The bill that was absolutely written by Jake Chapman, not MidAmerican Energy

Citizen lobbyist Matt Chapman (no relation to Senator Jake Chapman) digs into the politics behind a bill that has been called “the utility attack on Iowa’s clean energy leadership.” -promoted by desmoinesdem

The subcommittee hearing on Senate Study Bill 3093 was scheduled for room 315 on the south side of the capitol. Although it is a good-sized room, and the temperature was 15 degrees outside on February 1, lobbyists were packed in like sardines, and it was suffocating. Iowa Senate Commerce Committee vice chair Senator Michael Breitbach joked before the meeting, “if anyone passes out you can just lean on” the people crammed in next to them.

It would not be an exaggeration to say there were sixty people in that room. Seventy five even. SSB 3093 has more than a hundred lobbyist declarations already.

Committee chair Jake Chapman was late; you could hear the groans when someone said he was getting on the elevator and would be a few minutes. Chapman was seated and vice chair Breitbach was running the meeting. He said we would go through the legislation by section and would be considering only objections, because of time constraints. That suggested lobbyists backing the bill would keep quiet. It was also a clue that a trap was being set.

The Iowa Utilities Board is non-partisan and unable to lobby beyond noting what the legislation would do to their authority over the energy companies.

Kerri Johannsen from the Iowa Environmental Council argued against the legislation, highlighting how corrosive it would be on the ability of the Iowa Utilities Board to regulate consumer rates. She also highlighted the benefits of efficiency and clean energy, which this bill would undermine. An estimated 20,000 jobs in Iowa are linked to renewable energy. (UPDATE: Johannsen has in-depth knowledge of this issue, having previously worked as a policy analyst and legislative liaison for the Iowa Utilities Board.)

Aliant Energy lobbyist Julie Vande Hoef pushed back on any discussion of the bill’s detrimental effects.

The meeting reached the section of the bill dealing with efficiency contributions from energy companies. Senator Matt McCoy, the only Democrat on the subcommittee, asked what the implications would be for “Grandma” besides the energy companies’ windfalls.

After one of the lobbyists answered McCoy, it was Senator Chapman’s turn to speak. He had been silent up to this point. He said he agreed with McCoy about protecting consumers and grandstanded by proclaiming he’d looked at energy-efficient appliances right before the meeting and found all have the energy star rating. Appliances are much more efficient than they used to be, Chapman said. Did you know we contribute in every bill to energy efficiency, and that secret tax is legislated to not be visible? Since those credits for updating appliances come from our money, Chapman said, and his job is to keep constituents’ taxes low, he wanted an amendment to make such contributions visible on consumers’ bills.

You would think a sharp lobbyist like Vande Hoef would have pushed back on this. The fact that she was silent speaks volumes.

The fact that every dollar spent on efficiency returns two to three times as much in savings was also not mentioned.

The Aliant Energy media consultant told me they are not for scrapping energy-efficiency programs. They have endorsed SSB 3093 as introduced. They are registered as undecided on a separate proposal, Senate Study Bill 3078, which would eliminate some energy-efficiency regulations and utility company contributions to programs.

When I inquired about Senator Chapman’s proposed amendment to SSB 3093, the Alliant employee responded, “Without seeing it, I can already say that we support energy efficiency and just filed our next five-year plan on February 1.”

After SSB 3093 passed the second subcommittee on February 6, I contacted Chapman and asked if he could share his source on the supposed $160 million annual cost to Iowans, which he had cited at a weekend legislative forum on February 3.

He said he would send me a scan if he had time, adding, “I have to tell you that I am wrong…the number I have is only the electric portion. There is the same tax on natural gas which is an additional $50 million, so it’s really over $200 million annually. All customers who pay for natural gas or electricity in Iowa pay this. So yes, this includes commercial property owners as well as tenants (if they pay the utility bills) and residential home owners.”

The subcommittee hearing seemed like theater to me. Chapman likes to run committee meetings, so the fact that Breitbach chaired this one was a clue. Another clue was the way Chapman waited for McCoy to bring up how the bill would harm the consumer, then framed the consumer contributions as a scam, even though the benefit is demonstrable. A third clue: Breitbach saying near the start of the hearing that only comments against the legislation would be heard. That would make the trap more likely to be sprung by the opposition, giving it some credibility.

Clue number four was post Chapman put up on his Facebook page the evening of February 1.

My response:

The senator gave me his number in an exchange on his page and promised he would give me some quotes “for your liberal blog article.” As flattering as that was, I replied that I would like to keep our conversations where the taxpayers could read them.

At a legislative forum on February 3, Chapman played the same card again. When he went into his pitch about the “secret tax,” he asked if anyone knew they were paying it. One woman raised her hand: “I saw it on your Facebook page yesterday.”

So this talking point moved from theatrics in a subcommittee hearing to a Facebook post that was disingenuous at best to a Saturday morning meeting with constituents. The one person who had heard it before saw it on Chapman’s own Facebook feed.

The reality is, passing this bill would initiate the ripping off of consumers.

During the subcommittee hearing, CCI Action Fund member Cherie Mortice made great comments about how this bill would affect customers.

MidAmerican is sitting on a billion dollars worth of profits accumulated over 2015-16. That profit margin came from our fee money and the suggestion these proposals would not hurt consumers is wrong. I have benefited from several of the incentive programs to reduce my energy bill. They love to remind us how low our rates are compared to surrounding states, but that doesn’t relieve them of the responsibility and moral imperative to give back to our neighborhoods and communities.

Mortice called SSB 3093 the “MidAmerican Bill” once or twice. Chapman countered, “I want to be clear. I am Senator Jake Chapman and I wrote this bill, not MidAmerican Energy.” You could hear the irritation in the senator’s voice. I had assumed Breitbach was running the meeting because he had a better grasp of the issue. The purpose of the Kabuki theater (having the Commerce Committee vice chair lead the hearing on a bill Chapman claims to have authored) is not clear. I still doubt Chapman wrote this bill.

Kerri Johannsen from the Iowa Enviormental Council explained well what this bill would really do. Energy efficiency is an energy supply resource just like coal, natural gas, and wind, she said, adding that it is the lowest-cost energy resource we have. It keeps electric rates low for everyone and people who use the programs save even more. Every dollar people don’t have to spend on utility bills benefits local economies–not to mention the 20,000 jobs related to energy efficency programs.

The investor-owned utilities (MidAmerican and Alliant) don’t like energy efficiency because it means they don’t sell as much electricity and don’t earn the 10 percent rate of return they get when they build new generation, Johannsen pointed out. But spending a lot on energy efficency is not an unfair tax or wasteful. On the contrary, it’s a good investment to meet energy demand at the lowest cost.

We should listen to Johannsen, Mortice, and Des Moines City Council member Josh Mandlebaum from the Environmental Law and Policy Center, who has identified major problems with this bill.

However, Republicans on the subcommittee recommended SSB 3093 for passage on February 6. Next, it will be heard by the full Senate Commerce Committee. House Study Bill 595 is the companion bill in the lower chamber.

Incidentally, MidAmerican Energy Holdings Company has been a member of the American Legislative Exchange Council (ALEC). It sponsored ALEC’s 1998 annual meeting. ALEC drafts corporate-friendly bills on many topics and trains Republican lawmakers across the country to adopt them.

From the ALEC page on Wikipedia:

ALEC pushed for deregulation of the electricity industry in the 1990s. Maneuvering between two private sector members, the former energy trader, Enron, and the utilities trade association, Edison Electric Institute (EEI), resulted in EEI withdrawing its ALEC membership. Enron’s position on the matter was adopted by ALEC and subsequently, by many state legislatures.

Ah, Enron. You remember Enron?

The AARP, who are hawks against hidden surcharges by utilities, are registered against SSB 3093. They see through the thinly-veiled giveaway to big energy under the guise of “looking out for taxpaying constituents.” This bill would do the opposite.

Action alert from the Iowa Environmental Council:

Oppose Senate Study Bill 3093/House Study Bill 595
These bills undermine Iowa’s clean energy leadership by significantly scaling back energy efficiency, allowing new charges on solar customers, and removing consumer protections and oversight.

These bills will increase energy costs, threaten nearly 21,000 solar and energy efficiency jobs, reduce consumer choice, and increase reliance on fossil fuels.

Iowa has some of the lowest energy rates in the Midwest and the country while at the same time developing one of the strongest clean energy economies. This bill undermines many of the policies that have led to Iowa’s cost-effective clean energy leadership.

Deregulation Without Competition
• Iowa electric and gas utilities are monopolies. Consumers have no choice in their provider for electric or gas service. There is no competition among providers.
• These bills deregulate utilities without providing for any competition.
• In fact, the bills decrease consumer choice even further. The bills could scale back or even eliminate the few consumer choices available today, including energy efficiency and solar.

Undermining Iowa’s Leadership on Clean Energy
• Solar jobs are a fast-growing sector of the economy and are present all over the state. This bill threatens every solar job in the state, over 700.
• There are solar installations in every one of Iowa’s 99 counties with rural Iowa leading adoption of solar energy.
• There were over 20,000 direct jobs in the energy efficiency sector in Iowa in 2016.i These jobs are threatened as the bills scale back energy efficiency significantly.
• In 2016, Iowa was ranked as the third least expensive state overall for energy prices.”ii Iowa’s long-standing energy efficiency programs have helped keep energy costs low in Iowa.
• Utility efficiency programs currently generate between $2 and $3 in benefits for every $1 invested in efficiency.
Shifting Costs and Risks to Consumers
• Reduces needed oversight on all utilities, including the rural electric cooperatives that already have the highest rates and fewest options for customers to manage energy bills.
• Rolls back energy efficiency, which is a very low-cost resource. Energy efficiency benefits everyone and helps keep utility rates low and stable for all customers, even those that do not choose to participate directly in the programs. Rolling back energy efficiency will increase costs to customers in the long run.
• Eliminates oversight on expensive equipment to control emissions at coal plants and replaces with voluntary, pre-approval for passing costs to customers.
Attack on Energy Efficiency
• Allows large/industrial energy users to ‘opt out’ of efficiency programs, meaning fewer customers participate in efficiency and the programs will save less.
• Adds a particular cost-effectiveness test (total resource cost test) that will scale back energy efficiency options and result in less savings.
• Puts arbitrary limits on how much utilities spend on energy efficiency.
• Reduces or eliminates IUB oversight on rural electric cooperatives energy efficiency.
• Eliminates IUB reporting on efficiency to the General Assembly, reducing accountability.

Attack on Renewable Energy
• The bills allow utilities to discriminate against solar customers and charge them separate and higher rates.
• The bills could lead to massive increases in rates to solar customers effectively shutting down the solar industry in Iowa.
• Exempts rural electric cooperatives from Iowa’s long-standing policy to encourage renewable energy (476.41).

Attack on Consumer Protection and Consumer Choice
• Utilities would be able to increase rates without any effective oversight from the Iowa Utilities Board.
• Exempts electric coops from rules on customer deposits, meaning there would be no limits on the charges for new customers to get connected.
• Limits or could even eliminate customer options for adding solar or implementing energy efficiency in a home or business.
• Removes or restricts IUB oversight on a wide range of critical issues, including energy efficiency, rate increases, coal plant emissions controls, consumer protections, and rural electric coops and municipal utilities.

i Clean Energy Trust, Clean Jobs Midwest: Iowa (2017) at https://www.cleanjobsmidwest.com/state/iowa. ii Iowa Energy Plan (2016) at 4. Available at http://iowaenergyplan.org/

More information from the Iowa Environmental Council:

Energy Efficiency Benefits Everyone – Energy efficiency helps keep utility rates low and stable for all customers, even those that do not choose to participate directly in the programs.
● When utilities build or purchase energy resources, they pass the cost along to customers. Energy efficiency is the least-cost resource so eliminating it would increases costs for all customers.
● Customers who participate directly in energy efficiency programs get an additional benefit of reducing their energy use and utility bills further.
● Energy efficiency improves air quality and public health by reducing use of fossil fuels. While Iowa has successfully reduced the use of coal and gas to meet energy needs in recent years, our reliance on imported fossil fuels will increase if we stop doing energy efficiency.

Energy Efficiency is Good Business – There were over 20,000 direct jobs in the energy efficiency sector in Iowa in the most recent year data is available, 2016.[1]
● Energy efficiency savings are reinvested in local communities, which supports additional jobs.
● Job growth in the clean energy sector, including efficiency, is growing 11 times faster than overall job growth in Iowa.[2]
● Iowa’s low energy rates and clean energy policies are attracting some of the largest energy users to the state – e.g. Facebook, Google, Microsoft.

Energy Efficiency Is Widely Popular – 97% of Iowans support increasing the use of energy efficiency, including 95% of Republicans, 97% of Democrats, and 99% of Independents.[3]

Iowa’s Energy Efficiency Programs Work – Utility efficiency programs currently generate between $2 and $3 in benefits for every $1 invested in efficiency.
● These programs are required to be cost-effective and significantly exceed the required threshold.
● Current programs help a wide range of customers save money and upgrade their homes and businesses with new and efficient equipment, including farmers and agriculture, small business, homes and apartments, and larger industrial users.

There is a Lot More Savings Out There – A 2017 analysis of Iowa’s energy efficiency potential found that investor-owned utility programs could increase electric savings by 80% over current average levels and gas savings by 114% over current average levels.[4]

● The 2017 study also found that there is electric and natural gas potential across all sectors of the economy – residential, commercial and industrial – and in all types of technologies and end uses, including lighting, space heating and cooling, water heating, appliances, cooking, processes, building enveloped, and more.
● In 2016, only 1,473 out of 80,000 applicants received weatherization assistance.[5]
● New efficiency opportunities are always becoming available with emerging technologies and innovation.

Energy Efficiency is One of the Four Pillars of the Iowa Energy Plan – The Plan mentions energy efficiency more than 100 times.

● The Vision Statement says, in part: “We will continue to embrace energy efficiency”[6] and a top objective of the Energy Efficiency Pillar is to “Increase the energy efficiency … of Iowa’s existing and new buildings in all sectors.”[7]
● Governor Reynolds led development of the Iowa Energy Plan as lieutenant governor.

Iowa Energy Costs are Lower than Other States – In 2016, Iowa was ranked as the third least expensive state overall for energy prices.”[8]

● Iowa also has the lowest average electric and industrial electric prices in the Midwest.[9]

Average Total Prices, cents/kWh, 2016*
Average Industrial Prices, cents/kWh, 2016
Iowa
8.55
6.05
North Dakota
8.94
7.98
Nebraska
9.05
7.69
Indiana
9.22
6.97
Illinois
9.38
6.51
Missouri
9.74
7.12
South Dakota
9.83
7.57
*sorted by average total price from lowest to highest

[1] Clean Energy Trust, Clean Jobs Midwest: Iowa (2017) at https://www.cleanjobsmidwest.com/state/iowa.
[2] Clean Jobs Midwest.
[3] Public Opinion Strategies/Fairbank, Maslin, Maulin, Metz & Associates (2014).
[4] Dunsky Energy Consulting et al, Assessment of Iowa’s Energy Efficiency Potential (2017).
[5] Data provided by the Iowa Department of Human Rights and Dahloff Associates, Report on the Impacts and Costs of the Iowa Low-Income Weatherization Program (2017).
[6] Iowa Energy Plan at 12.
[7] Iowa Energy Plan at 38.
[8] Iowa Energy Plan (2016) at 4. Available at http://iowaenergyplan.org/.
[9] U.S. Energy Information Administration, Detailed State Data, Average Price by State by Provider 1990-2015, available at https://www.eia.gov/electricity/data/state/ .

Iowa Environmental Council fact sheet on solar energy:

Solar energy in Iowa is growing

● As of October 2017, Iowa had at least 71 megawatts (MW) of total installed solar capacity.[1] This is up from approximately 2 MW of solar installed in 2012.
● Annual solar installations in Iowa have averaged 15-20 MW per year in recent years. Iowa is on track to reach 100 MW of solar as soon as the end of 2018.[2]
● Every one of Iowa’s 99 counties has solar projects installed that benefited from the Iowa upfront solar tax credit.[3] This includes 3,395 projects and counting.
● Rural counties such as Washington County and Winneshiek County are solar hot spots with more solar installed than other counties.[4] Farmers and rural businesses are leading the use of solar in such areas.
● As of October 2017, Iowa had more small-scale distributed solar than most Midwest and Plains states.[5]

Solar energy strengthens Iowa’s economy

● There were 714 jobs supported by the solar industry in Iowa in 2016, the most recent year data is available.[6]
● Renewable energy jobs are growing much faster than job growth in other sectors. Wind and solar jobs increased 14.5% between 2015 and 2016 in Iowa.[7]
● There are at least 59 Iowa businesses involved in the solar energy supply chain.[8]
● Investment of over $166 million is associated with solar projects that benefited from the Iowa solar tax credit alone, meaning the total investment in solar is even higher.[9]

Solar energy costs are declining

● Cost have come down significantly in recent years. There has been a 55% decline in solar prices over the past five years according to the Solar Energy Industries Trade Association.[10] A recent report found that the levelized costs of utility-scale have declined by 86% over between 2009-2017.[11]
● According to data provided by the Department of Revenue, average residential solar costs per kilowatt in 2014 were $3,387, falling to $2,560 in 2017. Average business solar costs per kilowatt were $3,143 in 2014, falling to $2,319 in 2017.[12]

Utility solar and community solar are part of Iowa’s solar successes

● Many consumer-owned utilities have developed solar projects supported by Iowa’s 476C production tax credit, including 4 municipal utilities (over 5.3 MW) and 13 electric coop projects (over 5 MW).
● Farmers Electric has more solar per customer than any other utility in Iowa and one of the highest amounts of solar per customer of any utility in the U.S.[13]

Iowa has the potential to be a solar leader

● Iowa ranks 16th among U.S. states in the technical potential for solar energy production. This puts Iowa ahead of states such as Florida, Georgia, Missouri, North Carolina and South Carolina.[14]
● Iowa has the potential to build enough solar PV to meet annual electric needs by more than 150 times over.[15]
● Alliant Energy recently filed testimony regarding resource planning that shows significant additions of solar, including 100-200 MW by 2024 and as much as 900 MW over the 20 year planning horizon.[16]

[1]Energy Information Administration, Electric Power Monthly, Table 6.2B Net Summer Capacity Using Primarily Renewable Energy Sources by State (data from October 2017 as reported in December 2017) at http://www.eia.gov/electricity/monthly/?scr=email. The EIA estimate of 71 MW as of October 2017 is consistent with available data in Iowa from the Iowa Department of Revenue, Iowa Utilities Board, and multiple utilities, and may be conservative. The Iowa solar tax credit supported over 45.4 MW between 2014-2017 alone, with additional capacity not reported in 2012-2013 (no data collected on capacity for those years, could be 5-10 MW) and in 2017 (incomplete reporting given timing of annual report could add 10 MW or more); Iowa’s 476C program supported an additional 12 MW through 2017. Alliant Energy and CIPCO have added 9.2 MW not otherwise included in these numbers. Total capacity is likely over 85 MW by year-end 2017.
[2] Iowa Environmental Council estimates based on data available from EIA, Iowa Dept. of Revenue, Iowa Utilities Board, the Iowa Solar Energy Trade Association, and utilities.
[3] Iowa Department of Revenue, Solar Energy System Tax Credit Annual Report for 2017 (released January 2, 2018) available at https://tax.iowa.gov/report/Reports.
[4] Id. at Figure 1, p. 5.
[5] EIA, Electric Power Monthly, Table 6.2B. Iowa’s 64.6 MW of estimated distributed/small-scale solar was higher than distributed solar estimates for Illinois, Indiana, Michigan, Minnesota, Nebraska, Wisconsin, Kansas, North Dakota and South Dakota.
[6] Clean Energy Trust et al, 2017 Clean Jobs Iowa at https://www.cleanjobsmidwest.com/state/iowa and https://www.cleanjobsmidwest.com/wp-content/uploads/2017/09/CJM-2017-ExeSum-IA.pdf.
[7] Id.
[8] Solar Energy Industries Association, Solar Spotlight: Iowa available at https://www.seia.org/state-solar-policy/iowa-solar.
[9] IA Dept. of Revenue, Solar Energy System Tax Credit Annual Report for 2017.
[10] Solar Energy Industries Association, Solar Spotlight: Iowa.
[11] Lazard, Levelized Cost of Energy Analysis – Version 11 (November 2017) at https://www.lazard.com/media/450337/lazard-levelized-cost-of-energy-version-110.pdf.
[12] Iowa Department of Revenue, Solar Energy System Tax Credit Annual Report for 2017 at page 8.
[13] See, e.g., Farmers Electric Cooperative, Our Renewable Energy Story at http://www.feckalona.net/renewable-energy-story.html.
[14] Iowa Environmental Council, Real Potential, Ready Today: Solar Energy in Iowa.
[15] Id.
[16] Iowa Utilities Board, Docket No RPU-2017-0002, Direct Testimony of Brent R. Kitchen (filed Aug. 3, 2017) at Schedules D and E.

The Iowa Policy Project published a backgrounder on renewable power and energy efficiency programs in 2003. The report outlines the logic behind the structure of the regulating guidelines.

Only rate-regulated utilities — MidAmerican Energy and Alliant Energy — are required to offer net metering in Iowa. These two utilities account for approximately 70 percent of Iowa’s power. Each has a unique net-metering program. Alliant subsidiary Interstate Power and Light pays an “avoided cost” rate for the customer’s net excess generated above their own usage. The utility’s avoided costs are typically similar to the cost at which the utility buys energy. So, a customer that generates excess power is paid at a lower rate than the full retail price that customers pay the utility. For customers with systems that generate less than 500 kW in capacity and that generate more power than they use, MidAmerican Energy provides a credit to the customer’s account for the net excess generated and allows the customer to use the credits in the future.

No wonder Alliant Energy was lobbying hard for the changes, and Senator Chapman took offense at the suggestion MidAmerican wrote the bill.

Top image: Republican State Senator Jake Chapman’s Twitter avatar.

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