Solar bill transformed from MidAmerican power play to win-win

A bill that sparked one of last year’s most intense lobbying fights is on its way to Governor Kim Reynolds, having passed both chambers unanimously. 

STRUGGLE ENDED IN STALEMATE

At this point in 2019, unusual alliances were forming to press for and against MidAmerican Energy’s effort to impose new fees on customers investing in solar power generation.

The coalition supporting the bill consisted of utilities, business advocacy groups, and some labor organizations. The most important groups lobbying against the legislation represented the solar industry, environmental organizations, and the Iowa Pork Producers Association.

Senate File 583 passed the Iowa Senate with little trouble but stalled in the House.

A dark money group that appeared to be funded largely by MidAmerican spent at least $1.25 million on advertising to generate public pressure on state legislators.

However, more than a dozen House Republicans remained firmly opposed to the solar bill: Ross Paustian, Jarad Klein, Louis Zumbach, Joe Mitchell, Dave Maxwell, Shannon Lundgren, Phil Thompson, Jane Bloomingdale, Brian Lohse, Jeff Shipley, David Kerr, Michael Bergan, Thomas Gerhold, and Andy McKean (he became a Democrat a few weeks later).

Then House Speaker Linda Upmeyer never brought Senate File 583 to the floor before legislators adjourned for the year.

FINDING CONSENSUS

I expected a strong push by MidAmerican to persuade the holdouts while the legislature was not in session. The Iowa Farm Bureau used that tactic effectively after sixteen House Republicans kept an ag-friendly water quality bill from passing in 2017. By the time lawmakers reconvened the following year, only a small GOP faction still opposed that legislation. It became the first bill Reynolds signed in 2018.

Instead of twisting arms, MidAmerican chose another path. For about eight months, representatives of the monopoly utility negotiated with stakeholders from the solar industry, environmental community, and the Iowa Pork Producers. (Solar panels help many livestock producers offset the energy costs associated with concentrated animal feeding operations.)

Last month, those talks produced a tentative agreement on a plan to address everyone’s concerns about future solar development. The Iowa Solar Energy Trade Association told its members,

Key aspects of the deal include the codifying of net metering in state code, grandfathering of existing customers in their current plans, and a transition to a Value of Solar rate down the road. This will provide predictability for the solar industry, our customers and the utility while diversification of our state’s energy portfolio will continue to keep costs low for all customers.

Finalizing the legislative language took a few weeks, but a strike-after amendment was prepared to change the text of Senate File 583.

SMOOTH SAILING THROUGH THE HOUSE AND SENATE

Republican State Representative Gary Carlson brought Senate File 583 to the House floor on March 3. The short debate begins around the 5:07:45 mark of this video. Carlson observed,

Last year we held considerable conversation regarding this bill, often referred to as “grid equity” or “solar tax,” depending on your perspective. We did not find common ground.

Over the interim, the groups representing utilities, the solar industry, solar users, installers, and most specifically, pork producers, continued to meet with outstanding results, which will be reflected in the amendment.

House members adopted the strike-after amendment by voice vote.

Carlson praised several colleagues who worked on the bill over the past year, especially those who did the “heavy lifting” during the interim. “It’s gratifying to see that the groups came together and have come up with a solution that’s good not only for the growth of the solar industry and utilities but for Iowans.”

State Representative John Forbes, who has installed solar panels at his pharmacy in Urbandale, was the lead Democrat on the bill. In brief remarks on March 3, he expressed support for the compromise as well.

Carlson explained that the new legislative language “establishes alternative billing methods” and “provides certainty” that by July 1, 2027, or the point at which distributed generation represents 5 percent market share, the Iowa Utilities Board will establish a “Value of Solar” study. “That certainty for all customers, installers, manufacturers, utility companies, is really the key to this bill.”

The vote on final passage was 98 to 0.

The amended bill went back to the Iowa Senate on March 4. Debate begins around the 12:35:00 mark of this video.

State Senator Eric Giddens spoke on behalf of Democrats. “This is good legislation. It’s good for our economy, it’s good for the environment, it’s good for the people of Iowa.” He credited hard work by stakeholders to turn the “flawed bill” senators approved last year into a

great bill that will strengthen the solar industry in this state, make distributed solar installations more affordable for homeowners, businesses, and farmers, and reduce our reliance on fossil fuels for electricity generation. This is the way the process should work, and with this vote, I’m proud to be a member of the Iowa Senate today.

In his closing remarks on Senate File 583, Republican State Senator Michael Breitbach echoed his counterpart in the House, saying the “new language gives certainty to solar customers” as well as a path forward to determining the value of solar.

Senators voted 48 to 0 to approve the amended bill.

Josh Mandelbaum was involved in the negotiations as a senior attorney for the Environmental Law & Policy Center. Following the Senate vote on March 4, he told Bleeding Heartland,

This legislation came out of a unique collaboration where parties came together to find a solution that benefits everyone. That’s exciting on its own, but one of the most exciting aspects of this is the certainty it will provide. Customers will be able to invest with confidence, knowing what the rules are. Solar installers and utilities will be able to plan ahead with assurance. This will lead to job creation and a robust solar market that will continue to grow and thrive.

If only every legislative battle had such a happy ending.

Credit is due to all the groups that opposed MidAmerican’s original bill, to the legislators in both parties who withstood an onslaught of direct mail, television commercials, and online advertising last year, and to MidAmerican executives who decided to search for a win-win resolution.

UPDATE: A reader asked what happens if he installs a solar system in the next few years, before the Iowa Utilities Board develops “Value of Solar” pricing. Does net metering apply?

My understanding is that this legislation puts net metering into Iowa Code for the first time, ensuring that future wind or solar users will be able to credit the excess electricity generated through their solar system back to the grid. Although it has been state policy since the 1980s, net metering was never codified, which means the Iowa Utilities Board could substantially alter or do away with it.

The provisions of this bill apply only to customers of Iowa’s investor-owned utilities (MidAmerican and Alliant Energy), not to those who get their power through rural electric cooperatives or municipal utilities.

LATER UPDATE: Mandelbaum clarified,

The two billing methods – net billing and inflow outflow will both be the functional equivalent of net metering. The inflow-outflow method will eventually transition to the Value of Solar rate. Whatever the billing method, when a customer installs under that method they can lock in the rate for 20 years providing certainty in how the investment will work.

FINAL UPDATE: Governor Kim Reynolds did not comment separately on this legislation when she signed it into law on March 12. Senate File 583 merited only a brief mention in a news release, along with more than a dozen other bills the governor approved the same day. The stakeholders that negotiated the deal released the following joint statement:

Adoption of Solar Bill Paves Way for Renewable Energy Growth in Iowa

Bipartisan legislation earned unanimous support in Legislature

DES MOINES – Governor Kim Reynolds signed Senate File 583 today, a bill that will provide predictability for Iowa’s solar industry, utilities and customers. The legislation passed both the Iowa House of Representatives and the Iowa Senate unanimously.

The legislation was the result of collaborative discussion between numerous stakeholders, including MidAmerican Energy, the Iowa Solar Energy Trade Association (ISETA), Iowa Pork Producers Association (IPPA), Iowa Environmental Council (IEC) and the Environmental Law and Policy Center (ELPC).

“Iowa’s solar industry was proud to collaborate with stakeholders to find a compromise that provides consistency and opportunity for solar energy to continue to grow in Iowa,” said Tim Dwight, President of ISETA. “We thank legislators and the Governor for passing and signing Senate File 583 into law. Solar energy helps diversify Iowa’s energy portfolio and will continue to keep costs low for all energy customers. This legislation ensures that Iowa farmers, small businesses and homeowners will continue to play a role in Iowa’s renewable energy leadership.”

The bill grandfathers all existing customers with their current agreements.

“This bill provides certainty that helps farmers plan ahead if they want to install solar technology, and it protects the financial interests of those who have already installed solar panels on their buildings,” said Mike Paustian of Walcott. Paustian is president of the Iowa Pork Producers Association. “Today’s pig farming requires energy resources to provide feed, water and temperature control that are vital to pig comfort and well-being. Many of our members have installed solar panels to help provide that energy while operating in a sustainable way.”

The new policy codifies net metering while creating a new, optional inflow-outflow system. Solar customers taking service under both net metering and the new inflow-outflow system would be able to supply their own energy needs and would receive credit for the energy they supply to the grid while paying for energy delivered by the utility. Each utility has the ability to choose to bill its solar customers based on net metering or an inflow-outflow rate.

“Renewable energy has a long history of bi-partisan support in Iowa and the unanimous passage and Governor’s approval of SF 583 continues that tradition,” said Kerri Johannsen, Energy Program Director for IEC. “This bill will provide the certainty needed for solar to continue to grow in Iowa. We appreciate the work of all involved to develop a policy that will work for both utilities and customers while benefiting Iowa’s economy and environment.”

The legislation also calls for a Value of Solar study to be created through a stakeholder process overseen by the Iowa Utilities Board and utilizing an independent third party consultant.

“This legislation came out of a unique collaboration where parties came together to find a solution that benefits everyone. That’s exciting on its own, but one of the most exciting aspects of this is the certainty it will provide,” said Environmental Law & Policy Center Senior Attorney Josh Mandelbaum. “Customers will be able to invest with confidence, knowing what the rules are. Solar installers and utilities will be able to plan ahead with assurance. This will lead to job creation and a robust solar market that will continue to grow and thrive.”

The updated energy policy will create long-term certainty for all customers, including solar owners, and enable even more renewable energy development in Iowa.

“This great outcome is the direct result of sincere collaboration. The new law ensures regulated utilities will recover infrastructure costs, which provides predictability to our customers,” said Adam Wright, president and CEO of MidAmerican Energy. “At the same time, it values solar generation, encourages even more renewable development and helps us keep our customers’ rates low. This is a true win for our state, and we congratulate lawmakers from both parties and the Governor for their hard work in finding common ground.”
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The Iowa Solar Energy Trade Association is the trade association serving Iowa’s solar energy industry and is dedicated to excellence in safety, quality of workmanship and technical standards for the benefit of the photovoltaic industry and its clients in the state of Iowa through public policy, public relations and education. Learn more at www.iowaseta.org.

The mission of the Iowa Pork Producers Association is promoting, educating and providing a leading voice for a sustainable, socially responsible, and globally competitive pork industry. Learn more at www.iowapork.org.

The Iowa Environmental Council (IEC) is an alliance of diverse organizations and individuals working together to protect Iowa’s natural environment. Founded in 1995, it is the largest and most comprehensive environmental coalition in the state. Through education, advocacy and coalition building, the Council raises awareness, generates action, and creates large-scale change that
makes Iowa a better place to live, work and explore. Learn more at iaenvironment.org.

The Environmental Law & Policy Center is the Midwest’s leading public interest environmental legal advocacy organization. We
develop strategic campaigns to protect natural resources and improve environmental quality across the region. Our multidisciplinary staff employs teamwork approaches using legal, economic, and public policy tools to produce successes that improve our environment and economy. For more information, visit elpc.org.

MidAmerican Energy Company, headquartered in Des Moines, Iowa, serves more than 791,000 electric customers in Iowa,
Illinois and South Dakota, and 771,000 natural gas customers in Iowa, Illinois, Nebraska and South Dakota. Information about
MidAmerican Energy is available at MidAmericanEnergy.com and company social media channels.

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