SF 2244 (LSB 5856XS (5) 90)

SENATE FILE 2244

BY  KLIMESH

A BILL FOR

An Act relating to rate-regulated electric utilities and integrated resource plans.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 476.1, Code 2024, is amended by adding the following new subsection:
   NEW SUBSECTION.  1A.  The utilities board shall seek to ensure safe, adequate, reliable, and affordable utility services provided at rates that are nondiscriminatory, just, reasonable, and based on the utility’s cost of providing service to customers within the state.
    Sec. 2.  Section 476.1A, Code 2024, is amended by adding the following new subsection:
   NEW SUBSECTION.  5A.  Electric utility resources, including electric generation, should be planned, designed, constructed, and operated to minimize costs to customers and to ensure safe, adequate, and reliable service. To serve these purposes, the board shall administer a resource planning procedure for investor-owned electric utilities in the state, including any investor-owned utility whose operations are limited to electric transmission services.
    Sec. 3.  Section 476.3, subsection 1, Code 2024, is amended to read as follows:
   1.  A public utility shall furnish reasonably adequate service at rates and charges in accordance with tariffs filed with the board.  A rate charged by a public utility to a similarly situated customer of the same service class shall differ only if the difference is based on demonstrable, measurable differences in the cost of providing the service. The rate charged to a customer shall be based upon the costs incurred to serve the customer. When there is filed with the board by any person or body politic, or filed by the board upon its own motion, a written complaint requesting the board to determine the reasonableness of the rates, charges, schedules, service, regulations, or anything done or omitted to be done by a public utility subject to this chapter in contravention of this chapter, the written complaint shall be forwarded by the board to the public utility, which shall be called upon to satisfy the complaint or to answer it in writing within a reasonable time to be specified by the board. Copies of the written complaint forwarded by the board to the public utility and copies of all correspondence from the public utility in response to the complaint shall be provided by the board in an expeditious manner to the consumer advocate. If the board determines the public utility’s response is inadequate and there appears to be any reasonable ground for investigating the complaint, the board shall promptly initiate a formal proceeding. If the consumer advocate determines the public utility’s response to the complaint is inadequate, the consumer advocate may file a petition with the board, which shall promptly initiate a formal proceeding if the board determines that there is any reasonable ground for investigating the complaint. The complainant or the public utility also may petition the board to initiate a formal proceeding, which petition shall be granted if the board determines that there is any reasonable ground for investigating the complaint. The formal proceeding may be initiated at any time by the board on its own motion. If a proceeding is initiated upon petition filed by the consumer advocate, complainant, or the public utility, or upon the board’s own motion, the board shall set the case for hearing and give notice as it deems appropriate. When the board, after a hearing held after reasonable notice, finds a public utility’s rates, charges, schedules, service, or regulations are unjust, unreasonable, discriminatory, or otherwise in violation of any provision of law, the board shall determine just, reasonable, and nondiscriminatory rates, charges, schedules, service, or regulations to be observed and enforced.
    Sec. 4.  Section 476.6, subsection 15, paragraph a, subparagraph (1), subparagraph division (a), Code 2024, is amended to read as follows:
   (a)  Electric utilities required to be rate-regulated under this chapter shall file five-year energy efficiency plans and demand response plans with the board unless the utility files an integrated resource plan under section 476.53B. Gas utilities required to be rate-regulated under this chapter shall file five-year energy efficiency plans with the board. An energy efficiency plan and budget or a demand response plan and budget shall include a range of energy efficiency or demand response programs, tailored to the needs of all customer classes, including residential, commercial, and industrial customers, for energy efficiency opportunities. The plans shall include programs for qualified low-income persons including a cooperative program with any community action agency within the utility’s service area to implement countywide or communitywide energy efficiency programs for qualified low-income persons. Rate-regulated gas and electric utilities shall utilize Iowa agencies and Iowa contractors to the maximum extent cost-effective in their energy efficiency plans or demand response plans filed with the board.
    Sec. 5.  NEW SECTION.  476.53B  Electric utility integrated resource plan.
   1.  a.  A rate-regulated electric utility shall file with the board an integrated resource plan no later than one year after the effective date of this Act. The plan shall include the period of time between approval of the plan and ending ten years after the filing of the plan.
   b.  The initial plan approval shall be conducted as a contested case proceeding pursuant to chapter 17A.
   2.  The utility shall file an update to the initial plan three years after the initial filing of the integrated resource plan. The update shall include any changes from the initial filing. The updated integrated resource plan shall be subject to a contested case proceeding but shall be limited to the changes included in the updated filing.
   3.  Three years after the filing of the updated integrated resource plan, the utility shall file a fully comprehensive plan that shall be subject to a contested case proceeding.
   4.  a.  The plan shall include utility facilities and resources for the provision of electric service including the following:
   (1)  Electric generation.
   (2)  Electric distribution facilities.
   (3)  Electric transmission facilities owned and operated by the utility.
   (4)  Any contractual or other arrangements including, without limitation, demand response arrangements, energy efficiency measures, peak load management, distributed generation, power purchase agreements, and wholesale market purchases, by which the utility may meet or modify demand for service.
   b.  The plan shall include a description of existing facilities and resources as of the date of filing, including any of the following:
   (1)  Generation facilities, which shall include all of the following information for each generation facility:
   (a)  The type and nameplate capacity.
   (b)  The location.
   (c)  The age.
   (d)  The purpose and operational characteristics.
   (e)  The net capacity and annual output for each of the past two calendar years.
   (f)  The fuel type and source and annual consumption of fuel for each of the past two calendar years.
   (g)  The cost of construction.
   (h)  The depreciation and undepreciated balance.
   (i)  The projected useful life or scheduled date for removal from service and reason for retirement.
   (j)  A decommissioning plan, if any.
   (2)  Transmission and distribution facilities, which shall include all of the following information for each transmission and distribution facility:
   (a)  The type and voltage.
   (b)  The location.
   (c)  The age.
   (d)  The cost of construction.
   (e)  The depreciation and undepreciated balance.
   (f)  The projected useful life or scheduled date of removal from service and reason for retirement.
   (3)  Any facility or resource retirements or terminations during the past two years or since submission of the last plan update.
   (4)  Any additional data the board deems appropriate and may require by rule.
   c.  The integrated resource plan shall include the projection for demand for service for each of the next ten years, by customer class and characteristic load shape, and the data and assumptions supporting the projections. The plan shall include projections for wholesale sale of generation output to a purchaser outside the utility system but within Iowa, and outside the state. The plan shall include a proposal to provide safe, adequate, and reliable service to customers at the lowest cost, in light of projected demand over the next ten years. The plan shall identify the facilities and resources that the utility proposes to use for these purposes. The plan shall incorporate the construction, purchase, retirement, and replacement of utility facilities and resources, as well as contracting for resources or services that are alternatives to or substitutes for utility ownership, including demand response arrangements, energy efficiency measures, peak load management, distributed generation, power purchase agreements, and wholesale market purchases.
   d.  The plan shall include proposed facilities and resources including any of the following:
   (1)  Proposed electric generation facilities, which shall include all of the following information for each proposed electric generation facility:
   (a)  The type and nameplate capacity.
   (b)  The location.
   (c)  The purpose and projected operational characteristics.
   (d)  The projected net capacity and annual output.
   (e)  The fuel type and source.
   (f)  The annual consumption of fuel and means of delivering to the facility.
   (g)  The water source and annual consumption.
   (h)  The cost of construction.
   (i)  The projected annual depreciation and projected useful life or scheduled date of removal from service and reason for retirement.
   (j)  Plans for waste disposal and monitoring of emissions and wastes.
   (k)  A decommissioning plan, if any.
   (2)  Proposed transmission and distribution facilities, which shall include all of the following information for each proposed transmission or distribution facility:
   (a)  The type and voltage.
   (b)  The expected location.
   (c)  The expected associated facilities.
   (d)  The cost of construction.
   (e)  The annual depreciation and projected useful life or expected date of removal from service.
   (3)  Other proposed resources, including all of the following information for each proposed resource:
   (a)  The nature of the resource.
   (b)  The relationship of the resource to safe and adequate service.
   (c)  Contractual obligations and rights of parties.
   (d)  The projected annual cost to the utility.
   (e)  The projected annual benefits, duration, and other information to be prescribed by the board.
   e.  (1)  The plan shall include a comparative evaluation of practicable alternative facilities and resources, which shall consider cost, adequacy, and reliability. The plan shall include analysis demonstrating that the proposed resource options represent the means to achieve the purposes of safe, adequate, and reliable service at the lowest cost, as compared to all other practicable alternatives.
   (2)  The cost analysis shall reflect an evaluation of all elements of the cost of the options, including construction costs, financing costs including return on equity or debt, useful life of the facility and depreciation, expenditures for interconnection, projected transmission costs, operation and maintenance, fuel expense, property taxes, rent and easements, and an adjustment to reflect average capacity factors for the type of generation facility and the need for redundancy for intermittent generation.
   (3)  The cost analysis shall account for all tax aspects of a proposed resource, including tax credits as applicable. For purposes of the cost analysis, the projected tax credits shall be reduced in proportion to Iowa’s share of federal income tax revenues paid by Iowa residents in the most recent tax year.
   (4)  The cost analysis shall take account of the necessary costs of complying with applicable laws, including environmental laws and regulations, in effect at the time of filing. The cost analysis shall not assign weight to other societal or environmental purposes other than those identified by this section.
   (5)  There shall be a rebuttable presumption in favor of the selection of the least-cost option and against any other analyzed option. The utility may rebut the presumption by demonstrating to the board the need for a higher-cost option to meet objectives of adequacy and reliability.
   (6)  The board may by rule require that all, or certain defined, facilities or resources covered by a plan shall be procured by the utility through a competitive process.
   f.  (1)  A utility shall not include in the revenue requirement for a rate application any investment, cost, or expense for any reason within the required scope of a resource plan that is not included in the current resource plan approved by the board.
   (2)  The utility may apply to the board for rate recovery of costs not covered by the most recent resource plan if the utility can demonstrate exigent changed circumstances warranting an exception to the prior planning requirement and that the proposed expenditure represents the least-cost reasonable option necessary to meet the needs of safe, adequate, and reliable service.
   (3)  A utility may not apply for a franchise pursuant to chapter 478 for any transmission facility that is not included in the current resource plan.
   (4)  No investment shall be eligible for advance ratemaking under section 476.53 unless it has been included in the most recent resource plan approved by the board.
   g.  The plan shall include any energy efficiency plans and demand response plans. An electric utility subject to this section shall file an energy efficiency plan and demand response plan with the integrated resource plan and adhere to the timeline described in this section. An energy efficiency plan and demand response plan shall not be subject to a separate contested case proceeding and may only be addressed in the contested case proceeding for the integrated resource plan.
   h.  The board shall by rule provide for a contested case proceeding to consider a plan and update filed by a utility. Upon the filing of a plan, the board and the office of consumer advocate shall each review all materials and evidence filed by the utility. The board and office shall have discovery powers in the proceeding. The board may, subject to any measures the board determines to be necessary to protect proprietary utility information, require evidence and other information provided to the board and office to be disclosed to an intervenor and a stakeholder. The office shall file with the board an evaluation of the filed plan and the board shall take into account the analysis by the office in the determination by the board.
   i.  The board shall by order approve or disapprove a filed plan and may conditionally approve a plan subject to the filing of a specific modification, not later than ten months after the initial filing and not later than five months after an updated filing. The board shall not approve a plan unless the utility shows by a preponderance of evidence that implementation of the plan can reasonably be expected to achieve the goals of safe, adequate, and reliable service, and that the plan satisfies the least-cost standard.
    Sec. 6.  REPEAL.  Section 476.53A, Code 2024, is repealed.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to an electric utility filing an integrated resource plan.
   The bill directs the Iowa utilities board (board) to seek safe, adequate, reliable, and affordable services and nondiscriminatory rates for Iowa customers.
   The bill prohibits a public utility from setting a different rate for a customer of the same service class unless the public utility demonstrates the measurable difference in costs of providing the service.
   The bill requires a rate-regulated electric utility to file an integrated resource plan (plan) within one year of the enactment of the bill. The plan shall be subject to a contested case proceeding. The electric utility shall then file an update to the initial plan three years after the initial filing with any changes made since the initial filing. Only the changes made from the initial filing shall be subject to a contested case proceeding after the updated plan is filed. The electric utility shall file a fully comprehensive plan three years after the updated plan filing. The entire fully comprehensive plan shall be subject to a contested case.
   The bill requires a plan to include existing and proposed facilities and resources, projected service demand, comparative evaluations, cost analysis, and energy efficiency plans and demand response plans. There shall be a rebuttable presumption in favor of the least-cost option in the cost analysis. The plan shall not include any investment, cost, or expense in the revenue requirement for a rate application. An electric utility may not apply for a franchise for any transmission facility that is not already included in the current plan. No investment shall be eligible for advance ratemaking unless it is included in the most recent approved plan.
   An electric utility required to file an energy efficiency plan and demand response plan shall include the plans in the integrated resource plan and shall not be subject to a separate contested case proceeding for the energy efficiency plan and demand response plan. An electric utility shall forego the requirement of Code section 476.6 requiring an energy efficiency plan and demand response plan to be filed every five years. Instead, the electric utility shall adhere to the same timeline included in the bill for the filing deadlines for the energy efficiency plan and demand response plan.
   The bill provides authority to the board to create by rule the procedures for a contested case proceeding pursuant to the bill. After the electric utility files the plan, the board and the office of consumer advocate (office) shall review the plan. The office shall submit an evaluation of the filed plan to the board to use in determining approval of the plan. A plan may be conditionally approved by the board within 10 months of the initial filing or within 5 months of an updated filing.
   Current law provides intent of the general assembly to encourage the development of renewable electric power generation, to use the renewable power to meet local electric needs, and to develop transmission capacity to export wind power generated in Iowa. The bill strikes this intent.