Energy Efficiency Standards
Iowa has what some consider an equivalent to an EERS, but unlike other states that mandate savings statewide, Iowa’s approach provides more flexibility for utilities and at the same time places limits on the potential for efficiency program portfolios. The Iowa Utility Board has enacted rules for utility energy efficiency programs that set annual energy savings targets for each rate-regulated electric and gas utility.
Following the passage of Senate File 2311 (2018), only investor-owned utilities are required to file energy efficiency plans and placed variable spending caps on those plans. All municipal and cooperative utilities are exempt, unless they otherwise elect to be rate-regulated. The legislation included an optional exemption provision for all customers. The exemption becomes active only if the approved energy efficiency plan and demand response plan have a cumulative Ratepayer Impact Measure test score of less than one. In this case, a customer of the electric utility may request an exemption from participation in the five-year plans. Once the customer requests an exemption, the customer is prohibited from participating in any program included in the plans. Following the passage of Senate File 638 (2019), the variable spending caps of SF 2311 were made into a hard ceiling. Energy efficiency portfolio spending is now capped at 1.5% and 2% of annual retail revenue for Gas and Electric utilities, respectively.
Rate-regulated utilities are required to submit an assessment of energy usage, peak demand and potential savings for each of the subsequent ten years following filing to the IUB for the required five-year planning cycle. Accordingly, mandatory savings targets are assigned to individual utilities, tailored to their specific service territory, customer classes and demands.
The IUB considers energy efficiency to be a top priority. While there are no statewide mandates for energy savings levels, once the IUB approves a utility’s five-year energy efficiency plan, the planned energy savings are mandated for that five-year period. The previous energy efficiency plans cover 2014–2018, and most utilities were approved at savings levels around 1.1% of annual sales through 2018. Non-rate-regulated utilities in Iowa are required to file biennial energy efficiency plans with the IUB. In the filing, they must report on the results of all programs undertaken in the previous two years and the programs and potential savings that will be achieved in the upcoming two years.
Alliant Energy, Mid-American Energy and Black Hills Energy have filed their revised plans for the 2019-2023 cycle. Going forward, investments and savings are expected to decline for this cycle as a result of the statutory provisions in Senate File 2311.
Resource Planning
Iowa's utilities do not engage in a traditional integrated resource planning (IRP) process. Utilities are required to submit an annual report to the Iowa Utilities Board (IUB). Iowa Code for utility annual reporting requires utilities to include a complete financial report of receipts and expenditures and a list of applications, including board fees. It does not include a load forecasting component.
There is a load forecasting requirement in Iowa's energy efficiency planning. Energy efficiency planning for Iowa utilities is scheduled by order of the IUB. Energy efficiency plans cover a five-year time frame and are required to include a 20-year energy needs forecast and natural gas utilities are required to include a 5-year forecast.
- Statute: IC 476.16
- Rules: IAC 199—35.9 (476)
Rate Structures & Incentives
Cost Recovery
Iowa utilities are allowed cost recovery for energy efficiency programs. Subject to the filings required by the rules, cost recovery is automatic for approved energy efficiency plans. The IUB periodically reviews the cost recovery mechanisms, and energy efficiency plans and budgets in a contested case.
Lost Revenue Recovery
Lost revenue recovery has been allowed on a case-by-case basis for natural gas utilities in Iowa.
Utility Incentives
None.
Noncompliance Penalties
None.
Stakeholder Collaboration
Iowa requires that utilities report collaboration with other utilities with which they share service territory and with other interested parties in the planning process.
As part of the settlement agreements of utilities' current energy efficiency plans, the Iowa Office of Consumer Advocate coordinates the Iowa Energy Efficiency Collaborative. This collaborative includes utilities, Office of the Consumer Counsel, Department of Economic Development, Iowa Association of Electric Cooperatives, Iowa Energy Center, Iowa Interfaith Power & Light, Office of the Consumer Advocate and other stakeholders. It reviews various utility programs within the state and provides a venue for sharing information, challenges and successes.
Program Evaluation
Rate-regulated utilities in Iowa must submit a monitoring and evaluation procedure to the IUB as part of their energy efficiency plan filing. This plan includes a proposal for how programs will be evaluated and reported to the IUB.
Non-regulated utilities must include in their biennial plan an evaluation of their program performance over the previous two-year plan.
Cost-effectiveness Testing
Cost-effectiveness testing for Iowa utilities is part of their energy efficiency planning process. Iowa requires that utilities evaluate the cost-effectiveness of their planned programs using the Total Resource Cost Test (primary test), as well as the Societal Cost Test, the Utility Cost Test, the Ratepayer Impact Measure and the Participant Cost Test. Utilities must provide a justification for any program with a benefit-cost ratio of less than 1.0 on the Total Resource Cost Test, and the portfolio must meet an overall ratio of 1.0.
Income qualified programs are not required to pass cost-effectiveness testing and are not considered in the cost-effectiveness of the overall portfolio.
Net vs. Gross
Iowa utilities are required to report both gross and net savings potential and to account for free-ridership in their energy efficiency plans.
Technical Resource Manual
The IUB approved use of the IA TRM in an order on March 22, 2017. Iowa’s TRM is developed and maintained through a collaboration among the members of the Iowa TRM Oversight Committee with project coordination support by the Iowa Utility Association. The Oversight Committee is composed of utilities that offer energy efficiency programs and advocates. The current TRM (v.8: vol I, vol II, vol III) and past versions are hosted at the IUB’s website. New versions are approved for use in the utilities' periodic EE plan filings.
State Energy Plan or Vision
In late 2015, the Iowa Economic Development Authority (IEDA) and the Iowa Department of Transportation (DOT) were tasked with preparing an Iowa state energy plan to set priorities and provide strategic guidance on Iowa’s energy future. The planning process concluded with the release of the final Iowa Energy Plan in December 2016. Iowa is now in the implementation stage of the plan. In September 2018, the Iowa Energy Office released a progress report.
State Agency Energy Reduction Requirement
The Iowa Energy Plan does not include a quantifiable commitment to energy reduction in state government. However, it does emphasize leadership on energy efficiency in Iowa’s government practices. The strategies include the Iowa B3 Benchmarking Program (an online benchmarking platform for facility managers of Iowa’s public buildings to compare a building’s performance over time or to compare between other buildings), and high-performance leasing for state use, which allows property owners and tenants to share in the costs and financial benefits of energy efficiency upgrades.
EE in New State Buildings
The 2009 Executive Order 20 by Governor Culver set out measures for improving overall government efficiency, including requiring all state buildings to conduct energy efficiency retrofits. Executive Order 20 was rescinded by Governor Branstad because he deemed the order to be unnecessarily burdensome.
In 2015, the state legislature approved the updated Life Cycle Cost Analysis (LCCA) guidelines, which are required on energy equipment installed in certain public buildings. The LCCA requirements promote energy efficiency in public buildings by accounting for reduced operational costs for energy efficient systems. The state is also involved with creating a public building benchmarking database to help target and offer assistance to buildings with high potential for energy savings and return on investment.
The State of Iowa is also enrolled in the US DOE Better Buildings Challenge program and has committed 17 million square feet under the program. Efficiency in state buildings may also be addressed in the upcoming state energy plan.