Companion bills in the Iowa House and Senate move Iowa closer to making true monopolies out of the state’s regulated electric utilities.
Utilities are permitted monopoly status out of efficiency. It would be difficult and expensive to set up two or more competing electric utilities to serve one community, with separate power lines. So, in exchange for a monopoly presence in a given area, privately owned utilities are subject to community approval and state regulation of their rates and services.
These new bills would remove a significant share of regulation, and the bills are moving quickly with little scrutiny — while high-profile legislation from school funding to budget cuts captures more attention.
But the utility bills demand attention, just as utility bills do every month in your household budget. Presently the Iowa Utilities Board oversees MidAmerican Energy and Alliant Energy. This oversight protects customers, who have no choice as to which company brings them electricity.
It is ironic that legislators would threaten a structure that works and promotes economic development. Iowa has some of the lowest energy rates in the nation (3rd or 4th lowest depending on the year). At the same time, this state has developed one of the strongest clean energy economies. These make Iowa a big draw for certain industry — a far greater reason to locate here than tax breaks that any state can offer.
Under legislation being proposed (SSB3093 and HSB595), many policies that have led to Iowa’s cost-effective clean energy leadership could not have been implemented, especially energy efficiency programs mandated almost 30 years ago by the Iowa Legislature.
Without regulation, monopolies would profit by producing more power rather than help customers save energy. They could unfairly treat customer-generated solar and wind energy and discriminate in favor of their own energy generation.
In fact, the pending bills would let them cut back substantially on the energy efficiency plans they are required to file each five years.
Left to their own preferences, monopolies would charge the smallest users more. Alliant proved this in its last rate filing. The Alliant plan would increase the cost of electricity by about 10 percent and increase the mandatory charge just to hook up by 30 percent. The plan was designed to put more costs on those who use less, because they are low-income or because they have used the utility rebates to buy more insulation or buy more efficient appliances.
But because Alliant needed permission to raise rates, this rate scheme was not allowed.
The bills in the Legislature would encourage this behavior. And few have been at the table. A subcommittee last week met in a room so small that video indicated most of those present were standing, and the discussion was cut off to move the bill on to a full committee more quickly.
The strategy with the corporate-friendly SSB3093 and HSB595 is the same that we saw in 2017 on collective bargaining and workers compensation. These forces are still at work, to lessen public oversight and public accountability, with changes in law that were not promoted publicly in the last legislative campaigns, and have been developed behind closed doors.
David Osterberg, who served six terms in the Iowa House of Representatives, is former director of the nonpartisan Iowa Policy Project and is IPP’s lead researcher on environmental and energy policy. firstname.lastname@example.org
Hear Osterberg’s Feb. 8 interview with KVFD-AM radio host Michael Devine about this issue at this link.