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A lobbyist for the Iowa Environmental Council says the bill could devastate utility-sponsored energy conservation programs in the state.
An Iowa bill that could gut energy efficiency programs and potentially penalize some solar customers appears likely to land on the governor’s desk.
The Iowa House of Representatives debated S.F. 2311 overnight Thursday before passing it 52-42 about 5 a.m. Friday. The state Senate already approved an earlier version and is expected to sign-off on the House amendments.
The legislation would cap spending on utility-sponsored energy efficiency programs at a level substantially below what is currently spent, and it apparently would allow utilities to charge higher fixed fees on customers with solar panels.
A representative for Iowa Gov. Kim Reynolds, a Republican who has supported clean energy in the past, could not be reached for comment Friday.
The lengthy, late-night debate last week “shows that there is a lot of angst about the bill,” said Kerri Johannsen, a lobbyist for the Iowa Environmental Council. She said members of both parties have expressed concerns about the bill’s potential impacts, thought she expects the Senate to easily approve it.
Most states require utilities to spend money on programs that help customers conserve energy such as energy efficient lighting or appliance rebates. The programs help lower bills for participants as well as all utility customers by delaying the need for more expensive infrastructure projects.
The Iowa bill would cap spending on energy efficiency at 2 percent of annual sales for electricity utilities and 1.5 percent of sales of natural gas utilities. It would also cap spending on demand response programs at 2 percent of expected retail rate revenue.
“This will be a significant reduction from what the companies have been spending,” Johannsen said. It’s also less than the savings goals proposed by the state’s largest utilities in their latest five-year efficiency plans.
Johannsen estimates that utility spending on reducing electricity use will fall by between 50 and 70 percent. The reduction in natural gas efficiency programs “is going to be devastating,” she said, at close to 90 percent.
Because energy efficiency has been widely proven to be cheaper than any source of generation, Johannsen said, “It doesn’t make any sense to cap the least-cost resource we have available.”
Furthermore, she added, the proposed caps are “really arbitrary. We haven’t been able to determine how or why they were selected. No one has made a case that it was selected on the basis that, ‘This is how much energy efficiency we felt was appropriate, or available.’
“We are not saying, ‘Spend this no matter what it costs.’ We’re saying, ‘Let’s be thoughtful, look at the costs and make it impactful, but let’s not arbitrarily limit what we’re spending.’”
The fee that funds energy efficiency programs represents about 7.5 percent of a typical MidAmerican residential customer’s monthly bill. Company spokeswoman Tina Hoffman wrote in an email that the company supports a spending cap “because it both saves customers money AND allows us to continue to achieve robust savings.”
Interstate Power & Light also supports the bill, which spokesman Mike Wagner said will “help to keep energy costs competitive for families and businesses, maintains the state’s leadership in renewable energy, and provides for opportunities for business grow and job creation.”
The cap is just one potential impact from the bill that energy efficiency advocates are bracing for. Rural electric cooperatives and municipal utilities would no longer be required to offer efficiency programs. And customers of investor-owned utilities could choose to stop paying to support their utility’s energy efficiency program if that program fails to score high enough on a cost-benefit test known as the Ratepayer Impact Test.
The energy efficiency programs by MidAmerican and Interstate Power & Light “hover around 1 percent” on the ratepayer test, Johannsen said, but the MidAmerican efficiency proposal now before state regulators scored below 1, meaning customers could opt out of paying for energy efficiency.
Cost-benefit analysis of energy-efficiency programs is done differently across country, and is the subject of vigorous debate.
Another piece of the law would allow municipal utilities to discriminate against customers with solar panels. While it would not allow them to charge different rates for energy, Johannsen said the bill apparently would allow them to take aim at solar customers through higher fixed fees or by slowing the interconnection process, for example.
Furthermore, the legislation removes the Iowa Utilities Board’s authority over those solar customers disputes. Currently, customers file complaints with the utilities board for free and go through a process. Under the bill, they would have to go to court and sue their utility.