HF 600 (LSB 1811HV (1) 90)

HOUSE FILE 600

BY  COMMITTEE ON COMMERCE

(SUCCESSOR TO HSB 200)

A BILL FOR

An Act relating to tariffs for public utility innovation programs and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 476.6, Code 2023, is amended by adding the following new subsection:
   NEW SUBSECTION.  22.  Innovative utility programs.
   a.  It is the intent of the general assembly to encourage public utilities to pursue innovation in pricing and programs to meet the dynamic needs of current and prospective customers, enable price-responsive solutions, and to provide economic, environmental, employment, and other benefits to the state. It is also the intent of the general assembly that these new endeavors shall not negatively impact nonparticipating customers. Therefore, the general assembly declares that innovative utility programs are essential to further the attraction and retention of customers to benefit the state’s economy and to support economical and sustainable energy production.
   b.  (1)  A tariff authorized under this subsection shall comply with all of the following conditions:
   (a)  A program created under the tariff shall be available to interested energy customers and customer participation shall be optional.
   (b)  A tariff shall define the eligible customer groups.
   (c)  Costs of the program shall be borne by participating customers, including program-specific facilities and administrative or overhead costs. Program costs shall include direct costs associated with the construction, operation, maintenance, and interconnection of facilities, including new transmission infrastructure directly arising from the tariff program and costs related to the implementation of tariff programs. Participants in a tariff approved pursuant to this section shall participate in future indirect costs allocated to customers of that utility without regard for the existence of a tariff approved pursuant to this section.
   (d)  An eligible customer group shall not exclude directly competing customers in the same customer service territory. For purposes of this subparagraph, “directly competing customers” means customers that make the same end product or offer the same service for the same general group of customers, and excludes customers that only produce component parts of the same end product.
   (e)  A tariff shall not alter the existing base rates or charges of the public utility. Refund, credit, or waiver of existing base rates or charges offered as part of the program shall not be considered an alteration of existing base rates or charges.
   (f)  The program created under the tariff shall not negatively impact nonparticipating customers.
   (2)  A tariff authorized under this subsection may include any of the following:
   (a)  Recovery of costs associated with program-specific services or facilities, including but not limited to energy storage, renewable hydrogen, transmission, electric generating facilities, electric distribution facilities, renewable natural gas generation facilities, renewable natural gas distribution facilities, utility-assisted hourly prices, or liquefied natural gas facilities.
   (b)  A just and reasonable rate of return applicable to the program for its duration for new facilities, existing facilities, or services provided by the public utility that are serving the program created under the tariff. In the absence of a program-specific rate of return, the rate of return approved in a public utility’s most recent general rate case proceeding shall be presumed to be just and reasonable for the purpose of this subparagraph.
   (c)  Application of the program to readily identifiable customer usage patterns, customer characteristics, or output of specified facilities.
   (d)  Assignment of program benefits, including nonmonetary benefits which may derive from dynamically balancing supply and demand, providing ancillary services, or the production of renewable energy attributes.
   (e)  When the program created under the tariff replaces a service for which the public utility collects an existing base rate or charge, a tariff may refund, credit, or waive the base rate or charge for the replaced service. A participating customer shall pay the costs of remaining services received from the public utility unless those costs are refunded, credited, or waived under the program created by the tariff.
   (f)  When the program created under the tariff is designed to recover costs associated with existing facilities, such recovery would require reconciliation of the impact to nonparticipating customers. Existing facilities subject to advance ratemaking principles established pursuant to section 476.53 are ineligible for program inclusion.
   (g)  If the program or its eligible customer group cease to exist and the public utility seeks the recovery of the program-specific facilities through a general rate case proceeding, the public utility shall demonstrate the reasonableness and prudence without any presumption regarding approval of such request. A public utility shall not be prohibited from recovering the costs of program-specific facilities through an alternative regulatory mechanism.
   c.  A public utility’s participation under this subsection is not mandatory. A public utility that elects to propose a tariff or tariff amendment under this subsection shall file an application for approval with the board. The application shall include an identification of costs and benefits related to the program for the board’s review of the conditions specified in paragraph “b”, subparagraph (1).
   d.  Within thirty days, the board shall approve, deny, or docket for further review an application for a tariff or amended tariff submitted pursuant to this subsection. If the application is docketed for further review, the board shall render a decision within ninety days from the date of application filing unless an objection has been filed with the board. If the application proposes to amend a tariff previously approved under this subsection, the board shall not reconsider existing programs previously approved under the tariff unless proposed as part of the amendment. All further review shall be conducted as a contested case pursuant to chapter 17A.
   e.  In the exercise of its authority under this subsection, the board shall not do any of the following:
   (1)  Limit the number of applications a public utility may file.
   (2)  Deny or condition the approval of a tariff because a public utility is subject to an alternative regulatory mechanism.
   (3)  Require a public utility subject to an alternative regulatory mechanism to record the revenues and costs associated with the program in an inconsistent manner with the federal energy regulatory commission’s uniform system of accounts, 18 C.F.R. pt. 101.
   (4)  Condition its approval on the public utility changing its proposal if the public utility has not agreed to such changes. This subparagraph shall not be interpreted to prevent the board from identifying changes to the proposal which might result in approval.
   f.  Tariffs and programs approved pursuant to this subsection shall be presumed just and reasonable in any subsequent general rate case proceeding.
   g.  The board shall not condition approval or denial of a tariff on final adoption of rules by the board.
   h.  The board shall adopt rules pursuant to chapter 17A to implement this subsection.
    Sec. 2.  APPLICABILITY.  This Act applies to a public utility filing an application with the utilities board for review of a tariff on or after the effective date of this Act.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill creates a tariff program relating to innovative utility programs.
   The bill provides that it is the intent of the general assembly to encourage public utility innovation in pricing and programs, and that the new innovations not negatively impact nonparticipating customers. The bill additionally provides that it is the intent of the general assembly to attract and retain customers for the benefit of the state’s economy, support of economical energy production, and support of sustainable energy production.
   The bill authorizes a tariff program. The bill provides that a tariff shall comply with several provisions. The tariff shall be optional for customers, define eligible customer groups, and assess program costs to participating customers. Program costs shall include specified direct costs arising from the tariff program and costs related to the implementation of tariff programs. Participants of a tariff program shall participate in future indirect costs allocated to customers of that utility without regard for the existence of an approved tariff. The tariff shall not allow for an eligible customer group excluding directly competing customers in the same customer service territory, alter existing base rate or charges of the public utility, or negatively impact nonparticipating customers. A tariff may include provisions relating to recovery of costs, rate of return, application of the program to other specified patterns, program benefits, and refunds, credits, or waivers where the program replaces an existing service, or recovery of costs associated with existing facilities. A participating program customer shall pay the costs of the services received from the public utility unless the costs are refunded, credited, or waived under the program. The bill provides that if the program or eligible customer group cease to exist and the public utility seeks recovery of the program-specific facilities through a general rate case proceeding, the public utility shall demonstrate the reasonableness and prudence without any presumption regarding approval of such request. A public utility shall be allowed to recover program-specific facilities though alternative regulatory mechanisms.
   The bill provides for tariff application and approval. A public utility’s authority is not mandatory regarding tariffs. The bill provides that an application for a tariff or amendment to a tariff shall be filed with the Iowa utilities board (board). The board shall approve, deny, or docket for further review an application within 30 days. If the board dockets the application for further review, the board shall render a decision within 90 days from the date of application filing, unless an objection is filed. The board shall not reconsider existing programs previously approved under the tariff during a review of an application for an amendment to a tariff unless the review of a program is proposed as part of the amendment.
   The bill prohibits the board from certain actions. The bill provides that the board shall not limit the number of applications a public utility may file, deny or condition the approval of a tariff because a public utility is subject to an alternative regulatory mechanism, require a public utility subject to an alternative regulatory mechanism to record revenues and costs in an inconsistent manner with specified federal standards, or condition approval of a tariff on the requirement that the public utility change the proposal to unagreed-upon terms.
   The bill provides that tariffs and programs approved pursuant to the bill shall be presumed to be just and reasonable in general rate case proceedings. The bill prohibits the board from conditioning approval or denial of a tariff on the final adoption of rules and requires the board to adopt rules related to the bill.
   The bill applies to a public utility filing an application with the board for review of a tariff on or after the effective date of the bill.