Senate File 117
SENATE FILE
BY LUNDBY
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act providing annual purchase or generation requirements for
2 certain electric utilities from alternate energy production
3 facilities, requiring establishment of a system of alternate
4 energy credit trading, making related changes, and providing
5 an effective date.
6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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PAG LIN
1 1 Section 1. Section 476.42, Code 2003, is amended by adding
1 2 the following new subsection:
1 3 NEW SUBSECTION. 3A. "Small distributed generation" means
1 4 a qualifying alternate energy production facility located at
1 5 or near the end=user site with a capacity of three megawatts
1 6 or less, connected at a voltage of less than sixty kilovolts.
1 7 To be a qualifying alternate energy production facility,
1 8 nonutility end=users of small distributed generation must
1 9 maintain majority ownership. The alternate energy production
1 10 facility may be connected in parallel operation to the
1 11 electric utility system.
1 12 Sec. 2. Section 476.44, subsection 2, Code 2003, is
1 13 amended to read as follows:
1 14 2. a. An electric utility subject to this division,
1 15 except a utility which that elects rate regulation pursuant to
1 16 section 476.1A, shall not be required to purchase, at any one
1 17 time, more than its share of one hundred five megawatts of
1 18 power or generate at least the following percentages of its
1 19 total annual Iowa retail electric sales from alternative
1 20 alternate energy production facilities or small hydro
1 21 facilities at the rates established pursuant to section
1 22 476.43:. The board shall allocate the one hundred five
1 23 megawatts based upon each utility's percentage of the total
1 24 Iowa retail peak demand, for the year beginning January 1,
1 25 1990, of all utilities subject to this section.
1 26 (1) By December 31, 2004, four percent.
1 27 (2) By December 31, 2005, five percent.
1 28 (3) By December 31, 2006, six percent.
1 29 (4) By December 31, 2007, seven percent.
1 30 (5) By December 31, 2008, eight percent.
1 31 (6) By December 31, 2009, nine percent.
1 32 (7) By December 31, 2010, and annually thereafter, at
1 33 least ten percent.
1 34 b. A maximum of two percent of each utility's total annual
1 35 retail electric sales may be derived from alternate energy
2 1 production facilities or small hydro facilities placed in
2 2 service before January 1, 2004.
2 3 c. At least twenty percent of an electric utility's yearly
2 4 percentage pursuant to the schedule in paragraph "a" shall be
2 5 derived from small distributed generation.
2 6 If a utility undergoes reorganization as defined in section
2 7 476.76, the board shall combine the allocated purchases of
2 8 power for each utility involved in the reorganization.
2 9 Notwithstanding the one hundred five megawatt maximum, the
2 10 board may increase the amount of power that a utility is
2 11 required to purchase at the rates established pursuant to
2 12 section 476.43 if the board finds that a utility, including a
2 13 reorganized utility, exceeds its 1990 Iowa retail peak demand
2 14 by twenty percent and the additional power the utility is
2 15 required to purchase will encourage the development of
2 16 alternate energy production facilities and small hydro
2 17 facilities. The increase shall not exceed the utility's
2 18 increase in peak demand multiplied by the ratio of the
2 19 utility's share of the one hundred five megawatt maximum to
2 20 its 1990 Iowa retail peak demand.
2 21 Sec. 3. Section 476.44, Code 2003, is amended by adding
2 22 the following new subsection:
2 23 NEW SUBSECTION. 3. The board shall establish and
2 24 administer a system for trading of alternate energy credits
2 25 through which a utility shall satisfy its obligation pursuant
2 26 to subsection 2.
2 27 a. Alternate energy credits shall be issued by the board
2 28 to alternate energy production facilities and small hydro
2 29 facilities, and shall represent the production of one
2 30 megawatt=hour of electrical generation by such facility.
2 31 b. Alternate energy credits may be sold or exchanged by
2 32 the facility to which the credits are issued, or by any other
2 33 person who acquires the credits.
2 34 c. The board shall adopt rules to administer and enforce
2 35 this subsection that, at a minimum, shall include the
3 1 following requirements:
3 2 (1) An alternate energy credit may be counted only once
3 3 toward compliance with subsection 2.
3 4 (2) The energy generation represented by an alternate
3 5 energy credit that is used to satisfy subsection 2 may not
3 6 additionally be used to satisfy obligations to consumers to
3 7 sell energy produced by alternate energy production
3 8 facilities.
3 9 (3) Each alternate energy credit that is not used in the
3 10 year of its creation may be banked, and remains valid for the
3 11 next two compliance years.
3 12 (4) A utility otherwise unable to satisfy its obligation
3 13 under subsection 2 shall purchase credits directly from the
3 14 board at the cost of three and one=half cents per kilowatt=
3 15 hour. The cost shall be adjusted annually for inflation,
3 16 according to application of the percentage change of the
3 17 consumer price index for all urban consumers, United States
3 18 city average, as published in the federal register by the
3 19 federal department of labor, bureau of labor statistics. The
3 20 board may by rule adopt a different adjustment for inflation
3 21 if it is found to be more appropriate for the pricing of
3 22 energy credits.
3 23 Sec. 4. EFFECTIVE DATE. This Act, being deemed of
3 24 immediate importance, takes effect upon enactment.
3 25 EXPLANATION
3 26 This bill provides for a schedule in Code chapter 476 for
3 27 purchase or generation requirements by certain electric
3 28 utilities of energy from alternate energy production
3 29 facilities, more commonly known as a renewable energy
3 30 standard, and related requirements, including a system of
3 31 energy credit trading.
3 32 The bill creates a schedule in Code section 476.44 that
3 33 increases the minimum annual percentage of renewable energy
3 34 that electric utilities, except for those utilities that have
3 35 elected rate regulation pursuant to Code section 476.1A, are
4 1 obligated to purchase from alternate energy production
4 2 facilities. As defined in Code section 476.42, an alternate
4 3 energy production facility means a facility that produces
4 4 energy from solar, wind turbine, waste management, resource
4 5 recovery, refuse=derived fuel, agricultural crops or residues,
4 6 or woodburning sources; the land, building, or improvements at
4 7 the project site; and the transmission or distribution
4 8 facilities necessary to conduct the energy produced. Current
4 9 Code language requires electric utilities to purchase 105
4 10 available megawatts, which is approximately 2 percent of Iowa
4 11 retail load. The bill would shift the requirement to 4
4 12 percent of Iowa retail sales by December 31, 2004, and then
4 13 increase that percentage annually by 1 percent per year,
4 14 culminating in a 10 percent annual purchase or generation
4 15 requirement by December 31, 2010.
4 16 The bill adds provisions to specify that only 2 percent of
4 17 each utility's total annual retail sales may be derived from
4 18 alternate energy production facilities placed into service
4 19 prior to January 1, 2004, and that at least 20 percent of a
4 20 utility's yearly purchase or generation requirement must be
4 21 derived from distributed generation sources. A new definition
4 22 is added for "small distributed generation" in Code section
4 23 476.42 that specifies size, use, and business organization
4 24 requirements.
4 25 The board is directed to establish an energy credit trading
4 26 system in conjunction with these changes. Credits are issued
4 27 to alternate energy producers for each megawatt=hour of
4 28 electricity produced. The credits may then be sold or
4 29 exchanged by those producers. Buyers may utilize the credits
4 30 to fulfill purchase or generation obligations under the new
4 31 provisions of Code section 476.44, or may sell or exchange the
4 32 credits with another buyer. An energy credit may only be
4 33 redeemed once toward fulfillment of the statutory purchase or
4 34 generation requirement, however. Energy credits may be banked
4 35 for up to two compliance years. A utility unable to satisfy
5 1 its purchase or generation requirement will be required to
5 2 purchase credits directly from the board.
5 3 The bill takes effect upon enactment.
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