H.F. 561 Section 1. Section 476.6, subsection 22, Code 2011, is 1 amended by adding the following new paragraph: 2 NEW PARAGRAPH . d. A rate-regulated electric utility that 3 was subject to a revenue sharing settlement agreement with 4 regard to its electric base rates as of January 1, 2010, shall 5 file an application for ratemaking principles applicable to 6 the construction of a nuclear generating facility with the 7 board. The application shall comply with the provisions of 8 section 476.53. In addition, the utility shall remain bound by 9 the commitments described in the March 11, 1999, board order 10 in Docket No. SPU-98-8, unless such restrictions are eased by 11 subsequent board order. 12 Sec. 2. Section 476.53, Code 2011, is amended to read as 13 follows: 14 476.53 Electric generating and transmission facilities. 15 1. It is the intent of the general assembly to attract 16 the development of electric power generating and transmission 17 facilities within the state in sufficient quantity to ensure 18 reliable electric service to Iowa consumers and provide 19 economic benefits to the state. It is also the intent of the 20 general assembly to encourage rate-regulated public utilities 21 to consider altering existing electric generating facilities, 22 where reasonable, to manage carbon emission intensity in 23 order to facilitate the transition to a carbon-constrained 24 environment. 25 2. a. The general assembly’s intent with regard to the 26 development of electric power generating and transmission 27 facilities, or the significant alteration of an existing 28 generating facility, as provided in this subsection 1 , shall be 29 implemented in a manner that is cost-effective and compatible 30 with the environmental policies of the state, as expressed in 31 Title XI . 32 b. The general assembly’s intent with regard to the 33 reliability of electric service to Iowa consumers, as provided 34 in this subsection 1 , shall be implemented by considering the 35 -1- HF 561 (8) 84 rn/nh/mb 1/ 12

H.F. 561 diversity of the types of fuel used to generate electricity, 1 the availability and reliability of fuel supplies, and the 2 impact of the volatility of fuel costs. 3 2. a . It is also the intent of the general assembly to 4 encourage the safe and prudent development of baseload nuclear 5 electric power generation, at a reasonable cost to ratepayers. 6 Nuclear generation has a long-term proven record of providing a 7 safe, reliable, and secure source of electricity in the United 8 States and offers the potential for significant job creation, 9 substantial economic development benefits, and the production 10 of electricity at significantly reduced levels of regulated 11 air emissions when compared to output from other thermal 12 generation sources. Further, the general assembly recognizes 13 that meeting stringent environmental permit and public health 14 and safety requirements is expensive and creates significant 15 cost burdens on customers and employers attributable to the 16 imposition of additional comprehensive and costly regulations 17 by the United States environmental protection agency that 18 dramatically increase costs to customers. Finally, the general 19 assembly recognizes that development of nuclear electric power 20 generation requires significant capital investment, ongoing 21 operating expenses, and decommissioning expenses, including 22 storage or disposal of used nuclear fuel, and a substantial 23 period of time for successful nuclear generation development, 24 siting, permitting, licensing, and deployment. 25 b. The general assembly recognizes that to maximize the 26 potential for significant job creation, economic development, 27 and competitive advantage derived from a robust nuclear 28 industry, a significant workforce is required to construct and 29 operate new nuclear power plants. Such jobs include skilled 30 trades, such as welders, pipe fitters, masons, carpenters, 31 millwrights, sheet metal workers, electricians, and heavy 32 equipment operators, in addition to nuclear reactor operators, 33 radiation protection specialists, and nuclear, mechanical, and 34 electrical engineers. In order for this state to lead the 35 -2- HF 561 (8) 84 rn/nh/mb 2/ 12

H.F. 561 nation in developing this skilled workforce and to maximize 1 economic development related to nuclear electric power 2 generation, the general assembly intends for the state to 3 undertake the following: 4 (1) Create and implement plans to assess and enhance 5 educational and training systems to develop a next-generation 6 nuclear workforce. 7 (2) Assess the adequacy and potential expansion of supply 8 chain infrastructure to support the growing nuclear industry. 9 (3) Recommend steps to attract new nuclear-related 10 businesses. 11 (4) Evaluate the economic development impact affordable 12 nuclear electric power generation will have on the expansion 13 and retention of existing industry. 14 3. a. The board shall specify in advance, by order 15 issued after a contested case proceeding, the ratemaking 16 principles that will apply when the costs of the electric power 17 generating facility or alternate energy production facility 18 are included in regulated electric rates , whether collected 19 through base rates or through a rider approved under paragraph 20 “b” , subparagraph (2), subparagraph division (a), whenever a 21 rate-regulated public utility does any of the following: 22 (1) Files an application pursuant to section 476A.3 to 23 construct do any of the following in Iowa a : 24 (a) Construct a baseload electric power generating facility 25 with a nameplate generating capacity equal to or greater than 26 three hundred megawatts or a . 27 (b) Construct a combined-cycle electric power generating 28 facility , or an . 29 (c) Construct an alternate energy production facility as 30 defined in section 476.42 , or to significantly . 31 (d) Significantly alter an existing generating facility. 32 (i) For purposes of this subparagraph division (d) , a 33 significant alteration of an existing generating facility must, 34 in order to qualify for establishment of ratemaking principles, 35 -3- HF 561 (8) 84 rn/nh/mb 3/ 12

H.F. 561 fall into one of the following categories: 1 (a) (A) Conversion of a coal fueled facility into a gas 2 fueled facility. 3 (b) (B) Addition of carbon capture and storage facilities 4 at a coal fueled facility. 5 (c) (C) Addition of gas fueled capability to a coal fueled 6 facility, in order to convert the facility to one that will 7 rely primarily on gas for future generation. 8 (d) (D) Addition of a biomass fueled capability to a coal 9 fueled facility. 10 (ii) With respect to a significant alteration of an existing 11 generating facility, an original facility shall not be required 12 to be either a baseload or a combined-cycle facility. Only 13 the incremental investment undertaken by a utility under 14 subparagraph divisions (a), (b), (c), or (d) subdivision (i), 15 subparagraph part (A), (B), (C), or (D) shall be eligible to 16 apply the ratemaking principles established by the order issued 17 pursuant to paragraph “e” . Facilities for which advanced 18 ratemaking principles are obtained pursuant to this section 19 shall not be subject to a subsequent board review pursuant to 20 section 476.6, subsection 21 to the extent that the investment 21 has been considered by the board under this section . To the 22 extent an eligible utility has been authorized to make capital 23 investments subject to section 476.6, subsection 21 , such 24 investments shall not be eligible for ratemaking principles 25 pursuant to this section . 26 (2) Expresses its intent, upon completion of analyses 27 authorized pursuant to section 476.6, subsection 22, for a 28 rate-regulated utility that was subject to a revenue-sharing 29 settlement agreement with regard to its electric base rates as 30 of January 1, 2010, to file an application pursuant to section 31 476A.3 to build a nuclear generating facility including but not 32 limited to small modular reactor technology, or expresses its 33 intent to seek authority pursuant to a combined construction 34 and operating license or an early site permit from the United 35 -4- HF 561 (8) 84 rn/nh/mb 4/ 12

H.F. 561 States nuclear regulatory commission. 1 (2) (3) Leases or owns in Iowa, in whole or in part, a any 2 of the following: 3 (a) A new baseload electric power generating facility with 4 a nameplate generating capacity equal to or greater than three 5 hundred megawatts or a . 6 (b) A combined-cycle electric power generating facility , 7 or a . 8 (c) A new alternate energy production facility as defined 9 in section 476.42 . 10 (d) A new nuclear generating facility including but not 11 limited to small modular reactor technology. 12 b. In determining the applicable ratemaking principles, the 13 board shall not be limited to traditional ratemaking principles 14 or traditional cost recovery mechanisms. 15 (1) Among the principles and mechanisms the board may 16 consider, the board has the authority to approve ratemaking 17 principles proposed by a rate-regulated public utility that 18 provide for reasonable restrictions upon the ability of 19 the public utility to seek a general increase in electric 20 rates under section 476.6 for at least three years after the 21 generating facility begins providing service to Iowa customers. 22 (2) In determining the applicable ratemaking principles for 23 a nuclear generating facility or for a license or permit from 24 the United States nuclear regulatory commission, a ratemaking 25 principles order issued by the board shall incorporate all of 26 the following: 27 (a) Enable the utility to recover upon issuance of the 28 order, through a rider pursuant to a tariff filing, a return 29 on and a return of all prudent capitalized costs and a return 30 of all prudent noncapitalized costs associated with the 31 permitting, licensing, and construction of a nuclear generating 32 facility. The amount of such cost recovery from utility 33 customers shall be reduced by the amount of any funding of 34 such costs borne by the United States department of energy 35 -5- HF 561 (8) 84 rn/nh/mb 5/ 12

H.F. 561 or any other governmental entity, and costs recovered from 1 any joint owners of the nuclear generating facility. A 2 determination of all prudent costs recoverable pursuant to 3 this subparagraph division shall be made and the level and 4 rate of the recovery of such charges reset annually to reflect 5 the level of reasonable costs related to pursuit of a United 6 States nuclear regulatory commission permit or license or 7 construction costs expected to be incurred in the next twelve 8 months. A determination shall also be made of any adjustment 9 required to balance the preceding period’s actual expenditures 10 and financing costs with what had been projected and included 11 in costs recoverable for the preceding period. If applicable, 12 the utility shall report to the board annually the budgeted 13 and actual costs as compared to the estimated total in-service 14 cost of the nuclear generating facility that was presented 15 in the last annual filing, as projected through the expected 16 in-service date of the nuclear generating facility. Following 17 issuance of the board’s ratemaking principles order, the 18 utility shall file an application with the board on an annual 19 basis providing such information, with the understanding that 20 some cost components may be higher than estimated and other 21 cost components may be lower. Each annual proceeding shall 22 be completed by the board within ninety days from the date 23 of filing the application. The board, for good cause shown, 24 may extend the deadline for completing an annual proceeding 25 for an additional period not to exceed ninety days. The 26 complete methodology for determination of prudent costs shall 27 be addressed as a ratemaking principle. All United States 28 nuclear regulatory commission permitting or licensing costs 29 are to be recovered over a period not to exceed the estimated 30 construction period for a nuclear generating facility as 31 determined by the board. All nuclear generating facility 32 construction costs are to be recovered over a period not 33 to exceed the sum of the estimated construction period for 34 a nuclear unit, plus its useful life as determined by the 35 -6- HF 561 (8) 84 rn/nh/mb 6/ 12

H.F. 561 board. A utility’s commencement of cost collection shall 1 begin promptly after completion of the ratemaking principles 2 proceeding, allowing for such additional time as may be needed 3 by the board to review a compliance rider tariff filing. 4 (b) Enable the utility to recover in rates all prudently 5 incurred expenses and costs, including but not limited to 6 ongoing operations and maintenance costs, decommissioning 7 funding and site restoration costs, and taxes for such a new 8 nuclear generating facility. 9 (c) Base the allowed debt, preferred stock, and equity 10 percentages on a capital structure calculated using the 11 average of the utility’s actual thirteen-month balances for 12 long-term debt, preferred stock, and common equity. The 13 long-term debt and preferred stock thirteen-month balances 14 shall include adjustments for thirteen-month balances of 15 unamortized discount, premium, expense, and any gain or loss 16 on reacquired securities. The costs of long-term debt and 17 preferred stock shall reflect the actual embedded interest and 18 dividend rate for each issue as well as any annual amortization 19 of unamortized discount, premium, expense, and any gain or loss 20 on reacquired securities or interest rate hedges as approved 21 by the board as a ratemaking principle. The costs of common 22 equity shall reflect the following: 23 (1) The risks to which the investor’s capital is exposed 24 and not the investor’s source of funds by comparing returns on 25 investments in other enterprises having corresponding risks. 26 (2) The investor-required cost of capital of the 27 rate-regulated utility so as to maintain its credit and ability 28 to attract capital. 29 (3) Neither directly or indirectly include additional debt 30 of the rate-regulated utility’s parent or other affiliates 31 in the rate-regulated utility’s capital structure or cost of 32 service, so long as the utility equity ratio does not exceed 33 fifty-five percent as determined in this subparagraph division 34 (c). If the rate-regulated utility’s equity ratio exceeds 35 -7- HF 561 (8) 84 rn/nh/mb 7/ 12

H.F. 561 this cap, or it is anticipated it will exceed this cap, the 1 rate-regulated utility may provide a rationale to the board 2 as to why the actual capital structure is reasonable for 3 maintaining its credit, attracting capital on reasonable terms, 4 and results in reasonable costs to the rate-regulated utility’s 5 retail customers. The board shall rule upon any such request 6 in a contested case proceeding. 7 (d) Allow the utility to recover return on and a return of 8 all prudent preconstruction and construction costs incurred 9 if the utility elects not to complete or is precluded from 10 completing construction of the nuclear generating facility. 11 Costs determined to be prudent in prior annual review 12 proceedings shall not subsequently be redetermined to be 13 imprudent. The utility shall recover such costs over a period 14 not to exceed the sum of the estimated construction period for 15 a nuclear unit plus its useful life as determined by the board. 16 (e) Allow the utility to recover the net book value of any 17 coal-fired generating facility entered into service prior to 18 1974 and owned by the utility as of January 1, 2010, that the 19 utility commits to retire in anticipation of the operation 20 of a new nuclear generating facility, and that the board 21 determines to be prudent. The board shall allow for the 22 recovery of a return on, and a return of the book value of, the 23 retired generating facility over a period not greater than the 24 remaining useful life of the facility prior to a determination 25 to retire the facility. 26 c. In determining the applicable ratemaking principles, the 27 board shall make the following findings: 28 (1) The rate-regulated public utility has in effect a 29 board-approved energy efficiency plan as required under section 30 476.6, subsection 16 . 31 (2) The Except for an application for ratemaking principles 32 subject to paragraph “a” , subparagraph (2), the rate-regulated 33 public utility has demonstrated to the board that the public 34 utility has considered other sources for long-term electric 35 -8- HF 561 (8) 84 rn/nh/mb 8/ 12

H.F. 561 supply and that the facility or lease is reasonable when 1 compared to other feasible alternative sources of supply. The 2 rate-regulated public utility may satisfy the requirements of 3 this subparagraph through a competitive bidding process, under 4 rules adopted by the board, that demonstrate the facility or 5 lease is a reasonable alternative to meet its electric supply 6 needs. 7 (3) For an application for ratemaking principles subject 8 to paragraph “a” , subparagraph (2), the rate-regulated utility 9 has demonstrated through a detailed business case filed with 10 the board that it is prudent to build the proposed nuclear 11 generating facility. 12 d. The applicable ratemaking principles shall be determined 13 in a contested case proceeding, which proceeding may be 14 combined with the proceeding for issuance of a certificate 15 conducted pursuant to chapter 476A . 16 e. The order setting forth the applicable ratemaking 17 principles shall be issued prior to the commencement of 18 construction or lease of the facility. 19 f. Following issuance of the order, the rate-regulated 20 public utility shall have the option of proceeding according to 21 either of the following: 22 (1) Withdrawing its application for a certificate pursuant 23 to chapter 476A or withdrawing its ratemaking principles 24 application . 25 (2) Proceeding with the construction or lease of the 26 facility or efforts to pursue a United States nuclear 27 regulatory commission permit or license . 28 g. Notwithstanding any provision of this chapter to the 29 contrary, the ratemaking principles established by the order 30 issued pursuant to paragraph “e” shall be binding with regard 31 to the specific electric power generating facility in any 32 subsequent rate proceeding. 33 h. Any judicial action directly or indirectly resulting 34 in a modification of the board’s ratemaking principles order 35 -9- HF 561 (8) 84 rn/nh/mb 9/ 12

H.F. 561 shall be applied prospectively only. No refunds shall be made 1 of revenues previously collected, unless the board determines 2 such revenues to be in excess of the costs incurred or to be 3 incurred by the utility. With respect to financial commitments 4 made prior to any judicial action directly or indirectly 5 resulting in a modification of the board’s ratemaking 6 principles order, the utility shall recover such costs under a 7 cancellation costs ratemaking principle. 8 i. The board shall issue an order on the merits of a 9 ratemaking application within one hundred eighty days after the 10 utility files an application for ratemaking principles. The 11 board, for good cause shown, may extend the deadline for ruling 12 on the merits of the application for an additional period not 13 to exceed one hundred eighty days, and by such additional time 14 beyond that period that is agreed to by the utility. 15 4. The utilities board and the consumer advocate may 16 employ additional temporary permanent staff, or and may 17 contract for professional services with persons who are not 18 state employees, as the board and the consumer advocate deem 19 necessary to perform required functions as provided in this 20 section , including but not limited to review of power purchase 21 contracts, review of emission plans and budgets, and review of 22 ratemaking principles proposed for construction or lease of a 23 new generating facility , including a new nuclear generating 24 facility or United States nuclear regulatory commission permit 25 or license . The board and consumer advocate may also expend 26 funds they deem necessary to train such employees and provide 27 office space and equipment. Beginning July 1, 2002, there 28 is appropriated out of any funds in the state treasury not 29 otherwise appropriated, such sums as may be necessary to enable 30 the board and the consumer advocate to hire , train, house, 31 and equip additional staff and contract for services under 32 this section . The costs of the additional staff and services 33 shall be assessed to the utilities pursuant to the procedure 34 in section 476.10 and section 475A.6 . The utilities board and 35 -10- HF 561 (8) 84 rn/nh/mb 10/ 12

H.F. 561 consumer advocate may each hire up to five permanent employees 1 capable of performing functions required by this section. Any 2 persons employed by the board or consumer advocate to carry 3 out the duties of this section related to nuclear generating 4 facilities shall be paid at compensation rates consistent with 5 current standards in the nuclear energy industry, and new 6 salary classifications shall be established to set pay ranges 7 for skilled personnel in the nuclear engineering, nuclear 8 construction, and any other professional categories in the 9 nuclear energy industry the board and consumer advocate deem 10 appropriate, including but not limited to legal, accounting, 11 and skilled examiners and inspectors. 12 5. Facilities for which advanced ratemaking principles are 13 obtained pursuant to this section shall not be subject to a 14 subsequent board review pursuant to section 476.6, subsection 15 21, to the extent that the investment has been considered 16 by the board under this section. To the extent an eligible 17 utility has been authorized to make capital investments subject 18 to section 476.6, subsection 21, such investments shall not be 19 eligible for ratemaking principles pursuant to this section. 20 Sec. 3. Section 476A.6, Code 2011, is amended by adding the 21 following new subsection: 22 NEW SUBSECTION . 4. In the case of an application to 23 construct a nuclear generation facility, the applicant commits 24 to prepare plans addressing United States nuclear regulatory 25 commission and federal emergency management agency public 26 emergency preparedness and response strategy requirements 27 in the event of an accident, natural disaster, or other 28 circumstance, condition, or occurrence compromising the safety 29 and security of the facility and posing a potential threat 30 to public health, safety, or welfare. The plans shall also 31 address coordination with state emergency planning departments, 32 public safety drills, and emergency response testing in 33 response to a simulated nuclear disaster as required by the 34 rules of the United States nuclear regulatory commission and 35 -11- HF 561 (8) 84 rn/nh/mb 11/ 12

H.F. 561 the federal emergency management agency. 1 Sec. 4. ELECTRIC UTILITY RATE INCREASES —— MITIGATION 2 STUDY. The utilities board of the utilities division of the 3 department of commerce shall conduct a study to identify 4 the potential impact to customer electric utility rates 5 resulting from recent federal regulations adopted by the United 6 States environmental protection agency, and strategies to 7 mitigate this impact. The study shall be undertaken with the 8 involvement of rate-regulated electric public utilities and 9 other stakeholders identified by the board. The board shall 10 submit a report regarding the results of the study by January 11 1, 2012. 12 Sec. 5. NUCLEAR ELECTRIC POWER GENERATION —— ECONOMIC 13 DEVELOPMENT OPPORTUNITIES —— TASK FORCE. The governor shall 14 appoint a task force to evaluate the economic development 15 opportunities created through nuclear electric power generation 16 in this state and to develop specific plans to maximize these 17 opportunities. Task force members appointed by the governor 18 shall include but not be limited to representatives from the 19 state board of regents, the community colleges, the Iowa 20 department of workforce development, the department of economic 21 development, the department of education, and utility industry 22 leaders. The governor shall appoint a chairperson from among 23 the members. The task force shall submit a report summarizing 24 its evaluation and containing recommendations to the general 25 assembly by January 1, 2012. 26 -12- HF 561 (8) 84 rn/nh/mb 12/ 12