Senate File 2311 H-8340 Amend Senate File 2311, as amended, passed, and reprinted by 1 the Senate, as follows: 2 1. By striking everything after the enacting clause and 3 inserting: 4 < Section 1. Section 28F.1, subsection 1, Code 2018, is 5 amended to read as follows: 6 1. This chapter provides a means for the joint financing 7 by public agencies of works or facilities useful and necessary 8 for the collection, treatment, purification, and disposal 9 in a sanitary manner of liquid and solid waste, sewage, 10 and industrial waste, facilities used for the conversion of 11 solid waste to energy, gasworks and facilities useful for 12 the delivery of natural gas service, and also electric power 13 facilities constructed within the state of Iowa, except that 14 hydroelectric power facilities may also be located in the 15 waters and on the dams of or on land adjacent to either side 16 of the Mississippi or Missouri river bordering the state of 17 Iowa, water supply systems, swimming pools or golf courses. 18 This chapter applies to the acquisition, construction, 19 reconstruction, ownership, operation, repair, extension, 20 or improvement of such works or facilities, by a separate 21 administrative or legal entity created pursuant to chapter 22 28E or chapter 389 . When the legal entity created under 23 this chapter is comprised solely of cities, counties, and 24 sanitary districts established under chapter 358 , or any 25 combination thereof or any combination of the foregoing with 26 other public agencies, the entity shall be both a corporation 27 and a political subdivision with the name under which it was 28 organized. The legal entity may sue and be sued, contract, 29 acquire and hold real and personal property necessary for 30 corporate purposes, adopt a corporate seal and alter the seal 31 at pleasure, and execute all the powers conferred in this 32 chapter . 33 Sec. 2. Section 28F.11, Code 2018, is amended to read as 34 follows: 35 -1- SF2311.5065 (3) 87 gh/rn 1/ 13 #1.

28F.11 Eminent domain. 1 Any public agency participating in an agreement authorizing 2 the joint exercise of governmental powers pursuant to this 3 chapter may exercise its power of eminent domain to acquire 4 interests in property, under provisions of law then in effect 5 and applicable to the public agency, for the use of the entity 6 created to carry out the agreement, provided that the power of 7 eminent domain is not used to acquire interests in property 8 which is part of a system of facilities in existence, under 9 construction, or planned, for the generation, transmission 10 or sale of electric power , or for the transmission, 11 transportation, or sale of natural gas . In the exercise 12 of the power of eminent domain, the public agency shall 13 proceed in the manner provided by chapter 6B . Any interests 14 in property acquired are acquired for a public purpose, as 15 defined in chapter 6A , of the condemning public agency, and the 16 payment of the costs of the acquisition may be made pursuant 17 to the agreement or to any separate agreement between the 18 public agency and the entity or the other public agencies 19 participating in the entity or any of them. Upon payment of 20 costs, any property acquired is the property of the entity. 21 Sec. 3. Section 476.1, subsection 7, Code 2018, is amended 22 to read as follows: 23 7. The jurisdiction of the board under this chapter 24 shall include efforts designed to promote the use of energy 25 efficiency strategies by rate or service-regulated gas and 26 electric utilities required to be rate-regulated . 27 Sec. 4. Section 476.1A, subsections 1, 2, and 4, Code 2018, 28 are amended to read as follows: 29 1. Electric public utilities having fewer than ten 30 thousand customers and electric cooperative corporations 31 and associations are not subject to the rate regulation 32 authority of the board . Such utilities are subject to all 33 other regulation and enforcement activities of the board, 34 including , except for regulatory action pertaining to all of 35 -2- SF2311.5065 (3) 87 gh/rn 2/ 13

the following : 1 a. Assessment of fees for the support of the division and 2 the office of consumer advocate, pursuant to section 476.10 . 3 b. Safety and engineering standards for equipment, 4 operations, and procedures. 5 c. Assigned area of service. 6 d. Pilot projects of the board. 7 e. Assessment of fees for the support of the Iowa energy 8 center created in section 15.120 and the center for global and 9 regional environmental research established by the state board 10 of regents. This paragraph “e” is repealed July 1, 2022. 11 f. Filing alternate energy purchase program plans with the 12 board, and offering such programs to customers, pursuant to 13 section 476.47 . 14 g. Filing energy efficiency plans and energy efficiency 15 results with the board. The energy efficiency plans as a 16 whole shall be cost-effective. The board may permit these 17 utilities to file joint plans. The board shall periodically 18 report the energy efficiency results including energy savings 19 of each of these utilities to the general assembly. The board 20 may waive all or part of the energy efficiency filing and 21 review requirements for electric cooperative corporations and 22 associations and electric public utilities which demonstrate 23 superior results with existing energy efficiency efforts. 24 2. However, sections 476.20 , subsections 1 through 4, 25 476.21 , 476.41 through 476.44 , 476.51 , 476.56 , 476.62 , and 26 476.66 and chapters 476A and 478 , to the extent applicable, 27 apply to such electric utilities. 28 4. The board of directors or the membership of an electric 29 cooperative corporation or association otherwise exempt 30 from rate regulation may elect to have the cooperative’s 31 rates regulated by the board. The board shall adopt rules 32 prescribing the manner in which the board of directors or the 33 membership of an electric cooperative may so elect. If the 34 board of directors or the membership of an electric cooperative 35 -3- SF2311.5065 (3) 87 gh/rn 3/ 13

has elected to have the cooperative’s rates regulated by the 1 board, after two years have elapsed from the effective date of 2 such election the board of directors or the membership of the 3 electric cooperative may elect to exempt the cooperative from 4 the rate regulation authority of the board , provided, however, 5 that if the membership elected to have the cooperative’s rates 6 regulated by the board, only the membership may elect to exempt 7 the cooperative from the rate regulation authority of the 8 board . 9 Sec. 5. Section 476.1B, subsection 1, paragraph f, Code 10 2018, is amended by striking the paragraph. 11 Sec. 6. Section 476.2, subsection 6, Code 2018, is amended 12 by striking the subsection. 13 Sec. 7. Section 476.4, subsection 1, Code 2018, is amended 14 to read as follows: 15 1. Every public utility shall file with the board tariffs 16 showing the rates and charges for its public utility services 17 and the rules and regulations under which such services were 18 furnished, on April 1, 1963, which rates and charges shall be 19 subject to investigation by the board as provided in section 20 476.3 , and upon such investigation the burden of establishing 21 the reasonableness of such rates and charges shall be upon the 22 public utility filing the same. These filings shall be made 23 under such rules as the board may prescribe within such time 24 and in such form as the board may designate. In prescribing 25 rules and regulations with respect to the form of tariffs 26 and any other regulations , the board shall, in the case of 27 public utilities subject to regulation by any federal agency, 28 give due regard to any corresponding rules and regulations of 29 such federal agency, to the end that unnecessary duplication 30 of effort and expense may be avoided so far as reasonably 31 possible. Each public utility shall keep copies of its tariffs 32 open to public inspection under such rules as the board may 33 prescribe. 34 Sec. 8. Section 476.6, subsections 8 and 13, Code 2018, are 35 -4- SF2311.5065 (3) 87 gh/rn 4/ 13

amended to read as follows: 1 8. Automatic adjustments permitted . 2 a. This chapter does not prohibit a public utility from 3 making provision for the automatic adjustment of rates and 4 charges for public utility service provided that a schedule 5 showing the automatic adjustment of rates and charges is first 6 filed with the board. 7 b. A public utility may automatically adjust rates and 8 charges to recover costs related to transmission incurred by 9 or charged to the public utility consistent with a tariff or 10 agreement that is subject to the jurisdiction of the federal 11 energy regulatory commission, provided that a schedule showing 12 the automatic adjustment of rates and charges is first filed 13 with the board. The board shall adopt rules regarding the 14 reporting of transmission expenses and transmission-related 15 activity pursuant to this paragraph. 16 13. Energy efficiency plans. Electric and gas public 17 utilities shall offer energy efficiency programs to their 18 customers through energy efficiency plans. An energy 19 efficiency plan as a whole shall be cost-effective. In 20 determining the cost-effectiveness of an energy efficiency 21 plan, the board shall apply the societal test, total resource 22 cost test, utility cost test, rate-payer impact test, and 23 participant test. Energy efficiency programs for qualified 24 low-income persons and for tree planting programs, educational 25 programs, and assessments of consumers’ needs for information 26 to make effective choices regarding energy use and energy 27 efficiency need not be cost-effective and shall not be 28 considered in determining cost-effectiveness of plans as a 29 whole. The energy efficiency programs in the plans may be 30 provided by the utility or by a contractor or agent of the 31 utility. Programs offered pursuant to this subsection by gas 32 and electric utilities that are required to be rate-regulated 33 shall require board approval. 34 Sec. 9. Section 476.6, subsection 15, paragraphs a and b, 35 -5- SF2311.5065 (3) 87 gh/rn 5/ 13

Code 2018, are amended to read as follows: 1 a. Gas and electric utilities required to be rate-regulated 2 under this chapter shall file energy efficiency plans and 3 demand response plans with the board as provided in paragraph 4 “e” . An energy efficiency plan and budget or a demand response 5 plan and budget shall include a range of energy efficiency 6 or demand response programs, tailored to the needs of all 7 customer classes, including residential, commercial, and 8 industrial customers, for energy efficiency or demand response 9 opportunities. The plans shall include programs for qualified 10 low-income persons including a cooperative program with any 11 community action agency within the utility’s service area to 12 implement countywide or communitywide energy efficiency or 13 demand response programs for qualified low-income persons. 14 Rate-regulated gas and electric utilities shall utilize 15 Iowa agencies and Iowa contractors to the maximum extent 16 cost-effective in their energy efficiency plans and demand 17 response plans filed with the board. A gas or electric utility 18 shall limit any administrative costs associated with the 19 adoption of an energy efficiency plan or demand response plan 20 pursuant to this subsection to ten percent or less of the total 21 costs associated with such plan. 22 b. (1) A gas and electric utility required to be 23 rate-regulated under this chapter shall assess potential energy 24 and capacity savings available from actual and projected 25 customer usage by applying commercially available technology 26 and improved operating practices to energy-using equipment 27 and buildings. The utility shall submit the assessment to 28 the board. Upon receipt of the assessment, the board shall 29 consult with the economic development authority to develop 30 specific capacity and energy savings performance standards 31 goals for each utility. Such goals, except as provided for in 32 subsection 13, shall only include cost-effective plans. The 33 utility shall submit an energy efficiency plan which shall 34 include economically achievable programs designed to attain 35 -6- SF2311.5065 (3) 87 gh/rn 6/ 13

these energy and capacity performance standards goals . The 1 board shall periodically report the energy efficiency results 2 including energy savings of each utility to the general 3 assembly. 4 (2) For purposes of this paragraph, “cost-effective” means 5 the total resource cost test result for a plan is greater 6 than one. In applying the total resource cost test, benefits 7 to be considered include avoided capacity and energy costs 8 and federal tax credits, and costs to be considered include 9 incremental costs of equipment, operation, and maintenance, 10 utility costs, and administration costs. 11 Sec. 10. Section 476.6, subsection 15, paragraphs c and d, 12 Code 2018, are amended by striking the paragraphs. 13 Sec. 11. Section 476.6, subsection 15, paragraphs e, f, and 14 g, Code 2018, are amended to read as follows: 15 e. (1) The board shall conduct contested case proceedings 16 for review of energy efficiency plans , demand response plans, 17 and budgets filed by gas and electric utilities required to be 18 rate-regulated under this chapter . 19 (2) (a) Notwithstanding the goals developed pursuant 20 to paragraph “b” , the board shall not require a gas utility 21 to adopt an energy efficiency plan that results in projected 22 cumulative average annual costs that exceed one and one-half 23 percent of the gas utility’s expected annual rate revenue from 24 retail customers in the state. 25 (b) Notwithstanding the goals developed pursuant to 26 paragraph “b” , the board shall not require an electric utility 27 to adopt an energy efficiency plan that results in projected 28 cumulative average annual costs that exceed two percent of the 29 electric utility’s expected annual rate revenue from retail 30 customers in the state. 31 (c) Notwithstanding the goals developed pursuant to 32 paragraph “b” , the board shall not require an electric utility 33 to adopt a demand response plan that results in projected 34 cumulative average annual costs that exceed two percent of the 35 -7- SF2311.5065 (3) 87 gh/rn 7/ 13

electric utility’s expected annual rate revenue from retail 1 customers in the state. 2 (3) (a) Each gas or electric utility required to be 3 rate-regulated under this chapter shall file an energy 4 efficiency plan or a demand response plan, or both, with the 5 board no later than October 31, 2018, which plan shall meet 6 the requirements of this subsection. Prior to the approval of 7 any plan filed pursuant to this subsection, a gas or electric 8 utility required to be rate-regulated shall continue to follow 9 the requirements of any plan approved by the board prior to the 10 effective date of this Act. 11 (b) The board may approve, reject, or modify the plans and 12 budgets submitted pursuant to this subsection . Notwithstanding 13 the provisions of section 17A.19, subsection 5 , in an 14 application for judicial review of the board’s decision 15 concerning a utility’s energy efficiency plan or budget, the 16 reviewing court shall not order a stay. 17 (c) The board shall approve, reject, or modify a plan filed 18 pursuant to this subsection no later than March 31, 2019. If 19 the board fails to approve, reject, or modify a plan filed by a 20 gas or electric utility on or before such date, any plan filed 21 by the gas or electric utility that was approved by the board 22 prior to the effective date of this Act shall be terminated. 23 The board shall not require a gas or electric utility to 24 implement an energy efficiency plan or demand response plan 25 that does not meet the requirements of this subsection. 26 (4) Whenever a request to modify an approved plan or budget 27 is filed subsequently by the office of consumer advocate or a 28 gas or electric utility required to be rate-regulated under 29 this chapter , the board shall promptly initiate a formal 30 proceeding if the board determines that any reasonable ground 31 exists for investigating the request. The formal proceeding 32 may be initiated at any time by the board on its own motion. 33 Implementation of board-approved plans or budgets shall 34 be considered continuous in nature and shall be subject to 35 -8- SF2311.5065 (3) 87 gh/rn 8/ 13

investigation at any time by the board or the office of the 1 consumer advocate. 2 f. Notice to customers of a contested case proceeding for 3 review of energy efficiency plans , demand response plans, and 4 budgets shall be in a manner prescribed by the board. 5 g. (1) A gas or electric utility required to be 6 rate-regulated under this chapter may recover, through an 7 automatic adjustment mechanism filed pursuant to subsection 8 , 8 over a period not to exceed the term of the plan, the costs of 9 an energy efficiency plan or demand response plan approved by 10 the board , including amounts for a plan approved prior to July 11 1, 1996, in a contested case proceeding conducted pursuant to 12 paragraph “e” . The board shall ensure that costs are recovered 13 from all customers on a reasonably comparable basis, including 14 customers who utilize alternate energy production facilities 15 as defined in section 476.42. 16 (2) The board shall periodically conduct a contested case 17 proceeding to evaluate the reasonableness and prudence of the 18 utility’s implementation of an approved energy efficiency 19 or demand response plan and budget. If a utility is not 20 taking all reasonable actions to cost-effectively implement 21 an approved energy efficiency plan, the board shall not allow 22 the utility to recover from customers costs in excess of those 23 costs that would be incurred under reasonable and prudent 24 implementation and shall not allow the utility to recover 25 future costs at a level other than what the board determines 26 to be reasonable and prudent. If the result of a contested 27 case proceeding is a judgment against a utility, that utility’s 28 future level of cost recovery shall be reduced by the amount by 29 which the programs were found to be imprudently conducted. 30 (3) The Beginning January 1, 2019, a gas or electric utility 31 shall not represent energy efficiency or demand response in 32 customer billings as a separate cost or expense unless the 33 board otherwise approves . 34 Sec. 12. Section 476.6, subsection 17, Code 2018, is amended 35 -9- SF2311.5065 (3) 87 gh/rn 9/ 13

by striking the subsection. 1 Sec. 13. Section 476.6, Code 2018, is amended by adding the 2 following new subsection: 3 NEW SUBSECTION . 22. Preapproval of cost recovery for natural 4 gas extensions —— rules. The board may adopt rules which 5 provide for a preapproval process for cost recovery for natural 6 gas extensions. 7 Sec. 14. Section 476.20, subsection 5, paragraph a, 8 unnumbered paragraph 1, Code 2018, is amended to read as 9 follows: 10 The board shall establish rules which shall be uniform with 11 respect to all public utilities furnishing gas or electricity 12 relating to deposits which may be required by the public 13 utility for the initiation or reinstatement of service. This 14 subsection shall not apply to municipally owned utilities, 15 which shall be governed by the provisions of section 384.84 16 with respect to deposits and payment plans for delinquent 17 amounts owed. Municipally owned utilities and electric 18 utilities that are not required to be rate-regulated shall not 19 be subject to the board’s rules in regards to deposits and 20 payment plans for delinquent amounts owed and repayment of past 21 due debt. Municipally owned utilities and electric utilities 22 that are not required to be rate-regulated shall be subject to 23 the board’s rules in regards to payment plans made prior to the 24 disconnection of services. 25 Sec. 15. Section 476.21, Code 2018, is amended to read as 26 follows: 27 476.21 Discrimination prohibited. 28 A municipality, corporation or cooperative association 29 providing electrical or gas service shall not consider the 30 use of renewable energy sources by a customer as a basis for 31 establishing discriminatory rates or charges for any service 32 or commodity sold to the customer or discontinue services or 33 subject the customer to any other prejudice or disadvantage 34 based on the customer’s use or intended use of renewable energy 35 -10- SF2311.5065 (3) 87 gh/rn 10/ 13

sources. As used in this section , “renewable energy sources” 1 includes but is not limited to solar heating, wind power and 2 the conversion of urban and agricultural organic wastes into 3 methane gas and liquid fuels. 4 Sec. 16. Section 476.33, subsection 4, Code 2018, is amended 5 to read as follows: 6 4. The board shall adopt rules that require the board, in 7 rate regulatory proceedings under sections 476.3 and 476.6 , to 8 utilize either a historic test year or a future test year at 9 the rate-regulated public utility’s discretion. 10 a. For a rate regulatory proceeding utilizing a historic 11 test year, the rules shall require the board to consider the 12 use of the most current test period possible in determining 13 reasonable and just rates, subject only to the availability of 14 existing and verifiable data respecting costs and revenues, and 15 in addition, to consider verifiable data that exists within 16 nine months after the conclusion of the test year, respecting 17 known and measurable changes in costs not associated with a 18 different level of revenue, and known and measurable revenues 19 not associated with a different level of costs, that are to 20 occur at any time within twelve months after the date of 21 commencement of the proceedings. Parties proposing adjustments 22 that are not verifiable at the commencement of the proceedings 23 shall include projected data related to the adjustments in 24 their initial substantive filing with the board. For purposes 25 of this subsection paragraph , a proceeding commences under 26 section 476.6 upon the filing date of new or changed rates, 27 charges, schedules, or regulations. This subsection does not 28 limit the authority of the board to consider other evidence in 29 proceedings under sections 476.3 and 476.6 . 30 b. For a rate regulatory proceeding utilizing a future test 31 year, the rules shall require the board to consider the use 32 of any twelve-month period beginning no later than the date 33 on which a proposed rate change is expected to take effect 34 in determining just and reasonable rates. The rules shall 35 -11- SF2311.5065 (3) 87 gh/rn 11/ 13

also require the board to conduct a proceeding subsequent to 1 the effective date of a rate resulting from a rate regulatory 2 proceeding utilizing a future test year to determine whether 3 the actual costs are reasonably consistent with those predicted 4 by the utility. If the actual costs are not reasonably 5 consistent with those predicted by the utility, the board shall 6 adjust the rates accordingly. For a rate regulatory proceeding 7 utilizing a future test year, the board may adopt rules 8 regarding evidence required, information to support forecasts, 9 and any reporting obligations. The board may also adopt rules 10 regarding the conditions under which a public utility that 11 utilizes a future test year may subsequently utilize a historic 12 test year. A public utility shall not be precluded from filing 13 a rate regulatory proceeding utilizing a future test year prior 14 to the adoption of any rules pursuant to this paragraph. 15 c. This subsection does not limit the authority of the board 16 to consider other evidence in proceedings under sections 476.3 17 and 476.6. 18 Sec. 17. Section 476.53, subsection 3, paragraph a, 19 subparagraph (1), subparagraph division (a), Code 2018, is 20 amended by adding the following new subparagraph subdivision: 21 NEW SUBPARAGRAPH SUBDIVISION . (v) Repowering of an 22 alternate energy production facility. For purposes of this 23 subparagraph subdivision, “repowering” shall mean either the 24 complete dismantling and replacement of generation equipment at 25 an existing project site, or the installation of new parts and 26 equipment to an existing alternate energy production facility 27 in order to increase energy production, reduce load, increase 28 service capacity, improve project reliability, or extend the 29 useful life of the facility. 30 Sec. 18. STUDY OF ELECTRIC VEHICLE INFRASTRUCTURE 31 SUPPORT. The economic development authority, in collaboration 32 with the department of transportation and the Iowa utility 33 industry, shall conduct a study of electric vehicle 34 infrastructure support for both commercial and noncommercial 35 -12- SF2311.5065 (3) 87 gh/rn 12/ 13

vehicles and make recommendations to the general assembly 1 regarding electric vehicle charging infrastructure. The study 2 shall evaluate the relative costs and benefits associated with 3 various options for electric vehicle infrastructure support. 4 The economic development authority shall submit a report to the 5 general assembly containing the results of the study no later 6 than June 30, 2019. 7 Sec. 19. EFFECTIVE DATE. The following, being deemed of 8 immediate importance, takes effect upon enactment: 9 The section of this Act amending section 476.6, subsection 10 15, paragraphs “e”, “f”, and “g”. > 11 2. Title page, line 2, by striking < utilities > and 12 inserting < utilities, providing for a study of electric 13 vehicle infrastructure support, and including effective date 14 provisions > 15 ______________________________ CARLSON of Muscatine -13- SF2311.5065 (3) 87 gh/rn 13/ 13 #2.