Iowa Senate OKs plan to rewrite utilities laws while critics predict higher costs

The Iowa Senate passed a controversial bill Tuesday night that rewrites some key provisions of the state's utilities laws with changes that Republicans promised will provide clean, reliable energy at a reduced cost for Iowa consumers.

Democrats who fought the bill angrily claimed that Iowa consumers will be forced to pay millions more each year for their utility bills as a result of the changes. They also warned that thousands of Iowa jobs will be lost because the legislation will make energy efficiency initiatives optional.

Senate File 2311 was approved 27-23, sending the bill to the Iowa House, where similar legislation has stalled this session. The legislation passed the Senate despite opposition from a host of prominent groups and businesses that included Facebook, Apple, Google and Microsoft, as well as the Iowa Pork Producers.

Sen. Michael Breitbach, R-Strawberry Point, said the bill represents the first comprehensive energy proposal debated by lawmakers in decades. He downplayed criticism by Democrats, saying the legislation will create transparency in billing that's not provided now to Iowa utility customers. He also predicted that Iowans will continue to purchase energy efficient appliances.

"I don't think that you can buy non-energy efficient appliances and I don't know anybody who would," Breitbach said. "This bill will help stimulate our economy by putting more money in the hands of our consumers."

Breitbach said the legislation will clarify the jurisdiction of the Iowa Utilities Board over non-rate regulated utilities and reduce regulatory inefficiencies; create an opt-out program for customers who don't want to participate in energy efficiency initiatives and demand response incentive programs; ensure that costs of providing gas and electricity are equally shared among customers; help extend natural gas service to underserved communities; and provide joint financing for natural gas extensions by cities and counties.

Sen. Robert Hogg, D-Cedar Rapids, criticized the bill, saying a consultant's report shows Alliant Energy's customers in Iowa would pay an additional $139 million annually as a result of the legislation and customers of other Iowa utilities would also be hurt. He added that energy efficiency has reduced the need for Iowa utilities' customers to pay for the cost of constructing expensive new electrical generating plants.

“I can’t recall a single constituent telling me there is a problem with energy efficiency. To the contrary, Iowans tell me they think energy efficiency works," Hogg said.

Breitbach disagreed, saying that many customers aren't aware that they are the ones paying for energy efficiency programs offered through public utilities.

"Maybe it doesn’t show up on your bill, but these people don’t give you these programs for nothing," Breitbach said. "If you don’t take advantage of these programs you are paying in and somebody else is getting it. It just amazes me that we think that these programs are out of the goodness of these public utilities' hearts."

One of the bill's provisions would amend Iowa law to restrict the Iowa Utilities Board's authority over energy efficiency strategies to only utilities that are rate regulated, excluding municipal utilities and rural electric cooperatives from jurisdiction. 

Another provision would cap energy efficiency plans at 2 percent of a customer’s bills for electric and 1.5 percent for gas. Current law does not cap the amount of money rate-regulated utilities must allocate to an energy efficiency plan.  As of now, the plan costs range from about 3.64 percent to 7.16 percent.

Sen. Joe Bolkcom, D-Iowa City, called the legislation "one of the dumbest bills this session," remarking that Iowans have some of the lowest utility costs in the country.

He was supported by Sen. Matt McCoy, D-Des Moines, who accused Republicans of supporting "monopoly" public utilities, while ignoring the fact that Iowa has attracted huge investments by high-tech companies which have constructed data centers here because of the availability of low-cost electricity.

"Grandma is going to have a bigger utility bill that she can't pay," McCoy said.

Sen. Jake Chapman, R-Adel, said he supports energy efficiency measures and he included them when he constructed a new home. But he added that he didn't ask other people to subsidize his efforts. He contended that the "real scam" is for low-income people who are tenants and pay utility bills with hidden fees for energy efficiency programs.

Chapman also expressed skepticism towards Democrats who are convinced that energy costs will soar if the legislation is enacted. "I think that this is a great bill for consumers and a great bill for Iowans," he remarked.

The legislation is opposed by a long list of of groups and businesses. Besides Google Inc.; Facebook; Microsoft; Apple; and the Iowa Pork Producers,  the opponents include the City of Waukee; Kinze Manufacturing; Mechanical Contractors Association of Iowa; NECA - Iowa; NextEra Energy; Center for Rural Affairs; Iowa Annual Conference of United Methodist Church; Rural School Advocates of Iowa; Urban Education Network of Iowa; Office of Consumer Advocate; Iowa chapter of the Sierra Club; AARP-Iowa; Iowa Environmental Council; Environmental Law and Policy Center; Iowa Citizens for Community Improvement; Nature Conservancy; and; Iowa Farmers Union.

The bill's supporters include: Alliant Energy Corporation; Iowa Association of Electric Cooperatives; Iowa Association of Municipal Utilities; ITC Midwest;  Nebraska Municipal Power Pool - NMPP Energy; and Black Hills Energy.

The Iowa Solar Energy Trade Association issued a statement after the Senate vote Tuesday night thanking its supporters who successfully lobbied for the removal of provisions from the bill that could have hurt the solar energy industry.  Association President Tim Dwight said a positive business and regulatory environment is critical for solar energy growth in Iowa.