House File 199
HOUSE FILE
BY WISE and JENKINS
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act establishing a pilot program for the development of
2 cogeneration facilities, providing for the development of
3 ratemaking principles and rates for pilot program facilities,
4 and providing for a future repeal.
5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
6 TLSB 1619YH 80
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PAG LIN
1 1 Section 1. NEW SECTION. 15.269 COGENERATION PILOT
1 2 PROGRAM.
1 3 1. DEFINITIONS. For purposes of this section, unless the
1 4 context otherwise requires:
1 5 a. "Cogeneration pilot project facility" means either a
1 6 utility=owned cogeneration pilot project facility or a
1 7 qualified cogeneration pilot project facility approved by the
1 8 department of economic development for participation in the
1 9 cogeneration pilot program established pursuant to subsection
1 10 2.
1 11 b. "Energy sales agreement" means a negotiated agreement
1 12 for the sale of the electric output from the cogeneration
1 13 pilot project, between either of the following:
1 14 (1) A qualified cogeneration pilot project facility and an
1 15 electric utility.
1 16 (2) A utility=owned cogeneration pilot project facility
1 17 and a commercial or industrial facility.
1 18 c. "Qualified cogeneration pilot project facility" means a
1 19 qualifying facility as defined in the federal Public Utility
1 20 Regulation Policies Act of 1978, 16 U.S.C. } 2601 et seq., and
1 21 related federal regulations.
1 22 d. "Utility=owned cogeneration pilot project facility"
1 23 means a cogeneration facility owned, in whole or in part, by a
1 24 rate=regulated electric utility that produces electric energy
1 25 and thermal energy for commercial purposes and is not a
1 26 qualifying facility as defined in the federal Public Utility
1 27 Regulatory Policies Act of 1978, 16 U.S.C. } 2601 et seq., and
1 28 related federal regulations.
1 29 2. PILOT PROGRAM ESTABLISHED.
1 30 a. It is the policy of this state to foster both the
1 31 development of cogeneration in Iowa and related economic
1 32 development associated with cogeneration projects.
1 33 It is the policy of this state that cogeneration projects
1 34 operate to the mutual benefit of businesses, industry, and
1 35 electric utilities in Iowa, financially and otherwise.
2 1 b. A cogeneration pilot program is established within the
2 2 department of economic development to obtain reliable energy
2 3 and economic benefits associated with successful development
2 4 of new, Iowa=based, electric power cogeneration strategies.
2 5 The department shall develop and administer the cogeneration
2 6 pilot program, according to the following:
2 7 (1) The department may choose up to three projects for
2 8 participation in the cogeneration pilot program:
2 9 (a) The projects shall be geographically diverse, and
2 10 represent different areas of Iowa, in order to test the
2 11 potential for cogeneration in different regions of the state.
2 12 (b) Each cogeneration pilot project facility must involve
2 13 two hundred megawatts or less of electricity, in combination
2 14 with one or more other cogeneration pilot project facilities.
2 15 (c) Each cogeneration pilot project facility must be
2 16 constructed in Iowa.
2 17 (d) Each project chosen for participation in the
2 18 cogeneration pilot program must also have the approval and
2 19 support of the department for economic development purposes.
2 20 (2) The department may adopt specific application
2 21 guidelines and deadlines by rule pursuant to chapter 17A, or
2 22 follow established departmental procedures and guidelines, if
2 23 applicable.
2 24 (3) The department shall assist in the implementation of
2 25 the cogeneration pilot program, and monitor the progress of
2 26 the participants. The department shall file its initial
2 27 report assessing the results of the pilot program with the
2 28 general assembly by December 1, 2004, and shall also file
2 29 yearly pilot program progress updates with the general
2 30 assembly through December 1, 2008.
2 31 3. FUTURE REPEAL. This section is repealed July 1, 2008.
2 32 However, any utilities board proceeding that involves a
2 33 qualified cogeneration pilot project facility or utility=owned
2 34 cogeneration pilot project facility that is pending on July 1,
2 35 2008, and that is being conducted pursuant to section 476.53
3 1 shall be completed notwithstanding the repeal of this section.
3 2 Sec. 2. Section 476.53, Code 2003, is amended by adding
3 3 the following new subsection:
3 4 NEW SUBSECTION. 2A. For purposes of this section, unless
3 5 the context otherwise requires, the terms "cogeneration pilot
3 6 project facility", "energy sales agreement", "qualified
3 7 cogeneration pilot project facility", and "utility=owned
3 8 cogeneration pilot project facility" mean the same as defined
3 9 in section 15.269.
3 10 Sec. 3. Section 476.53, subsections 3 and 4, Code 2003,
3 11 are amended to read as follows:
3 12 3. a. If a rate=regulated public utility files The board
3 13 shall specify in advance, by order issued after a contested
3 14 case proceeding, the ratemaking principles that will apply
3 15 when the costs of the electric power generating facility or
3 16 energy sales agreement are included in regulated electric
3 17 rates whenever a rate=regulated public utility does any of the
3 18 following:
3 19 (1) Files an application pursuant to section 476A.3 to
3 20 construct in Iowa a baseload electric power generating
3 21 facility with a nameplate generating capacity equal to or
3 22 greater than three hundred megawatts or a combined=cycle
3 23 electric power generating facility, or an alternate energy
3 24 production facility as defined in section 476.42, or if a
3 25 rate=regulated public utility leases.
3 26 (2) Leases or owns in Iowa, in whole or in part, a new
3 27 baseload electric power generating facility with a nameplate
3 28 generating capacity equal to or greater than three hundred
3 29 megawatts or a combined=cycle electric power generating
3 30 facility, or a new alternate energy production facility as
3 31 defined in section 476.42, the board shall specify in advance,
3 32 by order issued after a contested case proceeding, the
3 33 ratemaking principles that will apply when the costs of the
3 34 facility are included in regulated electric rates.
3 35 (3) Enters into an agreement for the purchase of the
4 1 electric power output of a qualified cogeneration pilot
4 2 project facility or construction of a utility=owned
4 3 cogeneration pilot project facility pursuant to section
4 4 15.269.
4 5 b. In determining the applicable ratemaking principles,
4 6 the board shall not be limited to traditional ratemaking
4 7 principles or traditional cost recovery mechanisms.
4 8 c. In determining the applicable ratemaking principles,
4 9 the board shall make the following findings:
4 10 (1) The rate=regulated public utility has in effect a
4 11 board=approved energy efficiency plan as required under
4 12 section 476.6, subsection 19.
4 13 (2) The rate=regulated public utility has demonstrated to
4 14 the board that the public utility has considered other sources
4 15 for long=term electric supply and that the facility, or lease,
4 16 or cogeneration pilot project facility is reasonable when
4 17 compared to other feasible alternative sources of supply. The
4 18 rate=regulated public utility may satisfy the requirements of
4 19 this subparagraph through a competitive bidding process, under
4 20 rules adopted by the board, that demonstrate the facility or
4 21 lease is a reasonable alternative to meet its electric supply
4 22 needs.
4 23 d. The applicable ratemaking principles shall be
4 24 determined in a contested case proceeding, which proceeding
4 25 may be combined with the proceeding for issuance of a
4 26 certificate conducted pursuant to chapter 476A.
4 27 e. The order setting forth the applicable ratemaking
4 28 principles shall be issued prior to the commencement of
4 29 construction or lease of the facility, or execution of an
4 30 energy sales agreement related to the cogeneration pilot
4 31 project facility.
4 32 f. Following issuance of the order, the rate=regulated
4 33 public utility shall have the option of proceeding with
4 34 construction or lease of the facility in Iowa, or withdrawing
4 35 its application for a certificate under chapter 476A.
5 1 g. Notwithstanding any provision of this chapter to the
5 2 contrary, the ratemaking principles established by the order
5 3 issued pursuant to paragraph "e" shall be binding with regard
5 4 to the specific electric power generating facility or
5 5 cogeneration pilot project facility in any subsequent rate
5 6 proceeding.
5 7 4. The utilities board and the consumer advocate may
5 8 employ additional temporary staff, or may contract for
5 9 professional services with persons who are not state
5 10 employees, as the board and the consumer advocate deem
5 11 necessary to perform required functions as provided in this
5 12 section, including but not limited to review of power purchase
5 13 contracts, review of emission plans and budgets, and review of
5 14 ratemaking principles proposed for construction or lease of a
5 15 new generating facility or a cogeneration pilot project
5 16 facility. Beginning July 1, 2002, there is appropriated out
5 17 of any funds in the state treasury not otherwise appropriated,
5 18 such sums as may be necessary to enable the board and the
5 19 consumer advocate to hire additional staff and contract for
5 20 services under this section. The costs of the additional
5 21 staff and services shall be assessed to the utilities pursuant
5 22 to the procedure in section 476.10 and section 475A.6.
5 23 Sec. 4. Section 476.53, Code 2003, is amended by adding
5 24 the following new subsection:
5 25 NEW SUBSECTION. 5. DETERMINATION OF AVOIDED COST FOR
5 26 COGENERATION PROJECTS.
5 27 a. A qualified cogeneration pilot project facility may
5 28 file a petition with the board for a determination of the
5 29 avoided cost of an electric utility as provided in the federal
5 30 Public Utility Regulatory Policies Act of 1978 and related
5 31 federal regulations.
5 32 b. The board shall issue its determination of the electric
5 33 utility's avoided cost within one hundred twenty days after
5 34 the petition is filed.
5 35 c. The board, for good cause shown, may extend the
6 1 deadline for issuing the decision for an additional period not
6 2 to exceed one hundred twenty days.
6 3 d. The board shall not issue a decision under this
6 4 subsection without providing notice and an opportunity for
6 5 hearing.
6 6 e. The utilities board and the consumer advocate may
6 7 employ additional temporary staff, or may contract for
6 8 professional services with persons who are not state
6 9 employees, as the board and the consumer advocate deem
6 10 necessary to perform required functions as provided in this
6 11 subsection. There is appropriated out of any funds in the
6 12 state treasury not otherwise appropriated, such sums as may be
6 13 necessary to enable the board and the consumer advocate to
6 14 hire additional staff and contract for services under this
6 15 section. The costs of the additional staff and services shall
6 16 be assessed to the electric utility pursuant to the procedure
6 17 in sections 476.10 and 475A.6.
6 18 EXPLANATION
6 19 This bill relates to energy and economic development.
6 20 The bill enacts new Code section 15.269, relating to a
6 21 pilot program for new electric power cogeneration facilities
6 22 constructed in Iowa. A pilot program for cogeneration
6 23 projects is established in the department of economic
6 24 development. The department is authorized to choose up to
6 25 three cogeneration projects in Iowa which are geographically
6 26 diverse, are 200 megawatts or less in total size, and have the
6 27 general approval of the department. The department shall
6 28 produce an initial report for the general assembly by December
6 29 1, 2004, with yearly updates until 2008 when the pilot program
6 30 is repealed. The new section is repealed effective July 1,
6 31 2008.
6 32 The bill extends to cogeneration pilot program facilities
6 33 meeting certain federal standards for energy production the
6 34 ratemaking procedure currently available in Code section
6 35 476.53 for other new electric generating and transmission
7 1 facilities: baseload electric power generating facilities,
7 2 combined=cycle electric power generating facilities, and
7 3 alternate energy production facilities. As part of the
7 4 overall policy statement, the general assembly indicates a
7 5 state policy that cogeneration projects produce mutual
7 6 financial benefits for project participants.
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