House File 349 - Introduced
HOUSE FILE
BY REICHERT
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act authorizing the establishment of an energy efficiency and
2 alternate energy production rate=decoupling pilot program for
3 gas and electric public utilities.
4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
5 TLSB 2165YH 83
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PAG LIN
1 1 Section 1. NEW SECTION. 476.48 DECOUPLING OF ENERGY SALES
1 2 FROM REVENUES == PILOT PROGRAM.
1 3 1. As used in this section, unless the context otherwise
1 4 requires:
1 5 a. "Decoupling" means a regulatory tool designed to
1 6 separate a utility's revenue from changes in energy sales,
1 7 with the objective of reducing a utility's disincentive to
1 8 promote energy efficiency.
1 9 b. "Operational cost savings" means the reduction in
1 10 financial risk incurred by a utility and corresponding
1 11 decreased cost of capital resulting from a reduced exposure to
1 12 earnings volatility when decoupling is utilized.
1 13 2. The board shall establish a pilot program relating to
1 14 the decoupling of energy sales from revenues. The program
1 15 shall involve the participation of one or more gas or electric
1 16 public utilities required to be rate=regulated under this
1 17 chapter. The board shall develop application forms for
1 18 program participation and selection criteria by rule, which
1 19 shall include requiring the development and submission by an
1 20 applicant of a decoupling pilot plan utilizing the criteria
1 21 and standards established in subsection 3 and designed to
1 22 determine whether a rate=decoupling strategy achieves energy
1 23 savings.
1 24 3. The board shall establish decoupling standards and
1 25 criteria by rule to mitigate the impact on public utilities of
1 26 the energy=savings and capacity performance standard
1 27 requirements required to be met pursuant to the utility's
1 28 energy efficiency plan filed with the board under section
1 29 476.6, subsection 16, paragraphs "a" and "b", without
1 30 adversely affecting utility customers. The standards shall
1 31 allow a participating utility timely recovery of the utility's
1 32 fixed costs independent of retail power sales, and shall
1 33 incorporate a rate of return accruing to the utility based
1 34 upon an increased investment in energy efficiency programs.
1 35 The amount of the increase in energy efficiency program
2 1 investment shall be determined by the board by rule.
2 2 4. To realize the rate of return authorized pursuant to
2 3 subsection 3, a participating utility shall document that the
2 4 required increase in energy efficiency program investment
2 5 specified in subsection 3 has been met, and that the
2 6 operational cost savings realized by the utility has been
2 7 allocated as required pursuant to subsection 5.
2 8 5. a. Fifty percent of the operational cost savings
2 9 realized by a utility through participation in the program
2 10 shall be allocated to assist the utility in meeting the
2 11 increased energy efficiency program investment requirement
2 12 pursuant to subsection 3.
2 13 b. The remaining fifty percent of the operational cost
2 14 savings shall be allocated by a utility to the tariff rate
2 15 established by the board pursuant to subsection 6.
2 16 6. The board shall establish a tariff rate applicable to
2 17 interconnection agreements between a participating utility and
2 18 an alternate energy production facility seeking to
2 19 interconnect with the utility. The rate shall be established
2 20 at a sufficient level to provide an incentive for the
2 21 development of alternate energy production within a designated
2 22 area or zone, to be identified by the board, within a
2 23 participating utility's service area. The board shall develop
2 24 additional criteria relating to the operation of this
2 25 subsection by rule, including but not limited to the
2 26 development of standardized agreements applicable to
2 27 interconnection pursuant to this subsection.
2 28 7. A pilot program shall be implemented pursuant to this
2 29 section for no longer than a three=year period, after which
2 30 the board shall submit a report to the members of the general
2 31 assembly regarding program results and conclusions which can
2 32 be drawn based upon an analysis of the results.
2 33 EXPLANATION
2 34 This bill establishes a rate=decoupling pilot program, to
2 35 be administered by the utilities board of the utilities
3 1 division of the department of commerce.
3 2 The bill defines "decoupling" as a regulatory tool designed
3 3 to separate a utility's revenue from changes in energy sales,
3 4 with the objective of reducing a utility's disincentive to
3 5 promote energy efficiency. The program would involve the
3 6 participation of one or more gas or electric public utilities
3 7 required to be rate=regulated under Code chapter 476. The
3 8 bill states that a utility applying for the program must
3 9 submit a decoupling pilot plan for board approval
3 10 incorporating decoupling criteria and standards established by
3 11 the board and designed to determine whether a rate=decoupling
3 12 strategy achieves energy savings.
3 13 The bill provides that the decoupling standards and
3 14 criteria shall be established to mitigate the impact on
3 15 utilities of implementing current energy=savings and capacity
3 16 performance standard requirements, without adversely affecting
3 17 utility customers. The standards shall allow a participating
3 18 utility timely recovery of the utility's fixed costs
3 19 independent of retail power sales, and provide the utility a
3 20 rate of return conditioned upon documentation that the utility
3 21 has made an increased investment in energy efficiency
3 22 programs, and complied with requirements regarding allocation
3 23 of operational cost savings. The bill defines "operational
3 24 cost savings" to mean the reduction in financial risk incurred
3 25 by a utility and corresponding decreased cost of capital
3 26 resulting from a reduced exposure to earnings volatility when
3 27 decoupling is utilized.
3 28 The bill specifies that 50 percent of the operational cost
3 29 savings realized by a utility through participation in the
3 30 program shall be allocated to assist the utility in meeting
3 31 the increased energy efficiency program investment
3 32 requirements imposed by the board upon program participants,
3 33 and the remaining 50 percent shall be allocated to a tariff
3 34 rate established by the board and applicable to
3 35 interconnection agreements between a participating utility and
4 1 an alternate energy production facility seeking to
4 2 interconnect with the utility. The bill requires the rate to
4 3 be established at a sufficient level to provide an incentive
4 4 for the development of alternate energy production within a
4 5 designated area or zone, to be identified by the board, within
4 6 a participating utility's service area.
4 7 The bill states that the pilot program shall be implemented
4 8 for no longer than a three=year period, after which the board
4 9 shall submit a report to the members of the general assembly
4 10 regarding program results and conclusions which can be drawn
4 11 based upon an analysis of those results.
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