House Study Bill 595 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON COWNIE) A BILL FOR An Act modifying various provisions relating to public 1 utilities. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 5362YC (11) 87 gh/rn

H.F. _____ Section 1. Section 28F.1, subsection 1, Code 2018, is 1 amended to read as follows: 2 1. This chapter provides a means for the joint financing 3 by public agencies of works or facilities useful and necessary 4 for the collection, treatment, purification, and disposal 5 in a sanitary manner of liquid and solid waste, sewage, 6 and industrial waste, facilities used for the conversion of 7 solid waste to energy, gasworks and facilities useful for the 8 delivery of gas service, and also electric power facilities 9 constructed within the state of Iowa, except that hydroelectric 10 power facilities may also be located in the waters and on the 11 dams of or on land adjacent to either side of the Mississippi 12 or Missouri river bordering the state of Iowa, water supply 13 systems, swimming pools or golf courses. This chapter applies 14 to the acquisition, construction, reconstruction, ownership, 15 operation, repair, extension, or improvement of such works 16 or facilities, by a separate administrative or legal entity 17 created pursuant to chapter 28E or chapter 389 . When the 18 legal entity created under this chapter is comprised solely 19 of cities, counties, and sanitary districts established under 20 chapter 358 , or any combination thereof or any combination of 21 the foregoing with other public agencies, the entity shall 22 be both a corporation and a political subdivision with the 23 name under which it was organized. The legal entity may sue 24 and be sued, contract, acquire and hold real and personal 25 property necessary for corporate purposes, adopt a corporate 26 seal and alter the seal at pleasure, and execute all the powers 27 conferred in this chapter . 28 Sec. 2. Section 28F.11, Code 2018, is amended to read as 29 follows: 30 28F.11 Eminent domain. 31 Any public agency participating in an agreement authorizing 32 the joint exercise of governmental powers pursuant to this 33 chapter may exercise its power of eminent domain to acquire 34 interests in property, under provisions of law then in effect 35 -1- LSB 5362YC (11) 87 gh/rn 1/ 26

H.F. _____ and applicable to the public agency, for the use of the entity 1 created to carry out the agreement, provided that the power of 2 eminent domain is not used to acquire interests in property 3 which is part of a system of facilities in existence, under 4 construction, or planned, for the generation, transmission 5 or sale of electric power , or for the transmission, 6 transportation, or sale of natural gas . In the exercise 7 of the power of eminent domain, the public agency shall 8 proceed in the manner provided by chapter 6B . Any interests 9 in property acquired are acquired for a public purpose, as 10 defined in chapter 6A , of the condemning public agency, and the 11 payment of the costs of the acquisition may be made pursuant 12 to the agreement or to any separate agreement between the 13 public agency and the entity or the other public agencies 14 participating in the entity or any of them. Upon payment of 15 costs, any property acquired is the property of the entity. 16 Sec. 3. Section 476.1, subsection 7, Code 2018, is amended 17 to read as follows: 18 7. The jurisdiction of the board under this chapter 19 shall include efforts designed to promote the use of energy 20 efficiency strategies by rate or service-regulated gas and 21 electric utilities required to be rate-regulated . 22 Sec. 4. Section 476.1A, subsections 1, 2, and 4, Code 2018, 23 are amended to read as follows: 24 1. Electric public utilities having fewer than ten 25 thousand customers and electric cooperative corporations 26 and associations are not subject to the rate regulation 27 authority of the board . Such utilities are subject to all 28 other regulation and enforcement activities of the board, 29 including , except for regulatory action pertaining to all of 30 the following : 31 a. Assessment of fees for the support of the division and 32 the office of consumer advocate, pursuant to section 476.10 . 33 b. Safety and engineering standards for equipment, 34 operations, and procedures. 35 -2- LSB 5362YC (11) 87 gh/rn 2/ 26

H.F. _____ c. Assigned area of service. 1 d. Pilot projects of the board. 2 e. Assessment of fees for the support of the Iowa energy 3 center created in section 15.120 and the center for global and 4 regional environmental research established by the state board 5 of regents. This paragraph “e” is repealed July 1, 2022. 6 f. Filing alternate energy purchase program plans with the 7 board, and offering such programs to customers, pursuant to 8 section 476.47 . 9 g. Filing energy efficiency plans and energy efficiency 10 results with the board. The energy efficiency programs 11 included in such plans as a whole shall be cost-effective. The 12 board may permit these utilities to file joint plans. The 13 board shall periodically report the energy efficiency results 14 including energy savings of each of these utilities to the 15 general assembly. The board may waive all or part of the 16 energy efficiency filing and review requirements for electric 17 cooperative corporations and associations and electric public 18 utilities which demonstrate superior results with existing 19 energy efficiency efforts. 20 2. However, sections 476.20 , subsections 1 through 4, 21 476.21 , 476.41 through 476.44 , 476.51 , 476.56 , 476.62 , and 22 476.66 and chapters 476A and 478 , to the extent applicable, 23 apply to such electric utilities. 24 4. The board of directors or the membership of an electric 25 cooperative corporation or association otherwise exempt 26 from rate regulation may elect to have the cooperative’s 27 rates regulated by the board. The board shall adopt rules 28 prescribing the manner in which the board of directors or the 29 membership of an electric cooperative may so elect. If the 30 board of directors or the membership of an electric cooperative 31 has elected to have the cooperative’s rates regulated by the 32 board, after two years have elapsed from the effective date of 33 such election the board of directors or the membership of the 34 electric cooperative may elect to exempt the cooperative from 35 -3- LSB 5362YC (11) 87 gh/rn 3/ 26

H.F. _____ the rate regulation authority of the board , provided, however, 1 that if the membership elected to have the cooperative’s rates 2 regulated by the board, only the membership may elect to exempt 3 the cooperative from the rate regulation authority of the 4 board . 5 Sec. 5. Section 476.1B, subsection 1, paragraph l, Code 6 2018, is amended to read as follows: 7 l. Filing energy efficiency plans and energy efficiency 8 results with the board. The energy efficiency programs 9 included in such plans as a whole shall be cost-effective. The 10 board may permit these utilities to file joint plans. The 11 board shall periodically report the energy efficiency results 12 including energy savings of each of these utilities to the 13 general assembly. 14 Sec. 6. Section 476.2, subsection 6, Code 2018, is amended 15 by striking the subsection. 16 Sec. 7. Section 476.4, subsection 1, Code 2018, is amended 17 to read as follows: 18 1. Every public utility shall file with the board tariffs 19 showing the rates and charges for its public utility services 20 and the rules and regulations under which such services were 21 furnished, on April 1, 1963, which rates and charges shall be 22 subject to investigation by the board as provided in section 23 476.3 , and upon such investigation the burden of establishing 24 the reasonableness of such rates and charges shall be upon the 25 public utility filing the same. These filings shall be made 26 under such rules as the board may prescribe within such time 27 and in such form as the board may designate. In prescribing 28 rules and regulations with respect to the form of tariffs 29 and any other regulations , the board shall, in the case of 30 public utilities subject to regulation by any federal agency, 31 give due regard to any corresponding rules and regulations of 32 such federal agency, to the end that unnecessary duplication 33 of effort and expense may be avoided so far as reasonably 34 possible. Each public utility shall keep copies of its tariffs 35 -4- LSB 5362YC (11) 87 gh/rn 4/ 26

H.F. _____ open to public inspection under such rules as the board may 1 prescribe. 2 Sec. 8. Section 476.6, subsections 1, 8, and 13, Code 2018, 3 are amended to read as follows: 4 1. Filing with board. A public utility subject to rate 5 regulation shall not make effective a new or changed rate, 6 charge, schedule, or regulation until the rate, charge, 7 schedule, or regulation has been approved by the board, except 8 as provided in subsections 8 , and 9 , and 22 . 9 8. Automatic adjustments permitted . 10 a. This chapter does not prohibit a public utility from 11 making provision for the automatic adjustment of rates and 12 charges for public utility service provided that a schedule 13 showing the automatic adjustment of rates and charges is first 14 filed with the board. 15 b. A public utility may automatically adjust rates and 16 charges to recover costs related to transmission incurred by 17 or charged to the public utility consistent with a tariff or 18 agreement that is subject to the jurisdiction of the federal 19 energy regulatory commission, provided that a schedule showing 20 the automatic adjustment of rates and charges is first filed 21 with the board. 22 13. Energy efficiency plans. Electric and gas public 23 utilities shall offer energy efficiency programs to their 24 customers through energy efficiency plans. An Each energy 25 efficiency plan as a whole program shall be cost-effective. 26 In determining the cost-effectiveness of an energy efficiency 27 plan program , the board shall apply the societal test, total 28 resource cost test, utility cost test, rate-payer impact 29 test, and participant test. Energy efficiency programs for 30 qualified low-income persons and for tree planting programs, 31 educational programs, and assessments of consumers’ needs for 32 information to make effective choices regarding energy use 33 and energy efficiency need not be cost-effective and shall 34 not be considered in determining cost-effectiveness of plans 35 -5- LSB 5362YC (11) 87 gh/rn 5/ 26

H.F. _____ as a whole . The energy efficiency programs in the plans may 1 be provided by the utility or by a contractor or agent of the 2 utility. Programs offered pursuant to this subsection by gas 3 and electric utilities that are required to be rate-regulated 4 shall require board approval. 5 Sec. 9. Section 476.6, subsection 15, paragraphs a and b, 6 Code 2018, are amended to read as follows: 7 a. (1) (a) Gas and electric utilities required to be 8 rate-regulated under this chapter shall file energy efficiency 9 plans with the board. An energy efficiency plan and budget 10 shall include a range of energy efficiency and demand response 11 programs, tailored to the needs of all customer classes, 12 including residential, commercial, and industrial customers, 13 for energy efficiency opportunities. The plans shall 14 include programs for qualified low-income persons including a 15 cooperative program with any community action agency within the 16 utility’s service area to implement countywide or communitywide 17 energy efficiency programs for qualified low-income persons. 18 Rate-regulated gas and electric utilities shall utilize 19 Iowa agencies and Iowa contractors to the maximum extent 20 cost-effective in their energy efficiency plans filed with the 21 board. 22 (b) Gas and electric utilities required to be 23 rate-regulated under this chapter may request an energy 24 efficiency plan modification during the course of a five-year 25 plan. A modification may be requested due to changes in 26 funding as the result of public utility customers filing 27 exemptions from the plan or for any other reason identified by 28 the gas or electric utility. The board shall take action on a 29 modification request made by the gas or electric utility within 30 sixty days after a modification request is filed. If the board 31 fails to take action within sixty days after a modification 32 request is filed, the modification request shall be deemed 33 approved. 34 (2) Public utility customers with monthly peak usage that 35 -6- LSB 5362YC (11) 87 gh/rn 6/ 26

H.F. _____ averages fifteen megawatts or more of electricity during a plan 1 year may apply for an exemption from participation in energy 2 efficiency and demand response programs included in an energy 3 efficiency plan, including an exemption from the costs of the 4 plan. For an exemption from a plan that is effective prior to 5 the effective date of this Act, a customer qualifying pursuant 6 to this paragraph shall apply within three months after the 7 effective date of this Act. For an exemption from a plan that 8 takes effect on or after the effective date of this Act, a 9 customer qualifying pursuant to this paragraph shall apply for 10 an exemption on or before June 1 of the first plan year. Upon 11 verification that a customer is eligible for such exemption, 12 the gas or electric utility shall grant the exemption and, 13 beginning January 1 of the following year, the customer shall 14 no longer be assessed the costs of the plan and shall no 15 longer be required to participate in energy efficiency and 16 demand response programs included in the plan. The exemption 17 shall be considered permanent unless the customer applies for 18 reenrollment in such programs on or before June 1 of a given 19 plan year. 20 b. (1) A gas and electric utility required to be 21 rate-regulated under this chapter shall assess potential energy 22 and capacity savings available from actual and projected 23 customer usage by applying commercially available technology 24 and improved operating practices to energy-using equipment and 25 buildings. The utility shall submit the assessment to the 26 board. Upon receipt of the assessment, the board shall consult 27 with the economic development authority to develop specific 28 capacity and energy savings performance standards goals for 29 each utility. Such goals, except as provided for in subsection 30 13, shall only include cost-effective energy efficiency and 31 demand response programs. The utility shall submit an energy 32 efficiency plan which shall include economically achievable 33 programs designed to attain these energy and capacity 34 performance standards goals . The board shall periodically 35 -7- LSB 5362YC (11) 87 gh/rn 7/ 26

H.F. _____ report the energy efficiency results including energy savings 1 of each utility to the general assembly. 2 (2) For purposes of this paragraph, “cost-effective” means 3 the total resource cost test result for a program is greater 4 than one. In applying the total resource cost test, benefits 5 to be considered include avoided capacity and energy costs 6 and federal tax credits, and costs to be considered include 7 incremental costs of equipment, operation, and maintenance, 8 utility costs, and program administration costs. 9 Sec. 10. Section 476.6, subsection 15, paragraph c, 10 subparagraphs (1) and (3), Code 2018, are amended to read as 11 follows: 12 (1) Gas and electric utilities that are not required to 13 be rate-regulated under this chapter shall assess maximum 14 potential energy and capacity savings available from actual 15 and projected customer usage through cost-effective energy 16 efficiency measures and programs, taking into consideration the 17 utility service area’s historic energy load, projected demand, 18 customer base, and other relevant factors. Each utility shall 19 establish an energy efficiency goal based upon this assessment 20 of potential and shall establish cost-effective energy 21 efficiency programs designed to meet the energy efficiency 22 goal. Separate goals may be established for various customer 23 groupings. 24 (3) Each utility shall commence the process of determining 25 its cost-effective energy efficiency goal on or before July 1, 26 2008, shall provide a progress report to the board on or before 27 January 1, 2009, and complete the process and submit a final 28 report to the board on or before January 1, 2010. The report 29 shall include the utility’s cost-effective energy efficiency 30 goal, and for each measure utilized by the utility in meeting 31 the goal, the measure’s description, projected costs, and the 32 analysis of its cost-effectiveness. Each utility or group 33 of utilities shall evaluate cost-effectiveness using the 34 cost-effectiveness tests in accordance with subsection 13 of 35 -8- LSB 5362YC (11) 87 gh/rn 8/ 26

H.F. _____ this section . Individual utilities or groups of utilities may 1 collaborate in conducting the studies required hereunder and 2 may file a joint report or reports with the board. However, 3 the board may require individual information from any utility, 4 even if it participates in a joint report. 5 Sec. 11. Section 476.6, subsection 15, paragraph d, Code 6 2018, is amended by striking the paragraph. 7 Sec. 12. Section 476.6, subsection 15, paragraphs e and g, 8 Code 2018, are amended to read as follows: 9 e. (1) The board shall conduct contested case proceedings 10 for review of energy efficiency plans and budgets filed by gas 11 and electric utilities required to be rate-regulated under 12 this chapter . Notwithstanding the goals developed pursuant to 13 paragraph “b” , the board shall not require a gas or electric 14 utility to adopt an energy efficiency plan that results in 15 projected average annual costs that exceed two percent of the 16 gas or electric utility’s annual rate revenue. For purposes of 17 determining the two percent threshold amount, the board shall 18 exclude from a gas or electric utility’s annual rate revenue 19 the revenues from customers that receive an exemption pursuant 20 to paragraph “a” , subparagraph (2), and shall exclude revenues 21 associated with the recovery of energy efficiency costs. A 22 gas or electric utility may voluntarily propose an energy 23 efficiency plan that results in projected average annual costs 24 that exceed two percent of the gas or electric utility’s annual 25 rate revenue. The board may approve, reject, or modify the 26 plans and budgets. Notwithstanding the provisions of section 27 17A.19, subsection 5 , in an application for judicial review of 28 the board’s decision concerning a utility’s energy efficiency 29 plan or budget, the reviewing court shall not order a stay. 30 Whenever 31 (2) Notwithstanding paragraph “a” , subparagraph (1), 32 subparagraph division (b), if, on the effective date of this 33 Act, a gas or electric utility’s currently approved energy 34 efficiency plan includes projected annual costs that exceed 35 -9- LSB 5362YC (11) 87 gh/rn 9/ 26

H.F. _____ two percent of the gas or electric utility’s annual rate 1 revenue received for service within the previous calendar year, 2 exclusive of recovery of energy efficiency costs, the gas or 3 electric utility may file a request to modify its approved 4 energy efficiency plan to achieve projected annual costs at 5 two percent or less of the gas or electric utility’s annual 6 rate revenue. In such case, or whenever a request to modify 7 an approved plan or budget is filed subsequently by the office 8 of consumer advocate or a gas or electric utility required to 9 be rate-regulated under this chapter , the board shall promptly 10 initiate a formal proceeding if the board determines that any 11 reasonable ground exists for investigating the request. The 12 formal proceeding may be initiated at any time by the board 13 on its own motion. Implementation of board-approved plans or 14 budgets shall be considered continuous in nature and shall be 15 subject to investigation at any time by the board or the office 16 of the consumer advocate. 17 g. (1) A gas or electric utility required to be 18 rate-regulated under this chapter may recover, through an 19 automatic adjustment mechanism filed pursuant to subsection 20 8 , over a period not to exceed the term of the plan, the 21 costs of an energy efficiency plan approved by the board , 22 including amounts for a plan approved prior to July 1, 1996, 23 in a contested case proceeding conducted pursuant to paragraph 24 “e” . The board shall ensure that energy efficiency costs are 25 recovered from all customers on a reasonably comparable basis, 26 including customers who utilize alternate energy production 27 facilities as defined in section 476.42. Customers who are 28 granted an exemption from energy efficiency and demand response 29 programs pursuant to paragraph “a” , subparagraph (2), shall not 30 be charged for recovery of energy efficiency costs. 31 (2) The board shall periodically conduct a contested case 32 proceeding to evaluate the reasonableness and prudence of the 33 utility’s implementation of an approved energy efficiency plan 34 and budget. If a utility is not taking all reasonable actions 35 -10- LSB 5362YC (11) 87 gh/rn 10/ 26

H.F. _____ to cost-effectively implement an approved energy efficiency 1 plan, the board shall not allow the utility to recover from 2 customers costs in excess of those costs that would be incurred 3 under reasonable and prudent implementation and shall not allow 4 the utility to recover future costs at a level other than what 5 the board determines to be reasonable and prudent. If the 6 result of a contested case proceeding is a judgment against a 7 utility, that utility’s future level of cost recovery shall be 8 reduced by the amount by which the programs were found to be 9 imprudently conducted. The utility shall not represent energy 10 efficiency in customer billings as a separate cost or expense 11 unless the board otherwise approves. 12 Sec. 13. Section 476.6, subsection 17, Code 2018, is amended 13 by striking the subsection. 14 Sec. 14. Section 476.6, subsection 20, Code 2018, is amended 15 to read as follows: 16 20. Electric power generating facility emissions. 17 a. It is the intent of the general assembly that the state, 18 through a collaborative effort involving state agencies and 19 affected generation owners, provide for compatible statewide 20 environmental and electric energy policies with respect 21 to regulated emissions from rate-regulated electric power 22 generating facilities in the state that are fueled by coal. 23 Each A rate-regulated public utility that is an owner of one 24 or more electric power generating facilities fueled by coal 25 and located in this state on July 1, 2001, shall develop a 26 multiyear plan and budget may, in its sole discretion, file for 27 advanced review of projects for managing regulated emissions 28 from its facilities in a cost-effective manner. 29 (1) The initial multiyear plan and budget shall be filed 30 with the board by April 1, 2002. Updates to the plan and budget 31 shall be filed at least every twenty-four months. 32 (2) Copies of the initial plan and budget, as well as 33 any subsequent updates, shall be served on the department of 34 natural resources. 35 -11- LSB 5362YC (11) 87 gh/rn 11/ 26

H.F. _____ (3) The initial multiyear plan and budget and any subsequent 1 updates shall be considered in a contested case proceeding 2 pursuant to chapter 17A . The department of natural resources 3 and the consumer advocate shall participate as parties to the 4 proceeding. 5 b. A rate-regulated public utility shall file an application 6 for advanced review of a project at least one hundred twenty 7 days before the anticipated start of construction. Where an 8 electric power generating facility is owned by two or more 9 rate-regulated public utilities, the operator of the electric 10 power generating facility may file the application on behalf of 11 the rate-regulated public utilities. 12 (4) c. The department of natural resources shall state 13 whether the plan or update project meets applicable state or 14 federal environmental requirements for regulated emissions , 15 including requirements related to air, water, or solid waste . 16 If the plan project does not meet these requirements, the 17 department shall recommend amendments that outline actions 18 necessary to bring the plan or update project into compliance 19 with the environmental requirements. 20 b. d. The board shall not approve a plan or update project 21 that does not meet applicable state or federal environmental 22 requirements and federal ambient air quality standards for 23 regulated emissions from electric power generating facilities 24 located in the state. 25 c. e. The board shall review the plan or update project 26 and the associated budget, and shall approve the plan or update 27 project and the associated budget if the plan or update project 28 and the associated budget are reasonably expected to achieve 29 cost-effective compliance with applicable state or federal 30 environmental requirements and federal ambient air quality 31 standards . In reaching its decision, the board shall consider 32 whether the plan or update project and the associated budget 33 reasonably balance costs, environmental requirements, economic 34 development potential, and the reliability of the electric 35 -12- LSB 5362YC (11) 87 gh/rn 12/ 26

H.F. _____ generation and transmission system. 1 d. f. The board shall issue an order approving or rejecting 2 a plan, update, or budget project within one hundred eighty 3 ninety days after the public utility’s a filing is deemed 4 complete; however, upon good cause shown, the board may 5 extend the time for issuing the order as follows: for approval 6 pursuant to this subsection. 7 (1) The board may grant an extension of thirty days. 8 (2) The board may grant more than one extension, but each 9 extension must rely upon a separate showing of good cause. 10 (3) A subsequent extension must not be granted any earlier 11 than five days prior to the expiration of the original 12 one-hundred-eighty-day period, or the current extension. 13 e. g. The reasonable costs incurred by a rate-regulated 14 public utility in preparing and filing the plan, update, or 15 budget project and in participating in the proceedings before 16 the board and the reasonable costs associated with implementing 17 the plan, update, or budget project shall be included in its 18 regulated retail rates. 19 f. It is the intent of the general assembly that the board, 20 in an environmental plan, update, or associated budget filed 21 under this section by a rate-regulated public utility, may 22 limit investments or expenditures that are proposed to be 23 undertaken prior to the time that the environmental benefit to 24 be produced by the investment or expenditure would be required 25 by state or federal law. 26 Sec. 15. Section 476.6, Code 2018, is amended by adding the 27 following new subsections: 28 NEW SUBSECTION . 22. Voluntary rates and revenue-neutral 29 tariff filings. 30 a. A rate-regulated public utility may file at any time for 31 approval a tariff or rate that satisfies any of the following 32 conditions: 33 (1) The tariff or rate is optional for customers and all 34 costs associated with the tariff or rate are borne by customers 35 -13- LSB 5362YC (11) 87 gh/rn 13/ 26

H.F. _____ who elect to participate in the tariff or rate. 1 (2) The tariff or rate is revenue-neutral. For purposes 2 of this subparagraph, “revenue-neutral” means a change in a 3 rate, tariff design, or mechanism as a component of an energy 4 efficiency plan or base rate that does not shift annualized 5 allowed revenue between customer classes and does not increase 6 or decrease the public utility’s average nonfuel revenue per 7 customer for any given rate class when compared to either the 8 rate, tariff design, or mechanism in effect at the time that a 9 filing is made pursuant to this subsection or the allocation 10 of costs approved by the board in a rate case using the cost of 11 service methodology. 12 b. The board shall review the tariff or rate filing within 13 thirty days of filing. If the board fails to review the tariff 14 or rate filing within thirty days of filing, the tariff or 15 rate filing shall be deemed approved. The board shall not be 16 required to hold a hearing to review a tariff or rate filing 17 made pursuant to this subsection. 18 NEW SUBSECTION . 23. Preapproval for natural gas extensions 19 —— rules. The board may adopt rules which provide for a 20 preapproval process for natural gas extensions to support 21 population growth or economic development. 22 Sec. 16. Section 476.20, subsection 5, paragraph a, 23 unnumbered paragraph 1, Code 2018, is amended to read as 24 follows: 25 The board shall establish rules which shall be uniform with 26 respect to all public utilities furnishing gas or electricity 27 relating to deposits which may be required by the public 28 utility for the initiation or reinstatement of service. This 29 subsection shall not apply to municipally owned utilities, 30 which shall be governed by the provisions of section 384.84 31 with respect to deposits and payment plans for delinquent 32 amounts owed. Municipally owned utilities and electric 33 utilities that are not required to be rate-regulated shall not 34 be subject to the board’s rules in regards to deposits and 35 -14- LSB 5362YC (11) 87 gh/rn 14/ 26

H.F. _____ payment plans for delinquent amounts owed and repayment of past 1 due debt. Municipally owned utilities and electric utilities 2 that are not required to be rate-regulated shall be subject to 3 the board’s rules in regards to payment plans made prior to the 4 disconnection of services. 5 Sec. 17. Section 476.21, Code 2018, is amended to read as 6 follows: 7 476.21 Discrimination prohibited. 8 A municipality, corporation or cooperative association 9 providing electrical or gas service shall not consider the 10 use of renewable energy sources by a customer as a basis for 11 establishing discriminatory rates or charges for any service 12 or commodity sold to the customer or discontinue services or 13 subject the customer to any other prejudice or disadvantage 14 based on the customer’s use or intended use of renewable energy 15 sources. As used in this section , “renewable energy sources” 16 includes but is not limited to solar heating, wind power 17 and the conversion of urban and agricultural organic wastes 18 into methane gas and liquid fuels. This section shall not 19 prohibit the establishment of rates or charges for customers 20 that are different than the rates or charges for customers who 21 obtain all of their energy requirements from the municipality, 22 corporation, or cooperative association, provided that the 23 difference in rates or charges is based on the difference in 24 cost of service and anticipated energy use. 25 Sec. 18. NEW SECTION . 476.26A Right to construct, own, and 26 maintain electric transmission lines. 27 1. As used in this section, unless the context otherwise 28 requires: 29 a. “Electric transmission line” means a high-voltage 30 direct current electric transmission line with a capacity of 31 one hundred kilovolts or more and any associated electric 32 transmission facilities. 33 b. “Electric transmission owner” means an individual or 34 entity who, as of the effective date of this Act, owns and 35 -15- LSB 5362YC (11) 87 gh/rn 15/ 26

H.F. _____ maintains an electric transmission facility including electric 1 transmission lines, wires, or cables that are capable of 2 operating at an electric voltage of one hundred kilovolts or 3 more that are required for rate-regulated electric utilities, 4 municipal electric utilities, and rural electric cooperatives 5 in this state to provide electric service to the public for 6 compensation. 7 c. “Incumbent electric transmission owner” means any of the 8 following: 9 (1) A public utility or a municipally owned utility that 10 owns, operates, and maintains an electric transmission line in 11 this state. 12 (2) An electric cooperative corporation or association or 13 municipally owned utility that owns an electric transmission 14 facility in this state and has turned over the functional 15 control of such facility to a federally approved authority. 16 (3) An “electric transmission owner” as defined in paragraph 17 “b” . 18 d. “Municipally owned utility” means a “city utility” as 19 defined in section 362.2, or an “electric power agency” as 20 defined in section 390.9 which is comprised solely of cities or 21 solely of cities and other political subdivisions. 22 2. An incumbent electric transmission owner may construct, 23 own, and maintain an electric transmission line that has 24 been approved for construction in a federally registered 25 planning authority transmission plan and which connects to an 26 electric transmission facility owned by the incumbent electric 27 transmission owner. Where an electric transmission facility is 28 owned by two or more incumbent electric transmission owners, 29 each incumbent electric transmission owner shall have the right 30 to construct, own, and maintain an electric transmission line 31 that connects to the electric transmission facility regardless 32 of whether one incumbent electric transmission owner declines 33 to construct, own, or maintain its portion of an electric 34 transmission line connecting to the electric transmission 35 -16- LSB 5362YC (11) 87 gh/rn 16/ 26

H.F. _____ facility, unless otherwise agreed upon in writing. 1 3. This section shall not modify the rights and obligations 2 relating to the construction, maintenance, and operation of 3 electric transmission lines pursuant to chapter 478. 4 Sec. 19. Section 476.33, subsection 4, Code 2018, is amended 5 to read as follows: 6 4. The board shall adopt rules that require the board, in 7 rate regulatory proceedings under sections 476.3 and 476.6 , to 8 utilize either a historic test year or a future test year at 9 the rate-regulated public utility’s discretion. 10 a. For a rate regulatory proceeding utilizing a historic 11 test year, the rules shall require the board to consider the 12 use of the most current test period possible in determining 13 reasonable and just rates, subject only to the availability of 14 existing and verifiable data respecting costs and revenues, and 15 in addition, to consider verifiable data that exists within 16 nine months after the conclusion of the test year, respecting 17 known and measurable changes in costs not associated with a 18 different level of revenue, and known and measurable revenues 19 not associated with a different level of costs, that are to 20 occur at any time within twelve months after the date of 21 commencement of the proceedings. Parties proposing adjustments 22 that are not verifiable at the commencement of the proceedings 23 shall include projected data related to the adjustments in 24 their initial substantive filing with the board. For purposes 25 of this subsection paragraph , a proceeding commences under 26 section 476.6 upon the filing date of new or changed rates, 27 charges, schedules, or regulations. This subsection does not 28 limit the authority of the board to consider other evidence in 29 proceedings under sections 476.3 and 476.6 . 30 b. For a rate regulatory proceeding utilizing a future test 31 year, the rules shall require the board to consider the use 32 of any twelve-month period beginning no later than the date 33 on which a proposed rate change is expected to take effect in 34 determining just and reasonable rates. 35 -17- LSB 5362YC (11) 87 gh/rn 17/ 26

H.F. _____ c. This subsection does not limit the authority of the board 1 to consider other evidence in proceedings under sections 476.3 2 and 476.6. 3 Sec. 20. Section 476.53, subsection 3, paragraph a, 4 subparagraph (1), subparagraph division (a), Code 2018, is 5 amended by adding the following new subparagraph subdivision: 6 NEW SUBPARAGRAPH SUBDIVISION . (v) Repowering of an 7 alternate energy production facility to upgrade or extend the 8 useful life of the facility. 9 Sec. 21. NEW SECTION . 476.59 Emerging energy technologies. 10 1. For purposes of this section, “emerging energy 11 technology” includes but is not limited to an energy storage 12 facility, electric grid protection system, electric grid 13 management system, cyber security infrastructure, electric 14 vehicle infrastructure, or any other emerging energy technology 15 identified by the board and consistent with the general 16 assembly’s intent as provided in subsection 2. 17 2. a. It is the intent of the general assembly to attract 18 the development of emerging energy technologies within the 19 state in sufficient quantity to ensure reliable electric 20 service to Iowa consumers and provide economic benefits to 21 the state. It is also the intent of the general assembly to 22 encourage the development of the state’s future electric energy 23 supply and the protection of the electric grid from cyber and 24 physical threats. 25 b. The general assembly’s intent with regard to the 26 reliability of electric service to Iowa consumers shall be 27 implemented by considering, among other things, the development 28 of energy storage, and the protection of the electric grid from 29 cyber and physical threats. 30 c. The general assembly’s intent with regard to the 31 development of Iowa’s future electric energy supply shall be 32 implemented in a manner that advances a reliable, secure, 33 economical, and environmentally responsible energy supply 34 for the state, recognizing the value of emerging energy 35 -18- LSB 5362YC (11) 87 gh/rn 18/ 26