Energy Efficiency Policies and Practices in Iowa

Utility Sector

Utility sector policies are those policies that directly affect the way that the state's electricity and natural gas utilities do business and serve the energy needs of their customers.  These policies include utility forecasting and planning requirements for energy efficiency, requirements for energy efficiency delivery to customers, regulatory mechanisms to determine utility revenues for energy efficiency services, processes for working collaboratively with other utilities and energy stakeholders to advance energy efficiency, requirements for evaluating energy efficiency programs and portfolios, and policies to promote the development of the next generation of energy grids.

Resource Planning

Iowa's utilities do not engage in a traditional Integrated Resource Planning (IRP) process. Utilities are required by Iowa Code 476.6(16) to submit an annual report to the Iowa Utilities Board. The Board's rules for this utility annual reporting are found at Iowa Administrative Code 199–23(476).

Incorporation of energy efficiency into the planning process is authorized by Iowa Code 476.6(17) and the Board's rules for energy efficiency planning are found at Iowa Administrative Code 199–35(476).  Energy efficiency planning is not required on an annual basis, but is scheduled by order of the Board (19935.4).  Energy efficiency plans are required to cover a 5-year budget timeframe. Electric plans are required to include a 20-year energy needs forecast (199-35.9) and natural gas utilities are required to include a 5-year forecast (199–35.10).

► Overview of Resource Planning policies in the Midwest

Energy Efficiency Standards

Iowa has what some consider to be equivalent to an EEPS, but unlike other states where the targets are mandated, Iowa’s approach provides more flexibility. Under the authority of Iowa Code 476.6(17), the Board has promulgated rules in Iowa Administrative Code 199–35 for utility energy efficiency programs. Rate-regulated utilities are required to submit an assessment of energy usage and potential savings to the IUB but there is no hard targets mandated for what level of savings are required, though once targets have been approved for a utility they are required to meet them. The IUB considers energy efficiency to be a top priority (199–35.1).

These plans, as noted above, cover a 5-year planning timeframe. The most recent plans cover the period from 2009-2013, and in general have been approved at a level of 1.5% of sales by 2013. In some cases, such as Interstate Power and Light, lower levels have been approved (at 1.3% electric and 1.2% natural gas in the case of IPL).

Non-rate-regulated utilities in Iowa are subject to rules under Iowa Administrative Code 199–36, which requires them to file biennial energy efficiency plans with the IUB. In the filing, they must report on the results of all programs undertaken in the previous two years and the programs and potential savings that will be achieved in the upcoming two years.

Overall, utility plans in Iowa add up to a statewide level of about about 1.4% of electricity and 1.0% of natural gas sales.

► Overview of Efficiency Standards policies in the Midwest

Rate Structures & Incentives

Cost Recovery

Iowa utilities are allowed cost recovery for energy efficiency programs under Iowa Administrative Code 199–35.12(476). Subject to the filings required by the rules, cost recovery is automatic for approved energy efficiency plans. The Board periodically conducts prudence review of the cost recovery mechanisms, and energy efficiency plans and budgets in a contested case (Iowa Administrative Code 199–35.13).

Lost Revenue Recovery

Under the order closing Docket NOI-06-1: Inquiry into the Effect of Reduced Gas Usage on Rate-regulated Natural Gas Utilities has been allowed on a case-by-case basis for lost revenue recovery by natural gas utilties in Iowa.

Utility Incentives

Iowa utilities do not receive performance incentives for meeting their energy efficiency targets.

Noncompliance Penalties

There are no clear and obvious consequences for utilities that do not meet their planned energy efficiency targets.

► Overview of rate structures & incentives in the Midwest

Stakeholder Collaboration

Iowa Administrative Code 199–35.8(9) requires that utilities report on their collaboration with other utilites with which it shares service territory and on any participation by interested parties in the planning process.

As part of the settlement agreements of utilities' current energy efficiency plans, the Iowa Office of Consumer Advocate coordinates the Iowa Energy Efficiency Collaborative. This collaborative includes utilities, Office of the Consumer Counsel, Department of Economic Development, Iowa Association of Electric Cooperatives, Iowa Energy Center, Iowa Interfaith Power & Light, Office of the Consumer Advocate, and other stakeholders. It reviews various utility programs within the state and provides a venue for information sharing and addressing challenges and successes.

► Overview of stakeholder collaboratives in the Midwest

Program Evaluation

Rate-regulated utilities in Iowa must submit a monitoring and evaluation procedure to the IUB as part of their energy efficiency plan filing, under Iowa Administrative Code 199–35.8(2)f. This plan includes a proposal for how programs will be evaluated and reported to the IUB.

Non-regulated utllities must include in their biennial plan an evaluation of their program performance over the previous two-year plan, Iowa Administrative Code 199–36.5.

Cost-Effectiveness Tests

Cost-effectiveness testing for Iowa utilities is part of their energy efficiency planning process. Iowa Administrative Code 199–35.8(2)a requires that utilities evaluate the cost-effectiveness of their planned programs using the Societal Cost Test, as well as the Program Administrator Cost Test, the Ratepayer Impact Measure, and the Participant Cost Test. Utilities must provide a justification for any program with a benefit-cost ratio of less than 1.0 on the Societal test, and the portfolio must meet an overall ratio of 1.0.

Net vs. Gross

Iowa utilties are required by IAC 199–35.8(2)c to report both gross and net savings potential and to account for free-ridership in their energy efficiency plans.

Technical Resource Manual

Iowa does not have a statewide Technical Resource Manual. Deemed savings are approved on a case-by-case basis as part of utilities' energy efficiency plan filings.

► Overview of efficiency program evaluation in the Midwest

Smart Grid

The Smart Grid Information Clearninghouse identifies the following smart grid projects in Iowa:

Recovery Act-funded smart grid projects that benefit Iowa, as identified on SmartGrid.gov include:

► Overview of smart grids in the Midwest



Read the report that accompanies these pages:
Energy Efficiency Policies, Programs, and Practices in the Midwest:
A Resource Guide for Policymakers (2014 Edition)

►more information about the Resource Guide