S.F. 2228 Section 1. NEW SECTION . 476.43A Alternate and renewable 1 energy incentive program. 2 The board shall establish and administer an alternate and 3 renewable energy incentive program to encourage the development 4 of alternate energy production projects across this state, as 5 follows: 6 1. An alternate energy production facility with a nameplate 7 generating capacity of less than or equal to twenty megawatts 8 which has applied for or obtained the necessary financing to 9 cover facility construction and operation costs, and which 10 seeks to enter into an interconnection agreement with an 11 electric utility, may submit an application for interconnection 12 pursuant to the program to the board. The board shall develop 13 an application form and establish approval criteria by rule. 14 2. a. Eligibility for the program shall be contingent 15 upon meeting the requirements of section 476C.1, subsection 6, 16 paragraph “b” , with regard to fifty-one percent ownership in the 17 facility being comprised of one or more of the individuals or 18 entities identified pursuant to that paragraph. 19 b. Notwithstanding the maximum ownership or purchase 20 requirements of section 476.44, an electric utility shall 21 interconnect with a facility which is approved by the board 22 for participation in the program, but shall not be required to 23 purchase an amount of energy from program participants which 24 exceeds two percent of its total demand load. 25 c. An electric public utility having fewer than ten 26 thousand customers and electric cooperative corporations 27 and associations referred to in section 476.1A shall not be 28 required to interconnect with a facility pursuant to the 29 program. 30 3. The board shall develop standardized energy independence 31 payment offers to facilitate interconnection between an 32 electric utility and a program participant incorporating 33 the applicable energy independence payments established by 34 the board pursuant to subsection 4. Standardized energy 35 -1- LSB 5888XS (3) 83 rn/nh 1/ 6

S.F. 2228 independence payment offers shall continue in effect for 1 a twenty-year period, subject to termination provisions 2 for failure to perform to be established by the board by 3 rule, and shall ensure that the energy produced can be 4 safely interconnected with the utility without causing any 5 adverse or unsafe consequences. The board shall require 6 all electric utilities to file with the board standardized 7 energy independence payment offers consistent with the offers 8 developed by the board. Electric utilities shall make these 9 offers available to any eligible program participant. 10 4. Energy independence payments applicable to the 11 program shall be established by the board sufficient to 12 guarantee repayment to a lender providing financing to a 13 program participant over a ten-year period. The energy 14 independence payments shall be calculated on a kilowatt-hour 15 basis. The energy independence payments shall be calculated 16 at a relatively higher level for projects initiated by 17 smaller-sized, community-based program participants in 18 comparison to larger-sized or commercial applicants, and at 19 the payment needed for development plus a reasonable profit. 20 Applicable energy independence payments shall vary by project 21 size and form of technology, according to the following 22 schedule: 23 a. For wind turbine facilities, separate energy independence 24 payments shall be calculated for facilities of between zero and 25 one hundred ten kilowatts, one hundred eleven and five hundred 26 kilowatts, five hundred one kilowatts and two and one-half 27 megawatts, and two and fifty-one hundredths megawatts and 28 twenty megawatts of nameplate generating capacity. For each 29 of these capacities, the board shall determine and apply three 30 differentiated wind power classes. 31 b. For waste management facilities, separate energy 32 independence payments shall be calculated for facilities of 33 between zero and ten kilowatts, and between five hundred 34 one kilowatts and twenty megawatts of nameplate generating 35 -2- LSB 5888XS (3) 83 rn/nh 2/ 6

S.F. 2228 capacity. 1 c. Solar facilities shall be differentiated into 2 single-plate photovoltaic facilities and thin film photovoltaic 3 facilities. 4 (1) For single-plate photovoltaic facilities, separate 5 energy independence payments shall be calculated for facilities 6 of between zero and ten kilowatts, eleven and five hundred 7 kilowatts, and five hundred one kilowatts and twenty megawatts 8 of nameplate generating capacity. 9 (2) For thin-film photovoltaic facilities, separate energy 10 independence payments shall be calculated for facilities 11 of between zero and ten kilowatts, eleven and five hundred 12 kilowatts, and five hundred one kilowatts and twenty megawatts 13 of nameplate generating capacity. 14 (3) For each of the capacities specified in subparagraphs 15 (1) and (2), the board shall determine and apply three 16 differentiated solar resource classes. 17 d. For agricultural crop and residue facilities, separate 18 energy independence payments shall be calculated for facilities 19 of between zero and ten kilowatts, eleven and five hundred 20 kilowatts, five hundred one kilowatts and one megawatt, and 21 one and one-tenth megawatts and twenty megawatts of nameplate 22 generating capacity. 23 e. For small hydro facilities, separate energy independence 24 payments shall be calculated for facilities of between zero and 25 fifty kilowatts, fifty-one and five hundred kilowatts, five 26 hundred one kilowatts and ten megawatts, and ten and one-tenth 27 megawatts and twenty megawatts of nameplate generating 28 capacity. 29 5. The energy independence payments established pursuant 30 to subsection 4 shall be subject to biannual review and 31 periodic adjustment by the board with respect to new program 32 participants based upon inflationary growth, technological 33 advances, and new product availability. The energy 34 independence payment shall be automatically adjusted after 35 -3- LSB 5888XS (3) 83 rn/nh 3/ 6

S.F. 2228 the ten-year repayment guarantee period has elapsed. The 1 readjusted energy independence payment shall be sufficient 2 to provide for the operation and maintenance costs of the 3 alternate energy production facility plus a reasonable profit. 4 6. In the event that state or federal tax credits or other 5 incentives are received by a program participant, the board 6 shall adjust and offset the energy independence payments 7 applicable to that participant to reflect the incentive amount. 8 7. The energy independence payments established pursuant 9 to this section shall be in lieu of rates otherwise determined 10 by the board pursuant to section 476.43. An unsuccessful 11 applicant, or an alternate energy production facility with 12 greater than twenty megawatts of nameplate generating capacity, 13 shall be governed by the rates established in section 476.43. 14 8. The board shall submit a report to the general assembly 15 by January 1 annually regarding participation levels and 16 program results. 17 EXPLANATION 18 This bill establishes an alternate and renewable energy 19 incentive program applicable to alternate energy production 20 facilities approved for participation in the program. 21 The bill provides that an electric utility, other than an 22 electric public utility having fewer than 10,000 customers and 23 electric cooperative corporations and associations referred 24 to in Code section 476.1A, shall be required to interconnect 25 with an alternate energy production facility approved for 26 participation in the program. An eligible applicant shall be a 27 facility with less than or equal to 20 megawatts of nameplate 28 generating capacity, which has obtained bank financing to 29 finance facility construction and operation costs, and which 30 meets percentage ownership requirements specified in Code 31 section 476C.1, subsection 6, paragraph “b”. Notwithstanding 32 the maximum ownership or purchase requirements of Code 33 section 476.44, an electric utility shall be required to 34 interconnect with a facility which is approved by the board 35 -4- LSB 5888XS (3) 83 rn/nh 4/ 6

S.F. 2228 for participation in the program, but shall not be required to 1 purchase an amount of energy from program participants which 2 exceeds 2 percent of its total demand load. 3 To facilitate interconnection, the bill directs the 4 board to develop standardized energy independence payment 5 offers which shall incorporate energy independence payments 6 applicable to the program. The bill provides that such 7 offers would continue in effect for 20 years, and ensure 8 safe interconnection with the utility. The bill directs the 9 board to require all electric utilities to file standardized 10 energy independence payment offers consistent with the 11 offers developed by the board, and make them available to 12 any eligible program participant. The bill provides that 13 the payments shall be sufficient to guarantee repayment to a 14 lender providing financing to a program participant over a 15 10-year period, shall be calculated on a kilowatt-hour basis 16 and at a relatively higher payment for projects initiated by 17 smaller-sized, community-based program participants, and at a 18 level providing for development plus a reasonable profit. The 19 bill specifies a schedule requiring the application of varying 20 payments depending upon the number of megawatts or kilowatts 21 of nameplate generating capacity to be produced by the program 22 participant and the type of technology employed to generate it. 23 The bill provides for biannual review of the energy 24 independence payments and periodic adjustment if determined 25 appropriate for new applicants. The payment shall be 26 automatically adjusted after the 10-year repayment guarantee 27 period has elapsed, and shall continue for an additional 28 10-year period at a payment level sufficient to provide for 29 the operation and maintenance costs of the alternate energy 30 production facility plus a reasonable profit. 31 The bill provides that the board may adjust and offset the 32 energy independence payments if state or federal tax credits 33 or other incentives are received by a program participant, and 34 clarifies that the payments applicable pursuant to the program 35 -5- LSB 5888XS (3) 83 rn/nh 5/ 6

S.F. 2228 shall be in lieu of rates otherwise determined by the board 1 pursuant to Code section 476.43. The bill also clarifies that 2 an unsuccessful applicant or an alternate energy production 3 facility with greater than 20 megawatts of nameplate generating 4 capacity shall continue to be governed by the rates established 5 in Code section 476.43. 6 The bill requires the board to submit an annual report to 7 the general assembly regarding participation levels and program 8 results. 9 -6- LSB 5888XS (3) 83 rn/nh 6/ 6