S.F. 2107 Section 1. Section 476.1, Code 2014, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 5A. A community solar garden program 3 established pursuant to section 476.49 shall not be regarded as 4 a public utility for purposes of this chapter. 5 Sec. 2. Section 476.25, Code 2014, is amended by adding the 6 following new unnumbered paragraph: 7 NEW UNNUMBERED PARAGRAPH . The furnishing of electricity 8 pursuant to a community solar garden program under section 9 476.49 shall not be considered an unnecessary duplication 10 of electric utility facilities and shall not constitute a 11 violation of this section. 12 Sec. 3. Section 476.44, subsection 2, Code 2014, is amended 13 to read as follows: 14 2. a. (1) An electric utility subject to this division , 15 except a utility that elects rate regulation pursuant to 16 section 476.1A , shall not be required , by January 1, 2020, 17 to own or purchase , at any one time, more than its share of 18 one hundred five megawatts of power from alternative energy 19 production facilities or small hydro solar energy facilities 20 located in this state at the rates established pursuant to 21 section 476.43 . The board shall allocate the one hundred five 22 megawatts based upon each utility’s percentage of the total 23 Iowa retail peak demand, for the year beginning January 1, 1990 24 2014 , of all utilities subject to this section . If a utility 25 undergoes reorganization as defined in section 476.76 , the 26 board shall combine the allocated purchases of power for each 27 utility involved in the reorganization. 28 (2) In satisfying the solar energy ownership or purchase 29 requirements pursuant to subparagraph (1), a minimum of ten 30 percent of the energy produced or purchased shall be produced 31 by or purchased from solar energy facilities with a nameplate 32 generating capacity of twenty kilowatts or less. 33 b. Notwithstanding the one hundred five megawatt maximum 34 requirement , the board may increase the amount of power solar 35 -1- LSB 5597XS (9) 85 rn/nh 1/ 10

S.F. 2107 energy that a utility is required to own or purchase at the 1 rates established pursuant to section 476.43 if the board 2 finds that a utility, including a reorganized utility, exceeds 3 its 1990 2014 Iowa retail peak demand by twenty percent and 4 the additional power solar energy the utility is required to 5 purchase will encourage the development of alternate energy 6 production facilities and small hydro solar energy facilities. 7 The increase shall not exceed the utility’s increase in peak 8 demand multiplied by the ratio of the utility’s share of the 9 one hundred five megawatt maximum requirement to its 1990 2014 10 Iowa retail peak demand. 11 Sec. 4. NEW SECTION . 476.49 Community solar garden program. 12 1. Definitions. For the purposes of this section, unless 13 the context otherwise requires: 14 a. “Community solar garden facility” means an electric 15 generating facility with a nameplate generating capacity of 16 one megawatt or less that generates electricity by means of 17 a ground-mounted or roof-mounted solar photovoltaic device 18 whereby subscribers receive a bill credit for the electricity 19 generated in proportion to the size of their subscription. 20 b. “Subscriber” means a retail customer of an electric 21 utility subject to this division who owns one or more 22 subscriptions to a community solar garden facility 23 interconnected with that utility. 24 c. “Subscription” means a proportional contractual 25 interest in a community solar garden facility, together with a 26 proportional interest in any state or federal tax credits for 27 which a community solar garden facility may be eligible. 28 2. Program established —— requirements. 29 a. A community solar garden program is established to 30 encourage and enhance the generation of solar energy and to 31 encourage and enhance the ability of electric public utility 32 customers to participate in and derive benefit from alternate 33 solar energy projects. 34 b. Pursuant to the program, an electric public utility 35 -2- LSB 5597XS (9) 85 rn/nh 2/ 10

S.F. 2107 subject to rate regulation shall be required to establish and 1 maintain one or more community solar garden facilities. The 2 program shall be designed to offset the energy use of not 3 less than five subscribers to each community solar garden 4 facility, of which no single subscriber has more than a forty 5 percent interest in the facility. A community solar garden 6 facility may be owned by the utility or by any other entity 7 or organization, including a subscriber organization, that 8 contracts to sell the output from the community solar garden 9 facility to the utility. 10 c. A community solar garden facility must be located 11 within a utility’s service area. Subscribers shall be retail 12 customers of the utility located in the same county or a county 13 contiguous to where the facility is located. Each subscription 14 shall be sized to represent at least two hundred watts of the 15 community solar garden facility’s generating capacity and 16 to supply, when combined with other distributed generation 17 resources serving the premises, no more than one hundred twenty 18 percent of the average annual consumption of electricity by 19 each subscriber at the premises to which the subscription is 20 attached. 21 d. A utility establishing a community solar garden 22 program shall be required to purchase from a community solar 23 garden facility all electricity generated by the facility 24 at the same rates applicable to alternate energy production 25 facilities pursuant to section 476.43, or at an alternative 26 rate established pursuant to section 476.50. A subscriber’s 27 portion of the electricity purchased by the utility shall be 28 credited to the subscriber’s account with the utility. The 29 board shall develop interconnection agreements for utilization 30 by a community solar garden facility interconnecting with the 31 utility as provided in section 476.50. 32 e. A utility shall not be required to purchase an amount of 33 electricity from one or more community solar garden facilities 34 in an amount exceeding four percent of its average annual 35 -3- LSB 5597XS (9) 85 rn/nh 3/ 10

S.F. 2107 electricity sales. The requirements of this section are 1 applicable in addition to, and not in lieu of, the maximum 2 purchase and ownership restrictions specified in section 3 476.44. 4 3. Plans —— submission requirements. 5 a. A public utility subject to this section shall submit a 6 community solar garden program plan to the board by September 7 30, 2014, incorporating the following components: 8 (1) The proposed location of one or more community solar 9 garden facilities to be operated and maintained by the utility. 10 (2) Uniform standards, fees, and processes for the 11 interconnection of community solar garden facilities that will 12 allow the utility to recover reasonable interconnection costs 13 for each facility. 14 (3) Information to be provided to potential subscribers 15 to ensure fair disclosure of future costs and benefits of 16 subscriptions. 17 (4) An implementation schedule for facility 18 interconnection. 19 b. The board may approve, disapprove, or modify the plan. 20 Once approved, a plan shall be implemented within ninety days 21 following the date of approval. Within one hundred eighty 22 days following the date of approval, the utility shall begin 23 crediting subscriber accounts for each community solar garden 24 facility within its service area. 25 c. The utility shall file an updated plan on an annual 26 basis summarizing the operation and status of its community 27 solar garden program and detailing the amount of electricity 28 generated by facilities and credited to subscriber accounts. 29 Sec. 5. NEW SECTION . 476.50 Solar interconnection 30 agreements —— alternative tariff rate. 31 1. An electric public utility may enter into 32 interconnection agreements with customers operating distributed 33 generation solar photovoltaic devices. A utility entering 34 into such an agreement may apply to the board for approval 35 -4- LSB 5597XS (9) 85 rn/nh 4/ 10

S.F. 2107 of an alternative tariff rate that compensates customers 1 through a billing credit mechanism for the value to the 2 utility, its customers, and society for operating such devices 3 interconnected to the utility system and operated by customers 4 primarily for meeting their own energy needs. If approved, 5 the alternative rate would apply in lieu of the rate otherwise 6 applicable to alternate energy production facilities pursuant 7 to section 476.43. 8 2. An application for an alternative tariff rate submitted 9 by a utility pursuant to this section shall demonstrate that 10 the proposed rate conforms with the following: 11 a. Appropriately applies the methodology established by the 12 board pursuant to subsection 3. 13 b. Includes a mechanism to allow recovery of the cost to 14 serve customers receiving the alternative tariff rate. 15 c. Charges the customer for all electricity consumed by the 16 customer at an applicable rate schedule for sales to that class 17 of customer. 18 d. Credits the customer for all electricity generated by the 19 solar photovoltaic device. 20 e. Applies charges and credits to a monthly billing that 21 includes a provision so that the unused portion of the credit 22 in any month or billing period shall be carried forward and 23 credited against all charges. In the event that the customer 24 has a positive balance after the twelve-month cycle ending 25 on the last day in February, that balance will be eliminated 26 and the credit cycle will restart the following billing period 27 beginning on March 1. 28 3. The board shall establish a solar value methodology 29 for utilization by utilities in developing and applying for 30 an alternative tariff rate pursuant to this section. The 31 methodology shall, at a minimum, account for the value of 32 energy and its delivery, generation capacity, transmission 33 capacity, transmission and distribution line losses, and 34 environmental value. The board may, based on known and 35 -5- LSB 5597XS (9) 85 rn/nh 5/ 10

S.F. 2107 measurable evidence of the cost or benefit of solar operation 1 to the utility, incorporate other values into the methodology, 2 including credits for locally manufactured or assembled 3 energy systems, systems installed at high-value locations on 4 the distribution grid, or other factors. In developing the 5 methodology pursuant to this subsection, the board may consult 6 stakeholders with experience and expertise in power systems, 7 solar energy, and electric utility ratemaking regarding the 8 proposed methodology, underlying assumptions, and preliminary 9 data. 10 4. Applications shall be subject to the approval provisions 11 of section 476.6. A utility shall recalculate the alternative 12 tariff rate on an annual cycle, and shall file the recalculated 13 alternative rate with the board for approval. The board may 14 not authorize a utility to charge an alternative tariff rate 15 that is lower than the utility’s applicable retail rate until 16 three years after the board originally approved the alternative 17 tariff rate. 18 5. A utility shall enter into an interconnection agreement 19 with an owner of a solar photovoltaic device receiving an 20 alternative tariff rate as provided in this section for a term 21 of at least twenty years, unless a shorter term is agreed to by 22 the parties. The board shall develop standard interconnection 23 agreement forms for utilization by the utility and the owner. 24 An owner must be paid the same rate per kilowatt-hour generated 25 each year for the duration of the interconnection agreement. 26 6. A utility must provide to the customer the meter and 27 any other equipment needed to provide service pursuant to the 28 interconnection agreement. 29 EXPLANATION 30 The inclusion of this explanation does not constitute agreement with 31 the explanation’s substance by the members of the general assembly. 32 This bill specifies solar energy purchase requirements 33 applicable to electric public utilities and provides 34 for alternative tariff rates applicable to solar energy 35 -6- LSB 5597XS (9) 85 rn/nh 6/ 10

S.F. 2107 interconnection agreements. 1 Currently, electric utilities are required to own alternate 2 energy production facilities or small hydro facilities located 3 in Iowa, or to enter into long-term contracts to purchase or 4 wheel electricity from such facilities. Alternate energy 5 production facilities are defined in Code section 476.42 6 to include solar, wind turbine, waste management, resource 7 recovery, refuse-derived fuel, agricultural crops or residues, 8 or woodburning facilities. 9 There is a limitation on the amount of electricity required 10 to be produced by a facility which is owned by an electric 11 utility, or purchased or wheeled from an alternate energy 12 production facility or small hydro facility. An electric 13 utility is not required to own or purchase, at any one time, 14 more than its share of 105 megawatts of power from alternate 15 energy production facilities or small hydro facilities. 16 The bill modifies the 105 megawatt purchase requirement 17 and limitation to make it applicable strictly to solar energy 18 derived from solar energy facilities in this state. The 105 19 megawatt solar energy ownership or purchase requirements must 20 be attained by January 1, 2020. The bill provides that out of 21 this amount, a minimum of 10 percent of the energy produced 22 or purchased shall be produced by or purchased from solar 23 energy facilities with a nameplate generating capacity of 24 20 kilowatts or less. The bill makes conforming changes to 25 related provisions. 26 The bill additionally establishes a community solar garden 27 program. The bill defines a “community solar garden facility” 28 to mean an electric generating facility with a nameplate 29 generating capacity of one megawatt or less that generates 30 electricity by means of a ground-mounted or roof-mounted solar 31 photovoltaic device whereby subscribers receive a billing 32 credit for the electricity generated in proportion to the size 33 of their subscription. The bill defines “subscriber” to mean 34 a retail customer of an electric utility who owns one or more 35 -7- LSB 5597XS (9) 85 rn/nh 7/ 10

S.F. 2107 subscriptions of a community solar garden interconnected with 1 that utility. The bill defines a “subscription” to mean a 2 proportional contractual interest in a community solar garden 3 facility, together with a proportional interest in any state or 4 federal tax credits for which a community solar garden facility 5 may be eligible. 6 The bill provides that an electric public utility subject to 7 rate regulation shall be required to establish and maintain one 8 or more community solar garden facilities, consisting of not 9 less than five subscribers to each facility, of which no single 10 subscriber has more than a 40 percent interest in the facility. 11 The bill states that a community solar garden facility may be 12 owned by the utility or by any other entity or organization, 13 including a subscriber organization, that contracts to sell the 14 output from the community solar garden facility to the utility. 15 The bill requires a community solar garden facility to 16 be located within the utility’s service area, and requires 17 subscribers to be retail customers of the utility located in 18 the same county or a county contiguous to where the facility 19 is located. Each subscription is required to be sized to 20 represent at least 200 watts of the community solar garden 21 facility’s generating capacity and to supply, when combined 22 with other distributed generation resources serving the 23 premises, no more than 120 percent of the average annual 24 consumption of electricity by each subscriber at the premises 25 to which the subscription is attached. The bill provides that 26 rates applicable to facilities shall either be the same rates 27 applicable to alternate energy production facilities pursuant 28 to Code section 476.43, or an alternative rate established 29 according to a methodology specified in the bill. The bill 30 provides that a subscriber’s portion of the electricity 31 purchased shall be provided as a credit on the subscriber’s 32 billing, that a utility shall not be required to purchase an 33 amount of electricity from one or more community solar garden 34 facilities in an amount exceeding 4 percent of its average 35 -8- LSB 5597XS (9) 85 rn/nh 8/ 10

S.F. 2107 annual electricity sales, and that the community solar garden 1 requirements are in addition to, and not in lieu of, alternate 2 energy purchase and ownership requirements specified in Code 3 section 476.44. 4 The bill requires a utility subject to the bill’s provisions 5 to submit a community solar garden program plan to the 6 Iowa utilities board by September 30, 2014, incorporating 7 specified components. The bill provides that the plan shall 8 be implemented within 90 days following the date of approval, 9 and that within 180 days following the date of approval, the 10 utility shall begin crediting subscriber accounts for each 11 community solar garden facility within its service area. The 12 utility is required to file an updated plan on an annual 13 basis summarizing the operation and status of its community 14 solar garden program and detailing the amount of electricity 15 generated by facilities and credited to subscribers. 16 The bill additionally includes provisions regarding solar 17 interconnection agreements in general, and alternative tariff 18 rates applicable to them. The bill provides that a public 19 utility entering into a solar energy interconnection agreement 20 may apply to the board for approval of an alternative tariff 21 rate that compensates customers through a billing credit 22 mechanism for the value to the utility, its customers, and 23 society for operating such devices interconnected to the 24 utility system and operated by customers primarily for meeting 25 their own energy needs. The bill specifies criteria which 26 an alternative tariff rate is required to conform to, and 27 creates a solar value methodology for utilization by public 28 utilities in developing and applying for the alternative tariff 29 rate. The bill provides that applications for an alternative 30 rate shall be subject to the rate approval provisions of 31 Code section 476.6, and that the utility shall enter into an 32 interconnection agreement with an owner of a solar photovoltaic 33 device receiving the alternative rate for a term of at least 20 34 years, unless a shorter term is agreed to by the parties. The 35 -9- LSB 5597XS (9) 85 rn/nh 9/ 10