H.F. _____ Section 1. Section 476.6, Code 2023, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 22. Innovative utility programs. 3 a. It is the intent of the general assembly to encourage 4 public utilities to pursue innovation in pricing and programs 5 to meet the dynamic needs of current and prospective customers, 6 enable price-responsive solutions, and to provide economic, 7 environmental, employment, and other benefits to the state. 8 It is also the intent of the general assembly that these 9 new endeavors shall not negatively impact nonparticipating 10 customers. Therefore, the general assembly declares that 11 innovative utility programs are essential to further the 12 attraction and retention of customers to benefit the state’s 13 economy and to support economical and sustainable energy 14 production. 15 b. (1) A tariff authorized under this subsection shall 16 comply with all of the following conditions: 17 (a) A program created under the tariff shall be available to 18 interested energy customers and customer participation shall 19 be optional. 20 (b) A tariff shall define the eligible customer groups. 21 (c) Costs of the program shall be borne by participating 22 customers, including program-specific facilities and 23 administrative or overhead costs. Program costs shall include 24 direct costs associated with the construction, operation, 25 maintenance, and interconnection of facilities, including new 26 transmission infrastructure directly arising from the tariff 27 program and costs related to the implementation of tariff 28 programs. Participants in a tariff approved pursuant to this 29 section shall participate in future indirect costs allocated to 30 customers of that utility without regard for the existence of a 31 tariff approved pursuant to this section. 32 (d) An eligible customer group shall not exclude directly 33 competing customers in the same customer service territory. 34 For purposes of this subparagraph, “directly competing 35 -1- LSB 1811YC (2) 90 es/rn 1/ 6

H.F. _____ customers” means customers that make the same end product or 1 offer the same service for the same general group of customers, 2 and excludes customers that only produce component parts of the 3 same end product. 4 (e) A tariff shall not alter the existing base rates or 5 charges of the public utility. Refund, credit, or waiver of 6 existing base rates or charges offered as part of the program 7 shall not be considered an alteration of existing base rates 8 or charges. 9 (f) The program created under the tariff shall not 10 negatively impact nonparticipating customers. 11 (2) A tariff authorized under this subsection may include 12 any of the following: 13 (a) Recovery of costs associated with program-specific 14 services or facilities, including but not limited to energy 15 storage, renewable hydrogen, transmission, electric generating 16 facilities, electric distribution facilities, renewable natural 17 gas generation facilities, renewable natural gas distribution 18 facilities, utility-assisted hourly prices, or liquefied 19 natural gas facilities. 20 (b) A just and reasonable rate of return applicable to 21 the program for its duration for new facilities, existing 22 facilities, or services provided by the public utility that are 23 serving the program created under the tariff. In the absence 24 of a program-specific rate of return, the rate of return 25 approved in a public utility’s most recent general rate case 26 proceeding shall be presumed to be just and reasonable for the 27 purpose of this subparagraph. 28 (c) Application of the program to readily identifiable 29 customer usage patterns, customer characteristics, or output 30 of specified facilities. 31 (d) Assignment of program benefits, including nonmonetary 32 benefits which may derive from dynamically balancing supply 33 and demand, providing ancillary services, or the production of 34 renewable energy attributes. 35 -2- LSB 1811YC (2) 90 es/rn 2/ 6

H.F. _____ (e) When the program created under the tariff replaces 1 a service for which the public utility collects an existing 2 base rate or charge, a tariff may refund, credit, or waive the 3 base rate or charge for the replaced service. A participating 4 customer shall pay the costs of remaining services received 5 from the public utility unless those costs are refunded, 6 credited, or waived under the program created by the tariff. 7 (f) When the program created under the tariff is designed 8 to recover costs associated with existing facilities, such 9 recovery would require reconciliation of the impact to 10 nonparticipating customers. Existing facilities subject to 11 advance ratemaking principles established pursuant to section 12 476.53 are ineligible for program inclusion. 13 (g) If the program or its eligible customer group 14 cease to exist and the public utility seeks the recovery 15 of the program-specific facilities through a general rate 16 case proceeding, the public utility shall demonstrate the 17 reasonableness and prudence without any presumption regarding 18 approval of such request. A public utility shall not be 19 prohibited from recovering the costs of program-specific 20 facilities through an alternative regulatory mechanism. 21 c. A public utility’s participation under this subsection 22 is not mandatory. A public utility that elects to propose a 23 tariff or tariff amendment under this subsection shall file an 24 application for approval with the board. The application shall 25 include an identification of costs and benefits related to the 26 program for the board’s review of the conditions specified in 27 paragraph “b” , subparagraph (1). 28 d. Within thirty days, the board shall approve, deny, 29 or docket for further review an application for a tariff or 30 amended tariff submitted pursuant to this subsection. If 31 the application is docketed for further review, the board 32 shall render a decision within ninety days from the date of 33 application filing unless an objection has been filed with 34 the board. If the application proposes to amend a tariff 35 -3- LSB 1811YC (2) 90 es/rn 3/ 6

H.F. _____ previously approved under this subsection, the board shall not 1 reconsider existing programs previously approved under the 2 tariff unless proposed as part of the amendment. All further 3 review shall be conducted as a contested case pursuant to 4 chapter 17A. 5 e. In the exercise of its authority under this subsection, 6 the board shall not do any of the following: 7 (1) Limit the number of applications a public utility may 8 file. 9 (2) Deny or condition the approval of a tariff because 10 a public utility is subject to an alternative regulatory 11 mechanism. 12 (3) Require a public utility subject to an alternative 13 regulatory mechanism to record the revenues and costs 14 associated with the program in an inconsistent manner with 15 the federal energy regulatory commission’s uniform system of 16 accounts, 18 C.F.R. pt. 101. 17 (4) Condition its approval on the public utility changing 18 its proposal if the public utility has not agreed to such 19 changes. This subparagraph shall not be interpreted to prevent 20 the board from identifying changes to the proposal which might 21 result in approval. 22 f. Tariffs and programs approved pursuant to this subsection 23 shall be presumed just and reasonable in any subsequent general 24 rate case proceeding. 25 g. The board shall not condition approval or denial of a 26 tariff on final adoption of rules by the board. 27 h. The board shall adopt rules pursuant to chapter 17A to 28 implement this subsection. 29 Sec. 2. APPLICABILITY. This Act applies to a public utility 30 filing an application with the utilities board for review of a 31 tariff on or after the effective date of this Act. 32 EXPLANATION 33 The inclusion of this explanation does not constitute agreement with 34 the explanation’s substance by the members of the general assembly. 35 -4- LSB 1811YC (2) 90 es/rn 4/ 6

H.F. _____ This bill creates a tariff program relating to innovative 1 utility programs. 2 The bill provides that it is the intent of the general 3 assembly to encourage public utility innovation in pricing 4 and programs, and that the new innovations not negatively 5 impact nonparticipating customers. The bill additionally 6 provides that it is the intent of the general assembly to 7 attract and retain customers for the benefit of the state’s 8 economy, support of economical energy production, and support 9 of sustainable energy production. 10 The bill authorizes a tariff program. The bill provides 11 that a tariff shall comply with several provisions. The 12 tariff shall be optional for customers, define eligible 13 customer groups, and assess program costs to participating 14 customers. Program costs shall include specified direct costs 15 arising from the tariff program and costs related to the 16 implementation of tariff programs. Participants of a tariff 17 program shall participate in future indirect costs allocated 18 to customers of that utility without regard for the existence 19 of an approved tariff. The tariff shall not allow for an 20 eligible customer group excluding directly competing customers 21 in the same customer service territory, alter existing base 22 rate or charges of the public utility, or negatively impact 23 nonparticipating customers. A tariff may include provisions 24 relating to recovery of costs, rate of return, application of 25 the program to other specified patterns, program benefits, 26 and refunds, credits, or waivers where the program replaces 27 an existing service, or recovery of costs associated with 28 existing facilities. A participating program customer shall 29 pay the costs of the services received from the public utility 30 unless the costs are refunded, credited, or waived under the 31 program. The bill provides that if the program or eligible 32 customer group cease to exist and the public utility seeks 33 recovery of the program-specific facilities through a general 34 rate case proceeding, the public utility shall demonstrate the 35 -5- LSB 1811YC (2) 90 es/rn 5/ 6

H.F. _____ reasonableness and prudence without any presumption regarding 1 approval of such request. A public utility shall be allowed 2 to recover program-specific facilities though alternative 3 regulatory mechanisms. 4 The bill provides for tariff application and approval. A 5 public utility’s authority is not mandatory regarding tariffs. 6 The bill provides that an application for a tariff or amendment 7 to a tariff shall be filed with the Iowa utilities board 8 (board). The board shall approve, deny, or docket for further 9 review an application within 30 days. If the board dockets 10 the application for further review, the board shall render a 11 decision within 90 days from the date of application filing, 12 unless an objection is filed. The board shall not reconsider 13 existing programs previously approved under the tariff during a 14 review of an application for an amendment to a tariff unless 15 the review of a program is proposed as part of the amendment. 16 The bill prohibits the board from certain actions. The 17 bill provides that the board shall not limit the number of 18 applications a public utility may file, deny or condition the 19 approval of a tariff because a public utility is subject to 20 an alternative regulatory mechanism, require a public utility 21 subject to an alternative regulatory mechanism to record 22 revenues and costs in an inconsistent manner with specified 23 federal standards, or condition approval of a tariff on the 24 requirement that the public utility change the proposal to 25 unagreed-upon terms. 26 The bill provides that tariffs and programs approved 27 pursuant to the bill shall be presumed to be just and 28 reasonable in general rate case proceedings. The bill 29 prohibits the board from conditioning approval or denial of a 30 tariff on the final adoption of rules and requires the board to 31 adopt rules related to the bill. 32 The bill applies to a public utility filing an application 33 with the board for review of a tariff on or after the effective 34 date of the bill. 35 -6- LSB 1811YC (2) 90 es/rn 6/ 6