HSB 519 (LSB 5423YC (4) 91)

HOUSE FILE _____ 

BY  (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON YOUNG)

A BILL FOR

An Act relating to energy production including the modification of electric power generation, energy storage, and transmission facility ratemaking principles.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  476.52A  Definitions.
   As used in this subchapter unless the context otherwise requires:
   1.  “Alternate energy production facility” means the same as defined in section 476.42.
   2.  “Energy storage” means any system, equipment, facility, or technology that is capable of absorbing energy, storing the energy for a period of time, and dispatching the energy through one of the following manners:
   a.  Using mechanical, electrochemical, thermal, electrolysis, or other processes to convert and store electric energy that was generated at an earlier time for use at a later time.
   b.  Using mechanical, electrochemical, biochemical, or thermal processes to convert and store energy generated from mechanical processes that would otherwise be wasted for delivery at a later time.
   c.  Storing energy in an electric, thermal, or gaseous state for direct use for heating or cooling at a later time in a manner that avoids the need to use electricity or other fuel sources at that later time, such as a grid-enabled water heater.
   3.  “Nuclear reactor” means an apparatus designed to produce electrical or heat energy through sustained nuclear fission in a self-supporting chain reaction.
   4.  “Repowering” means either the complete dismantling and replacement of generation equipment at an existing project site, or the installation of new parts and equipment to an existing alternate energy production facility in order to increase energy production, reduce load, increase service capacity, improve project reliability, or extend the useful life of the facility.
    Sec. 2.  Section 476.53, subsection 1, Code 2026, is amended to read as follows:
   1.  It is the intent of the general assembly to attract the development of electric power generating, energy storage, and transmission facilities within the state in sufficient quantity to ensure reliable electric service to Iowa consumers, ensure an adequate base load, and provide economic benefits to the state.  Ensuring reliable electric service and providing economic benefits may require public utilities to consider diverse electric power generating technologies and energy storage technologies, including alternate energy production facilities, nuclear reactors, and energy storage facilities. It is also the intent of the general assembly to encourage rate-regulated public utilities to consider altering existing electric power generating facilities, where when reasonable, to manage carbon emission intensity in order to facilitate the transition to a carbon-constrained environment.  It is also the intent of the general assembly to encourage the development of nuclear electric power generation within the state using nuclear reactors and to use nuclear power to meet local and regional electric needs.
    Sec. 3.  Section 476.53, subsection 3, paragraphs a, b, and d, Code 2026, are amended to read as follows:
   a.  The commission shall specify in advance, by order issued after conduct a contested case proceeding, the ratemaking principles that will apply when the costs of the electric power generating facility or alternate energy production facility are included in regulated electric rates whenever a rate-regulated public utility does seeks ratemaking principles for any of the following:
   (1)  (a)  Files an application pursuant to section 476A.3 to construct The costs of constructing in Iowa a baseload an electric power generating facility with a nameplate generating capacity equal to or greater than three hundred forty megawatts or a combined-cycle electric power generating facility, or an alternate energy production facility as defined in section 476.42, or an energy storage facility, or the construction costs to significantly alter an existing electric power generating facility, alternate energy production facility, or energy storage facility. For purposes of this subparagraph, a significant alteration of an existing generating facility must, in order to qualify for establishment of ratemaking principles, fall into one of the following categories:
   (i)  Conversion of a coal fueled an electric power generating facility into a gas fueled to an alternate fuel type for the electric power generating facility.
   (ii)  Addition of carbon capture and storage facilities at a coal fueled to an existing electric power generating facility.
   (iii)  Addition of gas fueled capability to a coal fueled facility, in order to convert the facility to one that will rely primarily on gas for future generation facilities to capture exhaust heat and thereby generate additional electric power at an existing electric power generating facility.
   (iv)  Addition of a biomass fueled capability to a coal fueled facility.
   (v)  (iv)  Repowering of an alternate energy production facility. For purposes of this subparagraph subdivision, “repowering” shall mean either the complete dismantling and replacement of generation equipment at an existing project site, or the installation of new parts and equipment to an existing alternate energy production facility in order to increase energy production, reduce load, increase service capacity, improve project reliability, or extend the useful life of the facility.
   (v)  Addition of energy storage at an existing electric power generating facility, alternate energy production facility, or energy storage facility.
   (b)  With respect to a significant alteration of an existing generating facility, an original facility shall not be required to be either a baseload or a combined-cycle facility. Only only the incremental investment undertaken by a utility under subparagraph division (a), subparagraph subdivision (i), (ii), or (iii), or (iv) shall be eligible to apply the ratemaking principles established by the order issued pursuant to paragraph “e”. Facilities for which advanced advance ratemaking principles are obtained pursuant to this section shall not be subject to a subsequent commission review pursuant to section 476.6, subsection 19, to the extent that the investment has been considered by the commission under this section. To the extent an eligible utility has been authorized to make capital investments subject to section 476.6, subsection 19, such investments shall not be eligible for ratemaking principles pursuant to this section.
   (2)  Leases or owns When leased or owned in Iowa, in whole or in part, a new baseload electric power generating facility with a nameplate generating capacity equal to or greater than three hundred forty megawatts or a combined-cycle electric power generating, a new energy storage facility, or a new alternate energy production facility as defined in section 476.42.
   b.  If the commission finds that the utility’s application meets the requirements of paragraph “c”, the commission shall specify by order issued after the contested case proceeding the ratemaking principles that will apply when the costs of the electric power generating facility or alternate energy production facility are included in regulated electric rates.

In determining the applicable ratemaking principles, the commission shall not be limited to traditional ratemaking principles or traditional cost recovery mechanisms. Among the principles and mechanisms the commission may consider, the commission has the authority to approve ratemaking principles proposed by a rate-regulated public utility that provide for reasonable restrictions upon the ability of the public utility to seek a general increase in electric rates under section 476.6 for at least three years after the generating facility begins providing service to Iowa customers.
   d.  The applicable ratemaking principles shall be determined in a contested case proceeding, which proceeding required by paragraph “a” may be combined with the proceeding for issuance of a certificate conducted pursuant to chapter 476A.
    Sec. 4.  Section 476.53, subsection 3, Code 2026, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  h.  Notwithstanding any provision of this chapter to the contrary, the return on equity for a utility’s wind energy systems and solar energy systems shall be the same as the utility’s most recent rate proceeding.
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 energy production including the modification of electric power generation, energy storage, and transmission facility ratemaking principles.
   The bill modifies intent language to reflect an intent to attract energy storage and develop nuclear power generation for consumers in the state.
   The bill alters ratemaking principle processes and modifies when a rate-regulated public utility may seek ratemaking principles. In addition to electric power generating facilities and alternate energy production facilities, the utilities commission (commission) may specify the ratemaking principles applying to an energy storage facility.
   The bill provides that a rate-regulated public utility may seek ratemaking principles from the commission when there are construction-related costs of an electric power generating facility with a nameplate generating capacity equal to or greater than 40 megawatts, an alternate energy production facility, or an energy storage facility, or significant alterations to an existing electric power generating facility, alternate energy production facility, or energy storage facility. Current law generally provides that when a rate-regulated public utility files an application to construct a baseload electric power generating facility with a nameplate generating capacity equal to or greater than 300 megawatts or a combined-cycle electric power generating facility or an alternate energy production facility, or to significantly alter an existing generating facility, the commission shall specify in advance the ratemaking principles that will apply.
   The bill modifies the requirements for a significant alteration of an existing generating facility to qualify for the establishment of ratemaking principles. The bill provides that to qualify for ratemaking principles, the significant alteration can convert an electric power generating facility to an alternate fuel type, add carbon capture and carbon storage to an electric power generating facility, add a facility to capture exhaust heat to an electric power generating facility, repower an alternate energy production facility, or add energy storage to an existing electric power generating facility, alternate energy production facility, or energy storage facility. Current law provides that to qualify for ratemaking principles, the significant alteration can convert a coal fueled facility into a gas fueled facility, add carbon capture and carbon storage to a coal fueled facility, add gas fueled capability to a coal fueled facility, add a biomass fueled capability to a coal fueled facility, or repower an alternate energy production facility.
   The bill provides that a utility investment to convert an electric power generating facility to a different fuel type, add carbon capture and carbon storage to an electric power generating facility, or add a fuel type to an electric power generating facility shall be eligible to apply the ratemaking principles established by an order issued prior to construction or lease of a facility.
   The bill provides that a rate-regulated public utility may seek ratemaking principles for leasing or owning a new electric power generating facility with a nameplate generating capacity equal to or greater than 40 megawatts, a new energy storage facility, or a new alternate energy production facility. Current law provides that a rate-regulated public utility leasing or owning a new baseload electric power generating facility with a nameplate generating capacity equal to or greater than 300 megawatts, a combined-cycle electric power generating facility, or a new alternate energy production facility may seek ratemaking principles.
   The bill requires the commission to issue an order after the contested case proceeding that the ratemaking principles will apply when the costs of the electric power generating facility or alternate energy production facility are included in regulated electric rates once the commission finds that the rate-regulated public utility’s application for ratemaking principles meets all the commission’s requirements. The bill requires the return on equity for a utility’s wind energy systems and solar energy systems to be the same as the utility’s most recent rate proceeding.