by John Zakrasek, Chair, Linn Clean Energy District, and Andy Johnson, Executive Director, Clean Energy Districts of Iowa (updated for 2025 legislative session)
The Iowa Legislature appears likely to make utility ratemaking a whole lot less democratic.
House Study Bill 123, the Governor’s omnibus energy bill, could strip ratepayers, stakeholders, and their advocates of the right to full participation in the regulatory process that approves utility investments, and subsequent rates that captive customers are forced to pay.
That doesn’t bode well for Alliant ratepayers, who are about to see what could be the largest electric rate increase in Iowa history this fall – just before elections, actually.
MidAmerican customers could see even larger rate shock – albeit a bit delayed – given the company’s clear desire to spend billions on nuclear in coming years, and the reduced oversight HF 2554 could provide.
The issue on the table is whether the fundamental utility and grid needs assessment known as Integrated Resource Planning (IRP) is a transparent, participatory, “contested” docket, or a secretive inside job of monopoly utilities. HF 2554 could open the door to greater ratepayer taxation while stripping rights of representation in the regulatory process.
Utilities as Taxing Monopolies
We don’t use the word “taxation” lightly.
MidAmerican Energy and Alliant Energy are state-granted monopolies. The private companies are owned by out-of-state investors, have no competition, and are guaranteed a 100% captive customer base by the state government.
Customers (subjects) are forced to buy from their state-assigned provider, and to pay whatever price the state allows the company to charge.
Sounds a little like the government’s absolute right to tax citizens, except that citizens in a democracy have voting rights over those doing the taxing. Utility subjects (ratepayers) have no such rights.
Contested Dockets Protect Ratepayer Rights and Representation
Instead of voting rights, we ratepayers are at the mercy of appointed regulators at the Iowa Utilities Board (IUB), who approve utility rate increases. We depend upon consumer advocates and stakeholder groups to “represent” our interests when the monopoly utility wants to raise taxes (rates).
Currently, regular rate dockets and “advanced ratemaking principle” (ARP) dockets protect those ratepayer rights to representation through “contested” dockets. Contested dockets allow for participation, transparency, open records (to a degree) … essentially, ratepayers and stakeholders are allowed to “contest”, or challenge, utility claims, provide testimony and data, and make a case for more prudent capital investments, and lower rates.
HF 2554 would strip those participation and representation rights from ratepayers and stakeholder groups in Integrated Resource Planning dockets, and reduce those rights in the related regular and ARP dockets.
We explained in this prior column how a robust Integrated Resource Planning can help ensure that ratepayers only pay for what they really need, rather than all the lucrative investments utilities would like to bill them for.
But IRP could be a double-edged sword.
If the IRP process itself is not a contested docket, then we ratepayers and stakeholders have no meaningful voice, or representation. We lose the ability to peek under the hood of the utility analysis, bring experts to present alternative evidence and analysis, and fight to only pay for what we need.
And when the results of such a secret, inside-job IRP are then used to justify unnecessary utility spending in subsequent rate dockets, the rights of ratepayers are twice diminished.
“Rest Assured,” or Speak Up
In resisting a fully transparent, participatory, and contested IRP process, a utility industry spokesperson wrote recently that “we don’t need a contentious, contested IRP to ensure that thoughtful and comprehensive planning occurs. Rest assured, it’s already happening …” through a “voluntary and informational integrated resource planning process”, that has “resulted in lower energy costs for the state’s customers relative to peer states.”
Huh. Alliant-served communities would be forgiven if they suspect more than a little utility spin in those words. Well over 80 such communities have passed resolutions saying “enough is enough,” and opposing the largest-ever rate increase proposal the company has in front of the Iowa Utilities Board right now.
According to the Energy Information Agency, Alliant’s Iowa residential rates are the third highest among the 33 investor-owned utilities serving Iowa and neighboring states, and its small business rates are the eleventh highest. The proposed IRP legislation could hinder, not help, efforts to keep rates reasonable.
For IRP to be effective in ensuring that ratepayers only pay for what they need, it needs to be comprehensive, required on a 3-year cycle, and conducted as a fully transparent contested docket.
If you’re not resting assured that Alliant and MidAmerican are placing your interests over those of company shareholders, now is the time to tell your legislators “no ratepayer taxation without representation.”
Posted: March 24, 2024
