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State Energy Efficiency Policy Database

Iowa

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Summary

Iowa's utilities administer energy efficiency programs under a regulated structure with oversight by the Iowa Utilities Board (IUB) and significant input from the Office of Consumer Advocate.  Iowa Code 476.6.16 mandates that electric and natural gas utilities that are required to be rate-regulated (investor-owned utilities or IOUs) must offer energy efficiency programs through cost-effective energy efficiency plans. Energy efficiency plans filed by municipal utilities and electric cooperatives include voluntary goals. The utilities recover program costs of the plans approved by the IUB through adding tariff riders to customer bills.

Iowa's utilities have long records of funding and providing comprehensive portfolios of energy efficiency programs to all major customer categories — residential, commercial, industrial and agricultural. Funding levels have been strong throughout the years, with a notable decrease in the late 1990s as the state considered restructuring proposals. Since the early 2000s, the state has renewed and increased its commitment to energy efficiency programs. 

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

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November 8, 2013


Customer Energy Efficiency Programs

Iowa's energy utilities administer energy efficiency programs for their customers. State law requires regulated utilities to provide such programs. Most publicly owned utilities in Iowa (municipal utilities), as well as rural electric cooperatives, provide energy efficiency programs, ensuring nearly statewide coverage.

Regulated investor-owned utilities recover costs of programs approved by the Iowa Utilities Board via adding tariff riders to customer bills. This is an automatic rate pass-through, reconciled annually to prevent over-recovery or under-recovery. Recently-filed utility plans indicate an increasing level of funding for, and commitment to, energy efficiency. The IUB is authorized to conduct prudence reviews of IOU energy efficiency and may disallow imprudent costs. 

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables on the left.

Links:

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November 8, 2013


Energy Efficiency Resource Standards

Summary: Targets vary by utility, with average annual electricity savings of 1.4% and natural gas savings of 1.2% of retail sales by 2013.

Senate Bill 2386, passed in 2008, requires the Iowa Utilities Board (IUB) to develop energy savings performance standards for each regulated electric and natural gas utility, which must file plans to meet those goals cost-effectively.  Utilities that are not regulated (i.e., municipal utilities and rural cooperatives) are also required to set energy efficiency savings goals, but their plans are not reviewed or approved by the IUB. 

In compliance with this law, the IUB issued an order for investor-owned utilities to submit energy efficiency plans with an annual savings goal for both electricity and natural gas of 1.5% of average retail sales over the previous three years, to be met by December 31, 2011 (Docket No. 199 IAC 35.4). Iowa’s two investor-owned electric utilities, Interstate Power and Light Company (IPL) and MidAmerican Energy Company, complied with this request by filing Energy Efficiency Plans for 2009-2013 that outline how the utilities could meet the 1.5% electric target (Docket No. EEP-08-2, Docket No. EEP-08-1 ). Both utilities determined the 1.5% natural gas target would be unattainable.

MidAmerican filed plans to meet the 1.5% electric goal. The IUB declined to approve a slightly lower electric goal for IPL due to potential rate impacts on IPL customers. Both IPL and MidAmerican’s goals represent levels of electric savings around twice the levels achieved in 2008. Municipal and cooperative utilities also are required to implement energy efficiency programs, set energy savings goals, create plans to achieve those goals, and report to the IUB on progress. Municipal and co-operative utilities filed goals on December 31, 2009.

Iowa’s natural gas utilities also set annual energy efficiency savings targets for the period between 2009 and 2013. Annual goals vary. Municipal utilities plan to save 0.74% by 2012. MidAmerican plans 1.6% and IPL 1.3% by 2013.

In February 2013, MidAmerican filed a five-year plan in Docket No. EEP-2012-002 that proposes average annual electric savings targets ranging from 0.92% to 1.14% of retail sales forecast and natural gas savings targets ranging from 0.67% to 0.8%.  In November 2012, IPL filed a five-year plan that proposed average annual electric savings targets ranging from 1.12% to 1.16% of retail sales forecast and natural gas savings targets of 0.9% of retail sales forecast. These next round of proposed targets are under review in the aforementioned dockets, to be finalized by the end of 2013.


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August 9, 2013


Alternative Business Models

On December 18, 2006, the Iowa Utilities Board examined the possibility of decoupling profits from sales revenue for their natural gas utilities. The Board did not require utilities to decouple, but concluded that individual utilities may apply for automatic adjustment mechanisms or other rate design changes on a case by case basis. (Iowa Docket No. NOI-06-1).


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August 9, 2013


Reward Structures for Successful Energy Efficiency Programs

There is currently no policy in place that rewards successful energy efficiency programs.  


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August 9, 2013


Energy Efficiency as a Resource

Iowa's investor-owned utilities are required to prepare and implement energy efficiency plans. The Iowa Utilities Board approves the plans. Key features of all the plans and programs approved for IOUs by the IUB include:

  • Plans must be cost-effective; four different cost-effectiveness tests are assessed and applied; of these, the societal cost test is the primary determinant of cost-effectiveness.
  • Plans must include programs for all types of customers.
  • Plans must include analysis of the potential for energy efficiency and must include performance standards in terms of energy and capacity savings.

Iowa's municipally owned utilities and rural electric cooperatives must also develop energy efficiency plans and submit both progress and final reports to the IUB. The IUB does not review or approve these plans, but compiles the results to use as part of overall state energy planning. Senate File 2386, signed in 2008, requires the IUB to report periodically to the General Assembly on the plans and results of IOU energy efficiency programs.


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August 12, 2013


Evaluation, Measurement & Verification
  • Cost-effectiveness test(s) used: SCT,  UCT, PCT, RIM
  • Uses a deemed savings database: no

The evaluation of ratepayer-funded energy efficiency programs in Iowa relies on both legislative mandates Iowa Code §476.6(16) and regulatory orders (Iowa Administrative Code 199—35.13(476)). Evaluations are administered by the utilities. There are no specific legal requirements for these evaluations in Iowa. Evaluations are conducted statewide and for each of the utilities. Iowa uses four of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Utility/Programs Administrator (UCT), Participant (PCT), Social Cost (SCT), and Ratepayer Impact Measure (RIM). The rules for benefit-cost tests are stated in Iowa Code §476.6(14)and IAC 199—35.8(2). Iowa specifies the SCT to be its primary cost-effectiveness test. These benefit-cost tests are required for overall portfolio, total program, customer project, and individual measure level screening, with exceptions for low-income programs, pilots, and new technologies.


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August 13, 2013