Origins of the Iowa Utility Policy Charrettes
During the 2023 legislative session, Republican Iowa State Representative Lundgren raised concerns regarding Iowa’s ratemaking procedures, which had not been reviewed since 2004 despite significant changes made by the state legislature to utilities’ processes and regulations. In response, HF 617 was passed and signed into law by Governor Reynolds, mandating the Iowa Utilities Board (IUB) conduct an independent review. The IUB then organized three policy charrettes, or collaborative planning processes, where all interested parties contribute to the development of a master plan. These charrettes were aimed at ensuring the provision of safe, adequate, reliable, just, reasonable and affordable utility services, with rates that are nondiscriminatory, equitable and reflective of the utility's cost of service provision within the state.
Collaborating with the Iowa Department of Administrative Services, the IUB selected London Economics International as the independent consultant for the study. As directed by HF 617, the IUB focused study activities on the following elements:
- An evaluation of the adequacy of current ratemaking law and procedure to promote the policy objectives.
- Identification of possible changes in law or procedure that might better advance the policy objectives.
- Recommendations for changes in law and administrative rules.
- Identification of ratemaking laws and procedures of other states that, if adopted in Iowa, could enhance the competitiveness of utility rates in Iowa as compared with utility rates in other jurisdictions.
Interested parties, including advocacy groups, environmental organizations, utilities, businesses and community members, could participate in each charrette either in person or virtually. Stakeholders were able to submit comments before and after each charrette via Docket No. NOI-2003-0001. MEEA staff actively participated in these charrettes and submitted comments for all three sessions, as seen in the links below. MEEA focused our comments on the importance of establishing comprehensive long-term planning alongside short-term action plans that emerge from an integrated resource plan, an area where Iowa has an opportunity to make improvements. Additionally, our comments showcased successful, robust integrated resource planning processes from states such as Indiana, Michigan and Minnesota.
What Each Policy Charrette Covered
- Policy Charrette #1 evaluated the adequacy and efficiency of Iowa’s existing ratemaking laws, procedures and administrative rules.
- Policy Charrette #2 focused on stakeholder input regarding ratemaking procedures of other states within both the Midcontinent Independent System Operator and Southwest Power Pool regions.
- Policy Charrette #3 gathered stakeholder input on proposed ratemaking mechanisms and discussions on the implementation of these changes.
Key Findings
London Economics International presented their findings to the legislature on January 9.
Key recommendations to the IUB included:
- Consider a maximum stay out provision for general rate cases.
- Enact a statue that requires rate-regulated utilities to file an integrated resource plan, and gas and water utilities to file long-term supply plans.
- Align necessity and advantages of advance ratemaking with the resource plan.
- Review tracker and rider mechanisms for utility operations.
- Initiate study to evaluate the current spending cap and alternative energy efficiency and demand response opt-out options.
- Examine the implementation of a performance-based regulation framework and various components, which include multi-year rate plans, performance mechanisms and earnings sharing mechanisms.
The complete report is accessible here.
Legislative Outcomes
The charrettes spurred the introduction of two bills in this legislation session to ensure Iowa’s ratemaking procedures and laws prioritize equity and affordability.
- SF 2244, introduced by Senator Klimesh on February 7, proposes that rate-regulated electric utilities file an integrated resource plan to the IUB within one year of the bill’s enactment. Utilities would be required to include any energy efficiency and demand response plans in the integrated resource plan. Following a hearing held by the Subcommittee on February 13, amendments were made, and the Commerce Committee released its report on February 15, recommending the passage of the bill. However, with no further movement since, it appears that this bill has likely halted for the session.
HF 2554, introduced on February 15 and managed by Representative Thomson, would introduce requirements for integrated resource plans. The bill passed the House on February 27. A Subcommittee hearing was subsequently held to discuss amendments. Following this hearing, the Committee on Commerce released its report, recommending the bill’s passage with amendments. Notably, these amendments include a new section requiring all rate-regulated electric utilities to file an integrated resource plan at least once every five years, which the IUB will evaluate for completeness. An integrated resource plan is required to include supply sources, conservation and management of demand.
Some Iowa advocates have expressed hesitancy regarding specific aspects of the legislation, particularly the language pertaining to the expansion of nuclear energy within the state and the potential for giving utilities more opportunity to raise rates without adequate oversight. As of March 21, the bill remains on the Unfinished Business Calendar, which allows bills to stay viable beyond the legislative funnel deadline.
The Iowa policy charrettes have laid the groundwork for potential legislative action and reform regarding Iowa’s ratemaking procedures. Through collaborative efforts and stakeholder engagement, these charrettes prompted the introduction of crucial bills aimed at including integrated resource planning and ensuring the provision of safe, reliable and affordable utility services for Iowa residents. Moving forward, these initiatives will play a role in shaping Iowa’s utility landscape, driving progress and innovation toward a sustainable and equitable energy future for all.
For more information about Iowa policy, contact Clara Stein.