. 11 h. Any judicial action directly or indirectly 12 resulting in a modification of the board’s ratemaking 13 principles order shall be applied prospectively 14 only. No refunds shall be made of revenues previously 15 collected, unless the board determines such revenues to 16 be in excess of the costs incurred or to be incurred 17 by the utility. With respect to financial commitments 18 made prior to any judicial action directly or 19 indirectly resulting in a modification of the board’s 20 ratemaking principles order, the utility shall recover 21 such costs under a cancellation costs ratemaking 22 principle. 23 i. The board shall issue an order on the merits of 24 a ratemaking application within one hundred eighty days 25 after the utility files an application for ratemaking 26 principles. The board, for good cause shown, may 27 extend the deadline for ruling on the merits of the 28 application for an additional period not to exceed one 29 hundred eighty days, and by such additional time beyond 30 that period that is agreed to by the utility. 31 4. The utilities board and the consumer advocate 32 may employ additional temporary permanent staff, or and 33 may contract for professional services with persons 34 who are not state employees, as the board and the 35 consumer advocate deem necessary to perform required 36 functions as provided in this section , including but 37 not limited to review of power purchase contracts, 38 review of emission plans and budgets, and review of 39 ratemaking principles proposed for construction or 40 lease of a new generating facility , including a new 41 nuclear generating facility or United States nuclear 42 regulatory commission permit or license . The board 43 and consumer advocate may also expend funds they 44 deem necessary to train such employees and provide 45 office space and equipment. Beginning July 1, 2002, 46 there is appropriated out of any funds in the state 47 treasury not otherwise appropriated, such sums as 48 may be necessary to enable the board and the consumer 49 advocate to hire , train, house, and equip additional 50 -8- SF390.2898 (1) 84 rn/nh 8/ 10

staff and contract for services under this section . 1 The costs of the additional staff and services shall 2 be assessed to the utilities pursuant to the procedure 3 in section 476.10 and section 475A.6 . The utilities 4 board and consumer advocate may each hire up to five 5 permanent employees capable of performing functions 6 required by this section. Any persons employed by the 7 board or consumer advocate to carry out the duties of 8 this section related to nuclear generating facilities 9 shall be paid at compensation rates consistent with 10 current standards in the nuclear energy industry, and 11 new salary classifications shall be established to 12 set pay ranges for skilled personnel in the nuclear 13 engineering, nuclear construction, and any other 14 professional categories in the nuclear energy industry 15 the board and consumer advocate deem appropriate, 16 including but not limited to legal, accounting, and 17 skilled examiners and inspectors. 18 5. Facilities for which advanced ratemaking 19 principles are obtained pursuant to this section shall 20 not be subject to a subsequent board review pursuant 21 to section 476.6, subsection 21, to the extent that 22 the investment has been considered by the board under 23 this section. To the extent an eligible utility has 24 been authorized to make capital investments subject to 25 section 476.6, subsection 21, such investments shall 26 not be eligible for ratemaking principles pursuant to 27 this section. 28 Sec. 3. Section 476A.6, Code 2011, is amended by 29 adding the following new subsection: 30 NEW SUBSECTION . 4. In the case of an application 31 to construct a nuclear generation facility, the 32 applicant commits to prepare plans addressing 33 United States nuclear regulatory commission and 34 federal emergency management agency public emergency 35 preparedness and response strategy requirements in 36 the event of an accident, natural disaster, or other 37 circumstance, condition, or occurrence compromising 38 the safety and security of the facility and posing a 39 potential threat to public health, safety, or welfare. 40 The plans shall also address coordination with state 41 emergency planning departments, public safety drills, 42 and emergency response testing in response to a 43 simulated nuclear disaster as required by the rules of 44 the United States nuclear regulatory commission and the 45 federal emergency management agency. 46 Sec. 4. ELECTRIC UTILITY RATE INCREASES —— 47 MITIGATION STUDY. The utilities board of the utilities 48 division of the department of commerce shall conduct 49 a study to identify the potential impact to customer 50 -9- SF390.2898 (1) 84 rn/nh 9/ 10

electric utility rates resulting from recent federal 1 regulations adopted by the United States environmental 2 protection agency, and strategies to mitigate this 3 impact. The study shall be undertaken with the 4 involvement of rate-regulated electric public utilities 5 and other stakeholders identified by the board. The 6 board shall submit a report regarding the results of 7 the study by January 1, 2012. 8 Sec. 5. NUCLEAR ELECTRIC POWER GENERATION —— 9 ECONOMIC DEVELOPMENT OPPORTUNITIES —— TASK FORCE. The 10 governor shall appoint a task force to evaluate the 11 economic development opportunities created through 12 nuclear electric power generation in this state and to 13 develop specific plans to maximize these opportunities. 14 Task force members appointed by the governor shall 15 include but not be limited to representatives from 16 the state board of regents, the community colleges, 17 the Iowa department of workforce development, the 18 department of economic development, the department of 19 education, and utility industry leaders. The governor 20 shall appoint a chairperson from among the members. 21 The task force shall submit a report summarizing its 22 evaluation and containing recommendations to the 23 general assembly by January 1, 2012. > 24 ______________________________ SWATI DANDEKAR -10- SF390.2898 (1) 84 rn/nh 10/ 10