H.F. 386 Section 1. Section 306.46, subsection 3, Code 2011, is 1 amended to read as follows: 2 3. This section shall not impair or interfere with a city’s 3 authority to grant, amend, extend, terminate, or renew a 4 franchise as provided in section 364.2 , and shall not impair 5 or interfere with a city’s existing general police powers to 6 control the use of its right-of-way. 7 Sec. 2. Section 364.2, subsection 4, Code 2011, is amended 8 by adding the following new paragraph: 9 NEW PARAGRAPH . h. A city may terminate a franchise granted 10 to a rate-regulated electric utility that has increased rates 11 for electric service by fifteen percent or more than the 12 average rate increase implemented by all other rate-regulated 13 electric utilities providing service in this state. To 14 terminate a franchise pursuant to this paragraph, the city 15 shall provide written notice to the rate-regulated electric 16 utility of the city’s intent to terminate the franchise 17 at least one year prior to the date of termination of the 18 franchise. 19 Sec. 3. Section 474.2, Code 2011, is amended to read as 20 follows: 21 474.2 Certain persons barred from office. 22 No person in the employ of any common carrier or other public 23 utility within two years prior to appointment , or owning any 24 bonds, stock , or property in any railroad company or other 25 public utility shall be eligible to the office of utilities 26 board member or secretary of the utilities board; and the 27 entering into the employ of any common carrier or other public 28 utility or the acquiring of any stock or other interest in 29 any common carrier or other public utility by such member or 30 secretary after appointment shall disqualify the member or 31 secretary to hold the office or perform the duties thereof. 32 Sec. 4. Section 476.3, Code 2011, is amended by adding the 33 following new subsection: 34 NEW SUBSECTION . 4. This section shall not prohibit the 35 -1- LSB 1591YH (3) 84 rn/sc 1/ 4

H.F. 386 board from authorizing rates which vary according to geographic 1 area based on an area’s rate history, per capita income, or 2 need for economic development. 3 Sec. 5. Section 476.7, Code 2011, is amended to read as 4 follows: 5 476.7 Application by utility for review. 6 1. If there shall be filed with the board by any public 7 utility an application requesting the board to determine the 8 reasonableness of the utility’s rates, charges, schedules, 9 service , or regulations, the board shall promptly initiate a 10 formal proceeding. Such a formal proceeding may be initiated 11 at any time by the board on its own motion. Whenever such 12 a proceeding has been initiated upon application or motion, 13 the board shall set the case for hearing and give such notice 14 thereof as it deems appropriate. Whenever the board, after 15 a hearing held after reasonable notice, finds any public 16 utility’s rates, charges, schedules, service , or regulations 17 are unjust, unreasonable, insufficient, discriminatory , or 18 otherwise in violation of any provision of law, the board shall 19 determine just, reasonable, sufficient , and nondiscriminatory 20 rates, charges, schedules, service , or regulations to be 21 thereafter observed and enforced. 22 2. This section shall not prohibit the board from 23 authorizing rates which vary according to geographic area based 24 on an area’s rate history, per capita income, or need for 25 economic development. 26 Sec. 6. Section 480A.6, Code 2011, is amended to read as 27 follows: 28 480A.6 Franchise ordinance not superseded. 29 This chapter does not modify or supersede the rights and 30 obligations of a local government and the public utility 31 established by the terms of any existing or future franchise 32 granted, approved, and accepted , or terminated pursuant to 33 section 364.2, subsection 4 . A city which that collects a 34 city franchise fee from an entity pursuant to section 364.2, 35 -2- LSB 1591YH (3) 84 rn/sc 2/ 4

H.F. 386 subsection 4 , under an existing or future franchise, shall not 1 also collect a fee from that entity under section 480A.3 . 2 Sec. 7. MUNICIPAL UTILITY FORMATION STUDY. The utilities 3 board of the utilities division of the department of 4 commerce shall conduct a study to evaluate the process for 5 establishing a municipal utility. The study shall include 6 identifying existing legal and financial impediments faced by 7 a municipality interested in forming a municipal utility, how 8 the board might facilitate an easier and more cost-effective 9 process, and how the board could provide technical assistance 10 to a community interested in establishing a municipal utility. 11 The board shall submit a report containing recommendations to 12 the general assembly by January 1, 2012. 13 EXPLANATION 14 This bill relates to and modifies provisions applicable to 15 public utility operation and regulation. 16 The bill authorizes a city having granted a franchise to 17 a rate-regulated electric utility to terminate the franchise 18 if the utility has increased rates for electric service by 15 19 percent or more than the average rate increase implemented by 20 all other rate-regulated electric utilities providing service 21 in this state. Prior to termination, the bill requires a 22 city to provide written notice to the utility of its intent 23 to terminate the franchise at least one year prior to the 24 termination date. The bill makes conforming changes consistent 25 with other Code provisions. 26 The bill modifies a current requirement prohibiting 27 eligibility for holding the office of utilities board member 28 or secretary of the utilities board if an individual is in 29 the employ of any common carrier or other public utility to 30 apply this prohibition to the two-year interval preceding the 31 individual’s appointment. Given that Code section 475A.1, 32 dealing with qualification for appointment to the office 33 of consumer advocate, references the eligibility criteria 34 applicable to holding the office of utilities board member, 35 -3- LSB 1591YH (3) 84 rn/sc 3/ 4

H.F. 386 this modification would also be applicable to the office of 1 consumer advocate. 2 The bill permits the board to authorize utility rates which 3 vary according to geographic area based on an area’s rate 4 history, per capita income, or need for economic development. 5 The bill directs the board to conduct a study evaluating 6 the process for establishing a municipal utility. The bill 7 specifies that the study shall include identifying existing 8 legal and financial impediments faced by a municipality 9 interested in forming a municipal utility, how the board might 10 facilitate an easier and more cost-effective process, and 11 how the board could provide technical assistance. The board 12 is required to submit a report containing recommendations 13 resulting from the study to the general assembly by January 1, 14 2012. 15 -4- LSB 1591YH (3) 84 rn/sc 4/ 4