Iowa governor signs utility-backed energy savings bill

Source: Jeffrey Tomich, E&E News reporter • Posted: Tuesday, May 8, 2018

Iowa Gov. Kim Reynolds, who as lieutenant governor shepherded an energy plan that championed energy efficiency, signed a utility-backed bill Friday that instead scales back energy savings programs.

The Republican governor, who is seeking re-election, signed Senate File 2311 against the urging of environmental and consumer advocates who argued the bill would increase utility bills and cost the state jobs.

The new law reduces what utilities can collect from consumers for energy efficiency projects by an estimated $100 million annually by capping investments at 2 percent of revenue for electric utilities and 1.5 percent for gas utilities. It also requires costs of efficiency programs to be a separate line item on bills and lets customers opt out of efficiency programs that don’t meet a certain cost-effectiveness benchmark.

The measure also exempts municipal utilities from establishing higher, discriminatory rates for customers with solar energy or wind systems.

Advocates said the changes amount to a huge step backward for Iowa energy policy.

“Completely contradicting [Reynolds’] own Iowa Energy Plan, this action is a leap backward for Iowa as it guts energy efficiency programs and allows municipal utilities to discriminate against solar energy customers,” the Iowa Environmental Council and Environmental Law & Policy Center said in a joint statement.

The Natural Resources Defense Council said the ratepayer impact (RIM) test used to decide if customers can opt out of efficiency programs has been rejected by a majority of states as ineffective.

“When one looks at how MidAmerican Energy and Alliant Energy’s electric energy efficiency programs that are currently being considered at the Iowa Utilities Board would fare under this draconian standard, the odds are not good,” NRDC said in a blog post before Reynolds signed the bill. “Nearly all of those programs would fail to clear the hurdle.”

The Iowa Senate passed the measure along party lines Monday night after a lengthy debate (Energywire, May 2). The efficiency provisions were part of a broader utility bill that also includes ratemaking changes.

The bill was supported by utilities including Alliant Energy Corp. and MidAmerican Energy Co., as well as associations representing municipal utilities and rural electric cooperatives.

Republicans said the bill would reduce costs to utility consumers by about $200 million a year while leaving $120 million for efficiency investments.

MidAmerican in November proposed a new five-year efficiency plan to take effect in 2019 that would reduce overall efficiency spending, which as of 2016 was among the highest in the nation, the utility said.

The Des Moines-based utility said the cost of its efficiency program equaled 7.7 percent of revenue in 2016, costing the average residential customer about $125 a year.

The plan filed last fall would cut that amount paid by residential customers by almost half. And with S.F. 2311 becoming law, the cuts will be deeper.