Iowa lawmakers consider ditching state's energy efficiency programs

Iowans would no longer get rebates for buying energy-efficient furnaces, adding insulation to drafty homes or installing smart thermostats under a bill introduced in the Iowa Legislature.

The bill would ax requirements that Iowa utilities provide energy efficiency programs for Iowans. Those programs reached $1.03 billion over five years ending in 2016.

Energy efficiency, touted in Iowa Gov. Kim Reynolds' energy strategy for the next decade, saves consumers money on their individual bills, postpones expensive investments in new electric generation plants, and lowers the overall cost of energy, advocates say.

The programs are popular with Iowa energy consumers who want to cut their energy bills, says Josh Mandelbaum, an attorney at the Environmental Law & Policy Center.

"We all benefit from energy efficiency," he said. "Energy efficiency keeps customers' utilities bills lower and stable longer."

Both MidAmerican Energy and Alliant Energy say they support energy efficiency, but they haven't taken a position on Senate Study Bill 3078.

It's one of two bills that critics say is bad for Iowa consumers — and the environment.

Senate Study Bill 3093 could let investor-owned utilities raise consumer bills without regulator approval — and boost charges to Iowans who have adopted solar energy at their homes, Mandelbaum said.

"It looks like the utilities' Christmas list was all rolled into one bill," said Mark Schuling, Iowa's consumer advocate. "It's good for utilities but not for customers."

Mandelbaum called the bills the most "significant attacks on Iowa energy policies that we’ve ever seen."

"It's clear they don’t take Gov. Reynolds' Iowa energy plan very serious," he said.

Brenna Smith, a Reynolds spokeswoman, said the governor would not comment on the legislation before it reaches her desk.

But Smith added that Reynolds is proud of Iowa's "smart investments in a diversified energy portfolio, including biofuels, solar and wind."

Senate Study Bill 3093, which also scales back Iowa's energy efficiency programs but doesn't eliminate them, says utilities can:

Raise rates or add tariffs that are "revenue neutral." It gives the Iowa Utilities Board 30 days to consider the request, but if action isn't taken within that time, the request is considered approved.

Charge solar, wind and other renewable energy customers more, based on "the difference in cost of service and anticipated energy use."

"It has provisions that would potentially destroy solar in the state," Mandelbaum said. "And it would allow huge increases to rates without Iowa Utilities Board review."

Justin Foss, a spokesman for Alliant Energy, disagrees with Mandelbaum's assessment.

"It's not an attack on ... solar customers," Foss said. "At the end of the day, it still allows for Utilities Board approval. It still allows for regulation and it allows for input."

Foss said utilities want to "speed up the review process so we can get new programs to market faster — programs that are voluntary or are revenue neutral."

He uses building fueling stations for electric cars as an example.

Consumers are hesitant to buy electric cars without adequate fueling stations, and utilities are hesitant to build fueling stations without assurances that they'll get a return on the investment.

"In an era of Microsoft, Amazon, Google, Apple and Snapchat, bringing products to market faster is what consumers want and demand," he said.

Tina Hoffman, a spokeswoman for MidAmerican Energy, said the provision "appears to be a common-sense proposal that recognizes the need for flexibility in a modern economy."

Schuling sees the provisions opening the door for utilities and electric cooperatives to add charges on solar and wind customers.

For example, Pella Cooperative Electric charged renewable energy customers an $85 monthly fee a few years ago before consumer complaints prompted the utility to drop it.

Schuling said he's concerned the bills' reduced time for review from state regulators, the consumer advocate's office and consumers would ultimately mean higher costs for Iowans.

"Customers may not find out about it until after the fact, when they get a charge on their bills," he said. "It limits our investigation about whether it's a correct change in rates or charges."

Schuling also said that getting regulators' pre-approval for projects shifts the risk from utilities to consumers. "We have no way to challenge a project after it's built," he said.

Typically, the utilities build projects then come to regulators for approval to pass along the costs.

MidAmerican said it supports parts of Senate Study Bill 3093 that would scale back Iowa's energy efficiency programs.

The legislation calls for utilities to spend no more than 2 percent of revenue on energy efficiency programs.

MidAmerican, for example, spends 7.7 percent of revenue on home assessments, rebates and other practices that cut consumers' bills.

Hoffman, the MidAmerican spokeswoman, said the Des Moines utility believes Iowa's energy efficiency program needs to be "right-sized."

MidAmerican proposed spending $152 million less over the next five years on energy efficiency goals than it did from 2014 to 2018.

Hoffman said the utility has invested significantly in energy efficiency and met its energy efficiency goals.

And, the utility is moving toward its goal to meet 100 percent of consumers' energy needs with renewable energy sources.

"We're still offering a very robust set of programs that will achieve energy savings, but it's time to give our customers back those dollars to make decisions about how they want to spend it," Hoffman said.

The plan, submitted to the Utilities Board, proposes spending $360 million through 2023.