Iowa-2023-HSB658-Introduced

H.F. _____ DIVISION I 1 ELECTRIC POWER GENERATION, ENERGY STORAGE, AND TRANSMISSION 2 FACILITY RATEMAKING PRINCIPLES 3 Section 1. NEW SECTION . 476.52A Definitions. 4 As used in this subchapter unless the context otherwise 5 requires: 6 1. “Alternate energy production facility” means the same as 7 defined in section 476.42. 8 2. “Energy storage” means any system, equipment, facility, 9 or technology that is capable of absorbing energy, storing the 10 energy for a period of time, and dispatching the energy through 11 one of the following manners: 12 a. Using mechanical, electrochemical, thermal, 13 electrolysis, or other processes to convert and store electric 14 energy that was generated at an earlier time for use at a later 15 time. 16 b. Using mechanical, electrochemical, biochemical, or 17 thermal processes to convert and store energy generated 18 from mechanical processes that would otherwise be wasted for 19 delivery at a later time. 20 c. Storing energy in an electric, thermal, or gaseous 21 state for direct use for heating or cooling at a later time 22 in a manner that avoids the need to use electricity or other 23 fuel sources at that later time, such as a grid-enabled water 24 heater. 25 3. “Nuclear reactor” means an apparatus designed to produce 26 electrical or heat energy through sustained nuclear fission in 27 a self-supporting chain reaction. 28 4. “Repowering” means either the complete dismantling and 29 replacement of generation equipment at an existing project 30 site, or the installation of new parts and equipment to an 31 existing alternate energy production facility in order to 32 increase energy production, reduce load, increase service 33 capacity, improve project reliability, or extend the useful 34 life of the facility. 35 -1- LSB 6079YC (6) 90 lh/js 1/ 8

H.F. _____ Sec. 2. Section 476.53, subsection 1, Code 2024, is amended 1 to read as follows: 2 1. It is the intent of the general assembly to attract 3 the development of electric power generating , energy storage, 4 and transmission facilities within the state in sufficient 5 quantity to ensure reliable electric service to Iowa consumers 6 and provide economic benefits to the state. Ensuring 7 reliable electric service and providing economic benefits 8 may require public utilities to consider diverse electric 9 power generating technologies and energy storage technologies, 10 including alternate energy production facilities, nuclear 11 reactors, and energy storage facilities. It is also the 12 intent of the general assembly to encourage rate-regulated 13 public utilities to consider altering existing electric power 14 generating facilities, where when reasonable, to manage carbon 15 emission intensity in order to facilitate the transition to a 16 carbon-constrained environment. 17 Sec. 3. Section 476.53, subsection 3, paragraph a, Code 18 2024, is amended to read as follows: 19 a. The board shall may specify in advance, by order issued 20 after a contested case proceeding, the ratemaking principles 21 that will apply when the costs of the electric power generating 22 facility , or alternate energy production facility , or energy 23 storage facility are included in regulated electric rates 24 whenever a . A rate-regulated public utility does may seek 25 ratemaking principles for any of the following: 26 (1) (a) Files an application pursuant to section 476A.3 27 to construct The costs of constructing in Iowa a baseload an 28 electric power generating facility with a nameplate generating 29 capacity equal to or greater than three hundred forty megawatts 30 or a combined-cycle electric power generating facility , or an 31 alternate energy production facility as defined in section 32 476.42 , or an energy storage facility, or the construction 33 costs to significantly alter an existing electric power 34 generating facility , alternate energy production facility, or 35 -2- LSB 6079YC (6) 90 lh/js 2/ 8

H.F. _____ energy storage facility . For purposes of this subparagraph, 1 a significant alteration of an existing generating facility , 2 alternate energy production facility, or energy storage 3 facility must, in order to qualify for establishment of 4 ratemaking principles, fall into one of the following 5 categories: 6 (i) Conversion of a coal fueled an electric power generating 7 facility into a gas fueled to an alternate fuel type for the 8 electric power generating facility. 9 (ii) Addition of carbon capture and storage facilities at a 10 coal fueled to an existing electric power generating facility. 11 (iii) Addition of gas fueled capability to a coal fueled 12 facility, in order to convert the facility to one that will 13 rely primarily on gas for future generation facilities to 14 capture exhaust heat and thereby generate additional electric 15 power at an existing electric power generating facility . 16 (iv) Addition of a biomass fueled capability to a coal 17 fueled facility. 18 (v) (iv) Repowering of an alternate energy production 19 facility. For purposes of this subparagraph subdivision, 20 “repowering” shall mean either the complete dismantling and 21 replacement of generation equipment at an existing project 22 site, or the installation of new parts and equipment to an 23 existing alternate energy production facility in order to 24 increase energy production, reduce load, increase service 25 capacity, improve project reliability, or extend the useful 26 life of the facility. 27 (v) Addition of energy storage at an existing electric power 28 generating facility, alternate energy production facility, or 29 energy storage facility. 30 (b) With respect to a significant alteration of an existing 31 generating facility, an original facility shall not be required 32 to be either a baseload or a combined-cycle facility. Only 33 only the incremental investment undertaken by a utility 34 under subparagraph division (a), subparagraph subdivision 35 -3- LSB 6079YC (6) 90 lh/js 3/ 8

H.F. _____ (i), (ii), or (iii) , or (iv) shall be eligible to apply the 1 ratemaking principles established by the order issued pursuant 2 to paragraph “e” . Facilities for which advanced ratemaking 3 principles are obtained pursuant to this section shall not be 4 subject to a subsequent board review pursuant to section 476.6, 5 subsection 19 , to the extent that the investment has been 6 considered by the board under this section , but may be subject 7 to the provisions of paragraph “0d” of this subsection . To the 8 extent an eligible utility has been authorized to make capital 9 investments subject to section 476.6, subsection 19 , such 10 investments shall not be eligible for ratemaking principles 11 pursuant to this section . 12 (2) Leases or owns When leased or owned in Iowa, in whole or 13 in part, a new baseload electric power generating facility with 14 a nameplate generating capacity equal to or greater than three 15 hundred forty megawatts or a combined-cycle electric power 16 generating , a new energy storage facility, or a new alternate 17 energy production facility as defined in section 476.42 . 18 Sec. 4. Section 476.53, subsection 3, Code 2024, is amended 19 by adding the following new paragraph: 20 NEW PARAGRAPH . 0d. The board may require as a condition 21 of approval of an advanced ratemaking petition for solar 22 energy production, wind energy production, or energy 23 storage by a rate-regulated public utility the filing of an 24 integrated resource plan. The board shall adopt rules for an 25 integrated resource plan filing. An integrated resource plan 26 shall include proposals for the use of resources including 27 generation, distribution facilities, transmission, limitation 28 demand response arrangements, peak load management, distributed 29 generation, power purchase agreements, and wholesale market 30 purchases. 31 Sec. 5. APPLICABILITY. This division of this Act applies to 32 an application for new or changed rates, charges, schedules, or 33 regulations filed by a public utility on or after the effective 34 date of this Act. 35 -4- LSB 6079YC (6) 90 lh/js 4/ 8

H.F. _____ DIVISION II 1 RATEMAKING REVIEW 2 Sec. 6. RATEMAKING —— PERFORMANCE-BASED REGULATION REVIEW. 3 1. The utilities board shall initiate and coordinate an 4 independent review of performance-based regulation frameworks 5 and various components, which shall include multiyear 6 rate plans, performance mechanisms such as scorecards and 7 performance incentive mechanisms, and earnings sharing 8 mechanisms. The review shall take into account the policy 9 objectives of ensuring safe, adequate, reliable, and affordable 10 utility services provided at rates that are nondiscriminatory, 11 just, reasonable, and based on the cost of the utility to 12 provide service to customers within the state. 13 2. The review shall include recommendations for changes in 14 law and administrative rules and identification of ratemaking 15 laws and procedures of other states that, if adopted in Iowa, 16 could enhance the competitiveness of utility rates in the state 17 compared with utility rates in other jurisdictions. 18 3. The consumer advocate division of the department 19 of justice shall, and rate-regulated utilities and other 20 interested persons may, participate in the review. The board 21 may utilize additional services to assist in the coordination 22 of the review and preparation of the report. The board shall 23 submit a report with findings and recommendations to the 24 general assembly by October 1, 2026. 25 EXPLANATION 26 The inclusion of this explanation does not constitute agreement with 27 the explanation’s substance by the members of the general assembly. 28 This bill relates to electric power generation, energy 29 storage, and transmission facility ratemaking principles. 30 Division I of the bill modifies intent language to reflect an 31 intent to attract energy storage for consumers in the state. 32 Division I of the bill alters ratemaking principle processes 33 and modifies when a rate-regulated public utility may seek a 34 ratemaking principle. In addition to electric power generating 35 -5- LSB 6079YC (6) 90 lh/js 5/ 8

H.F. _____ facilities and alternate energy production facilities, the 1 utilities board (board) may specify the ratemaking principles 2 applying to an energy storage facility. 3 Division I of the bill provides that a rate-regulated public 4 utility may seek ratemaking principles from the board when 5 there are construction-related costs of an electric power 6 generating facility with a nameplate generating capacity equal 7 to or greater than 40 megawatts, an alternate energy production 8 facility, or an energy storage facility, or significant 9 alterations to an existing electric power generating facility, 10 alternate energy production facility, or energy storage 11 facility. Current law generally provides that when a 12 rate-regulated public utility files an application to construct 13 a baseload electric power generating facility with a nameplate 14 generating capacity equal to or greater than 300 megawatts 15 or a combined-cycle electric power generating facility or an 16 alternate energy production facility, or to significantly alter 17 an existing generating facility or a new alternate energy 18 production facility, the board shall specify in advance the 19 ratemaking principles that will apply. 20 Division I of the bill modifies the requirements for a 21 significant alteration of an existing generating facility 22 to qualify for the establishment of ratemaking principles. 23 Division I of the bill provides that to qualify for ratemaking 24 principles, the significant alteration can convert an electric 25 power generating facility to an alternate fuel type, add 26 carbon capture and carbon storage to an electric power 27 generating facility, add a facility to capture exhaust heat to 28 an electric power generating facility, repower an alternate 29 energy production facility, or add energy storage to an 30 existing electric power generating facility, alternate energy 31 production facility, or energy storage facility. Current 32 law provides that to qualify for ratemaking principles, the 33 significant alteration can convert a coal-fueled facility into 34 a gas-fueled facility, add carbon capture and carbon storage 35 -6- LSB 6079YC (6) 90 lh/js 6/ 8

H.F. _____ to a coal-fueled facility, add gas-fueled capability to a 1 coal-fueled facility, add a biomass-fueled capability to a 2 coal-fueled facility, or repower an alternate energy production 3 facility. 4 Division I of the bill provides that a utility investment to 5 convert an electric power generating facility to a different 6 fuel type, add carbon capture and carbon storage to an electric 7 power generating facility, or add a fuel type to an electric 8 power generating facility shall be eligible to apply the 9 ratemaking principles established by an order issued prior to 10 construction or lease of a facility. 11 Division I of the bill provides that a rate-regulated 12 public utility may seek ratemaking principles for leasing 13 or owning a new electric power generating facility with a 14 nameplate generating capacity equal to or greater than 40 15 megawatts, a new energy storage facility, or a new alternate 16 energy production facility. Current law provides that 17 a rate-regulated public utility leasing or owning a new 18 baseload electric power generating facility with a nameplate 19 generating capacity equal to or greater than 300 megawatts, 20 a combined-cycle electric power generating facility, or a 21 new alternate energy production facility may seek ratemaking 22 principles. 23 Division I of the bill provides that the board may require an 24 integrated resource plan (plan) as a condition of an advance 25 ratemaking petition approval. The board shall adopt rules for 26 the plan and the plan shall include proposals for the use of 27 certain resources. 28 Division I of the bill applies to an application for new or 29 changed rates, charges, schedules, or regulations filed by a 30 public utility on or after the effective date of the bill. 31 Division II of the bill requires the board to conduct a 32 review of the performance-based regulation frameworks and 33 various components to ensure utility services are safe, 34 adequate, reliable, and affordable and provided at rates that 35 -7- LSB 6079YC (6) 90 lh/js 7/ 8