Iowa’s business community was well represented on August 30th and 31st as the Iowa Utilities Board held its first meetings, referred to as charrettes, for its study of ratemaking initiated by the passage of House File 617. A few key themes emerged.

Theme # 1: Integrated Resource Planning is a Critical Need

If there was one theme that came out – Iowa suffers from a lack of Integrated Resource Planning ("IRP"). For those reading the comments submitted by the participants leading up to the event – this was not a surprise.

The business advocates for Integrated Resource Planning include the Iowa Business Energy Coalition (“IBEC”), which represents many of Iowa’s largest industrial energy users, the Iowa Economic Alliance ("IEA"), which represents large energy users including large technology ratepayers, and the Large Energy Group (“LEG”), which represents another group of Iowa’s largest energy users. As LEG noted, “Resource plans should be transparent, part of a stakeholder process which includes customers, and filed with the Board on a reoccurring basis to reflect changes in economics, the capacity of energy markets, customer demands, and the costs of potential resource additions.”

In February, the Iowa Utilities Board ordered the public release of a redacted Zero Emission Study that MidAmerican Energy had commissioned for its internal use. MidAmerican’s own study concluded that solar was the best option to meet summer peak demand needs in 2040. The company had fought against sharing this internal report as a part of its $3.9 billion proposal known as WindPrime (the proposal contained just 2% of new solar generation). The study also highlighted the expensive nature of maintaining its existing large coal fleet.

The internal study’s findings were not surprising. Iowa’s peak energy use is on hot summer afternoons, as air conditioning is cranking up. Solar produces its greatest power on these hot days, while wind slows down. Iowa Business for Clean Energy had intervened in this case and highlighted this fact in our submittals to the Board.

On June 14, 2020, a provision was inserted into an appropriations bill at 1:35am on the last night of the Iowa legislative session.  The provision granted sole right to the incumbent transmission provider to build any approved new transmission line, eliminating any competition for transmission in Iowa. 

This past Friday, the IA Supreme Court issued its ruling on a challenge to the law by LS Power (“LSP”), a national transmission line developer. Justice Waterman, writing for the majority, in commenting on the passage of what is known as the Right of First Refusal (“ROFR”), stated:

“We are not surprised the ROFR lacked enough votes to pass without logrolling. The provision is quintessentially crony capitalism. This rent-seeking, protectionist legislation is anti-competitive.”

You may have seen the recent Des Moines Register headline that this region’s electric grid operator Midcontinent Independent System Operator (MISO), is at risk of “energy emergencies” this winter if hit by an extreme cold weather event. On December 1, the Iowa Utilities Board, in response to the concern, scheduled a conference for the utilities to discuss how they will handle any emergencies. 

And the risk to the grid will continue as climate change leads to more extreme weather events, utilities retire costly coal plants, the grid relies on more intermittent power sources, and transportation and heating electrify.

To address the growing risk, we need to start planning now. The decisions we make today need to ensure that the grid of 2030 and 2035 can handle future demands. It means our decisions today should not be based on today’s reality – but on tomorrow’s opportunities. 

The recent news stories of the potential for blackouts across the country create a super exclamation point (!) for why we need regulatory reform. While many entrenched interests are trying to blame renewables – the real driver is insufficient innovation, resulting from outdated regulations, better suited to the 1920s than the 2020s, and minuscule R&D investment from electric utilities that do not compete in a free market.

The Department of Energy just issued a report, The Role of Innovation in the Electric Utility Sector, highlighting how the lack of innovation in the utility sector threatens our access to a low cost, reliable, clean energy grid. The Report pointed to a McKinsey & Company 2020 study Building an R&D Strategy for Modern Times, which calculated each industries’ R&D investment (see graph below). To put it in perspective, the paltry energy utility sector R&D investment, by far the lowest of all the major industries, is one-sixth the level of the construction and infrastructure industry –an industry not known for its innovation.:

Most of us rarely think about electrical power until we flip the light switch and nothing happens. Or until we get the bill and it’s a lot higher than we were expecting.

But changes are coming that affect the way we use electrical power, from the rise of electric vehicles and renewable energy sources to the replacement of fossil fuels used in buildings. New expectations of the power grid have also emerged. Increasingly, customers want to see values like environmental justice and decarbonization reflected alongside historic expectations like reliability and affordability.

A group of Iowans is working to spark a discussion about how government regulation should adapt to respond to and manage those changes.

Iowa Business for Clean Energy launched in the fall of 2020 and is now starting to make its pitch for overhauling Iowa’s regulatory structure for electrical utilities.

At a workshop last week in Des Moines, Bob Rafferty, the group’s executive director, highlighted differences in rates paid by Iowa commercial and residential customers of MidAmerican Energy and Alliant Energy as a reason to consider regulatory changes.

Clean Energy for Iowa - What Business Needs to Know

The News Hour with Michael Libbie, Insights on Business

Bob Rafferty was invited to sit down with Mike Libbie to talk about the Iowa Business for Clean Energy. The News Hour radio show aired on April 1, 2022 on the Michael Libbie Podcast-Insights on Business from Des Moines Iowa. You can hear this broadcast by visiting the podcast page here.

Many topics were discussed during this 15-minute interview; including the origin of Iowa Business for Clean Energy and why the work they are doing is important for the future of Iowa and the competitiveness of our business and industry. In addition, they talk about the upcoming Reform the Grid Workshop. This workshop is an in-person event at the Greater Des Moines Botanical Garden on April 28th at 10:00 am.

Bob Rafferty was invited to sit down with Sabrina Ahmed to talk about the Iowa Business for Clean Energy. The This Week in Iowa TV show aired on April 10, 2022on WOI-TV Channel 5 in Des Moines Iowa. You can rewatch this broadcast by visiting the This Week In Iowa homepage here. The portion of the broadcast with Bob and Sabrina’s conversation starts at 8:12 and continues until 13:18

Many topics were discussed during this 5-minute segment of the popular weekend news program; including the origin of Iowa Business for Clean Energy and why the work they are doing is important for the future of Iowa and the competitiveness of our business and industry. In addition, they talk about the upcoming Reform the Grid Workshop. This workshop is an in-person event at the Greater Des Moines Botanical Garden on April 28th at 10:00 am.

The need for Iowa to reform its approach to regulating our electric grid has never been more urgent.

A few weeks ago, we highlighted an academic report that gave Iowa a “D” for the competitiveness of its electric grid, while giving Illinois an “A”. After digging through the U.S. Energy Information Office’s data, we also discovered that in 2010, Iowa’s average commercial electric rate was over 10% lower than Illinois' average rate, but in 2020, Iowa’s average rate was 14.4% higher than Illinois, a 25% swing in just 10 short years!