H.F. 2554 DIVISION I 1 ELECTRIC POWER GENERATION, ENERGY STORAGE, AND TRANSMISSION 2 FACILITY RATEMAKING PRINCIPLES 3 Section 1. NEW SECTION . 476.52A Definitions. 4 As used in this subchapter unless the context otherwise 5 requires: 6 1. “Alternate energy production facility” means the same as 7 defined in section 476.42. 8 2. “Energy storage” means any system, equipment, facility, 9 or technology that is capable of absorbing energy, storing the 10 energy for a period of time, and dispatching the energy through 11 one of the following manners: 12 a. Using mechanical, electrochemical, thermal, 13 electrolysis, or other processes to convert and store electric 14 energy that was generated at an earlier time for use at a later 15 time. 16 b. Using mechanical, electrochemical, biochemical, or 17 thermal processes to convert and store energy generated 18 from mechanical processes that would otherwise be wasted for 19 delivery at a later time. 20 c. Storing energy in an electric, thermal, or gaseous 21 state for direct use for heating or cooling at a later time 22 in a manner that avoids the need to use electricity or other 23 fuel sources at that later time, such as a grid-enabled water 24 heater. 25 3. “Nuclear reactor” means an apparatus designed to produce 26 electrical or heat energy through sustained nuclear fission in 27 a self-supporting chain reaction. 28 4. “Repowering” means either the complete dismantling and 29 replacement of generation equipment at an existing project 30 site, or the installation of new parts and equipment to an 31 existing alternate energy production facility in order to 32 increase energy production, reduce load, increase service 33 capacity, improve project reliability, or extend the useful 34 life of the facility. 35 -1- LSB 6079HV (2) 90 lh/js 1/ 8

H.F. 2554 Sec. 2. Section 476.53, subsection 1, Code 2024, is amended 1 to read as follows: 2 1. It is the intent of the general assembly to attract 3 the development of electric power generating , energy storage, 4 and transmission facilities within the state in sufficient 5 quantity to ensure reliable electric service to Iowa consumers , 6 ensure an adequate base load, and provide economic benefits to 7 the state. Ensuring reliable electric service and providing 8 economic benefits may require public utilities to consider 9 diverse electric power generating technologies and energy 10 storage technologies, including alternate energy production 11 facilities, nuclear reactors, and energy storage facilities. 12 It is also the intent of the general assembly to encourage 13 rate-regulated public utilities to consider altering existing 14 electric power generating facilities, where when reasonable, 15 to manage carbon emission intensity in order to facilitate the 16 transition to a carbon-constrained environment. It is also the 17 intent of the general assembly to encourage the development 18 of nuclear electric power generation within the state using 19 nuclear reactors and to use nuclear power to meet local and 20 regional electric needs. 21 Sec. 3. Section 476.53, subsection 3, paragraph a, Code 22 2024, is amended to read as follows: 23 a. The board shall may specify in advance, by order issued 24 after a contested case proceeding, the ratemaking principles 25 that will apply when the costs of the electric power generating 26 facility , or alternate energy production facility , or energy 27 storage facility are included in regulated electric rates 28 whenever a . A rate-regulated public utility does may seek 29 ratemaking principles for any of the following: 30 (1) (a) Files an application pursuant to section 476A.3 31 to construct The costs of constructing in Iowa a baseload an 32 electric power generating facility with a nameplate generating 33 capacity equal to or greater than three hundred forty megawatts 34 or a combined-cycle electric power generating facility , or an 35 -2- LSB 6079HV (2) 90 lh/js 2/ 8

H.F. 2554 alternate energy production facility as defined in section 1 476.42 , or an energy storage facility, or the construction 2 costs to significantly alter an existing electric power 3 generating facility , alternate energy production facility, or 4 energy storage facility . For purposes of this subparagraph, 5 a significant alteration of an existing generating facility , 6 alternate energy production facility, or energy storage 7 facility must, in order to qualify for establishment of 8 ratemaking principles, fall into one of the following 9 categories: 10 (i) Conversion of a coal fueled an electric power generating 11 facility into a gas fueled to an alternate fuel type for the 12 electric power generating facility. 13 (ii) Addition of carbon capture and storage facilities at a 14 coal fueled to an existing electric power generating facility. 15 (iii) Addition of gas fueled capability to a coal fueled 16 facility, in order to convert the facility to one that will 17 rely primarily on gas for future generation facilities to 18 capture exhaust heat and thereby generate additional electric 19 power at an existing electric power generating facility . 20 (iv) Addition of a biomass fueled capability to a coal 21 fueled facility. 22 (v) (iv) Repowering of an alternate energy production 23 facility. For purposes of this subparagraph subdivision, 24 “repowering” shall mean either the complete dismantling and 25 replacement of generation equipment at an existing project 26 site, or the installation of new parts and equipment to an 27 existing alternate energy production facility in order to 28 increase energy production, reduce load, increase service 29 capacity, improve project reliability, or extend the useful 30 life of the facility. 31 (v) Addition of energy storage at an existing electric power 32 generating facility, alternate energy production facility, or 33 energy storage facility. 34 (b) With respect to a significant alteration of an existing 35 -3- LSB 6079HV (2) 90 lh/js 3/ 8

H.F. 2554 generating facility, an original facility shall not be required 1 to be either a baseload or a combined-cycle facility. Only 2 only the incremental investment undertaken by a utility 3 under subparagraph division (a), subparagraph subdivision 4 (i), (ii), or (iii) , or (iv) shall be eligible to apply the 5 ratemaking principles established by the order issued pursuant 6 to paragraph “e” . Facilities for which advanced advance 7 ratemaking principles are obtained pursuant to this section 8 shall not be subject to a subsequent board review pursuant to 9 section 476.6, subsection 19 , to the extent that the investment 10 has been considered by the board under this section , but may be 11 subject to the provisions of paragraph “0d” of this subsection . 12 To the extent an eligible utility has been authorized to make 13 capital investments subject to section 476.6, subsection 14 19 , such investments shall not be eligible for ratemaking 15 principles pursuant to this section . 16 (2) Leases or owns When leased or owned in Iowa, in whole or 17 in part, a new baseload electric power generating facility with 18 a nameplate generating capacity equal to or greater than three 19 hundred forty megawatts or a combined-cycle electric power 20 generating , a new energy storage facility, or a new alternate 21 energy production facility as defined in section 476.42 . 22 Sec. 4. Section 476.53, subsection 3, Code 2024, is amended 23 by adding the following new paragraph: 24 NEW PARAGRAPH . 0d. The board may require as a condition 25 of approval of an advance ratemaking petition for solar energy 26 production, wind energy production, or energy storage by a 27 rate-regulated public utility the filing of an integrated 28 resource plan. The board shall adopt rules for an integrated 29 resource plan filing. An integrated resource plan shall 30 include proposals for the use of resources including 31 generation, distribution facilities, transmission, adequate 32 base load generation and reliability, limitation demand 33 response arrangements, peak load management, distributed 34 generation, power purchase agreements, and wholesale market 35 -4- LSB 6079HV (2) 90 lh/js 4/ 8

H.F. 2554 purchases. 1 Sec. 5. NEW SECTION . 476.53B Department authority and 2 proceedings. 3 The board shall adopt rules pursuant to chapter 17A to 4 provide for the completion of proceedings under section 476.53 5 within ten months after the date of the filing of a petition 6 under section 476.53, subsection 3. The rules shall include 7 reasonable time limitations for the submission or completion 8 of comments and testimony, and exhibits, briefs, and hearings, 9 and may provide for the granting of additional time upon the 10 request of a party to the proceeding for good cause shown. 11 Sec. 6. APPLICABILITY. This division of this Act applies to 12 an application for new or changed rates, charges, schedules, or 13 regulations filed by a public utility on or after the effective 14 date of this Act. 15 DIVISION II 16 RATEMAKING REVIEW 17 Sec. 7. RATEMAKING —— PERFORMANCE-BASED REGULATION REVIEW. 18 1. The utilities board shall initiate and coordinate an 19 independent review of performance-based regulation frameworks 20 and various components, which shall include multiyear 21 rate plans, performance mechanisms such as scorecards and 22 performance incentive mechanisms, and earnings sharing 23 mechanisms. The review shall take into account the policy 24 objectives of ensuring safe, adequate, reliable, and affordable 25 utility services provided at rates that are nondiscriminatory, 26 just, reasonable, and based on the cost of the utility to 27 provide service to customers within the state. 28 2. The review shall include recommendations for changes in 29 law and administrative rules and identification of ratemaking 30 laws and procedures of other states that, if adopted in Iowa, 31 could enhance the competitiveness of utility rates in the state 32 compared with utility rates in other jurisdictions. 33 3. The consumer advocate division of the department 34 of justice shall, and rate-regulated utilities and other 35 -5- LSB 6079HV (2) 90 lh/js 5/ 8

H.F. 2554 interested persons may, participate in the review. The board 1 may utilize additional services to assist in the coordination 2 of the review and preparation of the report. The board shall 3 submit a report with findings and recommendations to the 4 general assembly by October 1, 2026. 5 EXPLANATION 6 The inclusion of this explanation does not constitute agreement with 7 the explanation’s substance by the members of the general assembly. 8 This bill relates to electric power generation, energy 9 storage, and transmission facility ratemaking principles. 10 Division I of the bill modifies intent language to reflect 11 an intent to attract energy storage and develop nuclear power 12 generation for consumers in the state. 13 Division I of the bill alters ratemaking principle processes 14 and modifies when a rate-regulated public utility may seek a 15 ratemaking principle. In addition to electric power generating 16 facilities and alternate energy production facilities, the 17 utilities board (board) may specify the ratemaking principles 18 applying to an energy storage facility. 19 Division I of the bill provides that a rate-regulated public 20 utility may seek ratemaking principles from the board when 21 there are construction-related costs of an electric power 22 generating facility with a nameplate generating capacity equal 23 to or greater than 40 megawatts, an alternate energy production 24 facility, or an energy storage facility, or significant 25 alterations to an existing electric power generating facility, 26 alternate energy production facility, or energy storage 27 facility. Current law generally provides that when a 28 rate-regulated public utility files an application to construct 29 a baseload electric power generating facility with a nameplate 30 generating capacity equal to or greater than 300 megawatts 31 or a combined-cycle electric power generating facility or an 32 alternate energy production facility, or to significantly alter 33 an existing generating facility or a new alternate energy 34 production facility, the board shall specify in advance the 35 -6- LSB 6079HV (2) 90 lh/js 6/ 8

H.F. 2554 ratemaking principles that will apply. 1 Division I of the bill modifies the requirements for a 2 significant alteration of an existing generating facility 3 to qualify for the establishment of ratemaking principles. 4 Division I of the bill provides that to qualify for ratemaking 5 principles, the significant alteration can convert an electric 6 power generating facility to an alternate fuel type, add 7 carbon capture and carbon storage to an electric power 8 generating facility, add a facility to capture exhaust heat to 9 an electric power generating facility, repower an alternate 10 energy production facility, or add energy storage to an 11 existing electric power generating facility, alternate energy 12 production facility, or energy storage facility. Current 13 law provides that to qualify for ratemaking principles, the 14 significant alteration can convert a coal-fueled facility into 15 a gas-fueled facility, add carbon capture and carbon storage 16 to a coal-fueled facility, add gas-fueled capability to a 17 coal-fueled facility, add a biomass-fueled capability to a 18 coal-fueled facility, or repower an alternate energy production 19 facility. 20 Division I of the bill provides that a utility investment to 21 convert an electric power generating facility to a different 22 fuel type, add carbon capture and carbon storage to an electric 23 power generating facility, or add a fuel type to an electric 24 power generating facility shall be eligible to apply the 25 ratemaking principles established by an order issued prior to 26 construction or lease of a facility. 27 Division I of the bill provides that a rate-regulated 28 public utility may seek ratemaking principles for leasing 29 or owning a new electric power generating facility with a 30 nameplate generating capacity equal to or greater than 40 31 megawatts, a new energy storage facility, or a new alternate 32 energy production facility. Current law provides that 33 a rate-regulated public utility leasing or owning a new 34 baseload electric power generating facility with a nameplate 35 -7- LSB 6079HV (2) 90 lh/js 7/ 8

H.F. 2554 generating capacity equal to or greater than 300 megawatts, 1 a combined-cycle electric power generating facility, or a 2 new alternate energy production facility may seek ratemaking 3 principles. 4 Division I of the bill provides that the board may require an 5 integrated resource plan (plan) as a condition of an advance 6 ratemaking petition approval. The board shall adopt rules for 7 the plan and the plan shall include proposals for the use of 8 certain resources. 9 Division I of the bill requires the board to adopt rules for 10 proceedings to conclude 10 months after a petition is filed. 11 Division I of the bill applies to an application for new or 12 changed rates, charges, schedules, or regulations filed by a 13 public utility on or after the effective date of the bill. 14 Division II of the bill requires the board to conduct a 15 review of the performance-based regulation frameworks and 16 various components to ensure utility services are safe, 17 adequate, reliable, and affordable and provided at rates that 18 are nondiscriminatory, just, reasonable, and based on the cost 19 of the utility to provide service to customers within the 20 state. The board shall submit a report containing the findings 21 and recommendations of the review to the general assembly by 22 October 1, 2026. 23 -8- LSB 6079HV (2) 90 lh/js 8/ 8