Monopoly power without regulation

With few watching, backroom efforts produce unforeseen blows to public utility oversight

Editor’s Note: This post updates a previous post by David Osterberg, “New blows to public accountability,” about features of a proposal to weaken regulation of Iowa electric utilities.

A version of this piece appeared as a guest opinion in The Gazette, Cedar Rapids

170118_capitol_170603-4x4A bill scheduled for debate the week of February 26th in the Iowa Senate would remove the public’s principal check on monopoly power of the state’s regulated electric utilities.

Utilities are permitted monopoly status for economic efficiency. It would be difficult, and expensive, to set up two or more competing electric or gas utilities to serve one community, with separate lines connecting homes and businesses. In exchange for a monopoly presence in a given area, privately owned utilities are subject to community scrutiny and state regulation of their rates and services.

Senate File 2311 would remove a significant share of oversight from electric utilities. Presently the Iowa Utilities Board (IUB) oversees MidAmerican Energy and Alliant Energy. This 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 (third- or fourth- lowest depending on the year). At the same time, this state has been developing one of the strongest clean energy economies. These features make Iowa a big draw for certain industries — a far more attractive reason to locate here than the tax breaks offered by so many states.

Under the proposed bill, many policies that have led to Iowa’s cost-effective clean energy leadership would disappear, especially energy efficiency programs mandated almost 30 years ago by the Iowa Legislature, which require utilities to file energy efficiency plans every five years.

Without regulation, monopolies could profit by producing more power, rather than helping customers save energy. They could unfairly treat customer-generated solar and wind energy and discriminate in favor of their own energy generation.

Left to their own preferences, monopolies might charge the smallest users more. Alliant proved this in its last rate increase filing. The Alliant plan would have increased the cost of residential electricity by about 10 percent while increasing the mandatory fixed charge just to hook up by 30 percent. The plan was designed to put more costs on those who use less, including those with low-income, essentially penalizing customers who have used the utility rebates to buy efficient appliances or those who generate solar energy.

But because Alliant needed permission from the IUB to raise rates, this rate scheme was reviewed and ultimately not allowed. Instead, the energy charge and the mandatory fixed charge were allowed to increase by roughly the same percentage.

SF2311 would reduce this longstanding oversight on all utilities, shifting costs and risks to their customers. Alliant could discriminate against solar customers by putting them in a separate rate category so they could be assessed a higher fixed charge. This could shut down solar firms and cost many of the state’s 700 solar jobs. The changes threatening the energy efficiency industry endangers even more jobs — more than 20,000.

The forces behind this bill lessen public oversight and public accountability. They would change Iowa law in ways never promoted publicly in the last legislative campaigns.

160915-59170_dox35x45David Osterberg, a former state representative (1983-95), is professor emeritus of occupational and environmental health at the University of Iowa, and co-founder of the non-partisan Iowa Policy Project.

Wind Power in Iowa: Lower Rates, Good Jobs

Iowa produces seven times as much wind power as U.S. average — and has lower electric rates.

Opponents of expanding renewable energy often claim that new, safe and clean electricity is all very nice but it just costs too much. Let’s look at the data. The Energy Information Administration of the U.S. Department of Energy keeps statistics on retail electric rates by state and for the nation as a whole. The graph below[i] compares the average retail rates (residential, commercial, industrial) in Iowa to the U.S. as a whole starting in 1998 when Iowa began to produce significant amounts of wind electricity. While there are many reasons why a particular state’s electric rates are high or low it is certainly fair to say that our rank as the leader in per-capita wind electricity production (24.5 percent of all electricity in 2011)[ii] has not caused our rates to shoot up dramatically. Even though Iowa produces seven times as much wind power as the U.S. average, its rates continue to be about 2.5 cents per kilowatt hour below the national average.

Basic RGB

Any discussion of prices for electricity must be qualified since the amount of wind electricity produced is not the same as the amount consumed in the state. States around Iowa have requirements that a percentage of electricity sold be from renewable energy. Iowa also has such a requirement and ours was the first in the nation, a fact the governor tends to emphasize, and the requirement was met long ago. Some wind electricity is certainly exported. Thus, while data on wind electricity consumption would be helpful, information is unavailable on what portion of electricity from each fuel source serves retail load and what is sold on the wholesale market. It should also be pointed out that selling at the wholesale level has some benefit to Iowa ratepayers.


[i] Energy Information Administration. October 1, 2012. Average Price by State Provider.

[ii]  American Wind Energy Association. “American wind power now generates over 10 percent of electricity in nine states.” Accessed March 15, 2013.

Posted by David Osterberg & Heather Gibney

Capitalizing on competition in Iowa

Competitions and “keeping up with the Joneses” can spur people to take advantage of the many energy-saving programs Iowa utilities already offer.

IPP last week released a report  that highlights how capitalizing on a better understanding of human psychology and behavior can drive energy efficiency and conservation in Iowa.

Will Hoyer
Will Hoyer

We initially got interested in the idea after hearing about the extraordinary results from a competition in Kansas last fall. We would love to see something similar happen in Iowa and are working to make that happen.

Apparently the idea of using competitions to spur energy efficiency and other beneficial behaviors has others excited as well. Department of Energy Secretary Steven Chu spoke on NPR last week about an initiative to get kids excited about energy efficiency. Chu said:

“In my wildest dreams, what I’d love it to be is sometime in not-too-distant future there’ll be kind of a — like a March Madness, there’ll be a lot of schools challenging other schools in their local areas for who’s going to make the most improvement in saving money and saving energy.”

Schools shouldn’t just be the only competitors. Entire towns can compete against one another. College campuses can compete. Churches. Businesses. Next-door neighbors. The truth is, we all want to “keep up with the Joneses” and if we know that the Joneses next door have a similar house and are paying less every month for their electricity then we’ll want to make the changes the Joneses made. Over time these will add up to significant savings in money and reductions in pollution and reduced need for new baseload electricity plants — whether they be coal, gas or nuclear.

Competitions and “keeping up with the Joneses” can spur people to take advantage of the many energy-saving programs Iowa utilities already offer. Many monetary incentives are out there already to replace old appliances, insulate your attic, install solar panels or upgrade your HVAC equipment. Haven’t taken advantage of those programs yet? Contact your utility to find out more. If you have reaped the benefits call your utility and ask for more!

Posted by Will Hoyer, Research Associate

Here comes the sun

No matter how much solar power is tapped, the sun will always come up tomorrow. Solar should top Iowa’s list of energy choices.

Teresa Galluzzo

Now is the time for Iowa to go solar. Developing solar power in Iowa will create thousands of jobs and bring millions into our economy. A new report from the Iowa Policy Project and three other organizations — the Iowa Environmental Council, Environmental Law & Policy Center and Vote Solar Initiative — details the economic benefits.

Increasing our solar-powered energy and reaping these benefits is something Iowa can easily do with good state policy and private investment. Here are some reasons why:

— We have enough sun. Iowa has more solar resources than Germany, the world’s solar energy leader. [1]

— Iowa has experience leading with clean energy from developing wind power. Iowa went from under 250 MW of wind in 2000 to more than 3,500 MW in 2010. We now rank second nationally in installed capacity. [2]

— Twenty-two Iowa businesses manufacture, install or maintain solar systems. More Iowans are being trained in solar technology at community colleges and workshops across the state.

— Iowans have proved solar works. For example, Allsteel, a national workplace furniture company headquartered in Muscatine, installed panels last year to power production lines at its seating manufacturing plant. [3]

— Our competition has begun to encourage the industry. While California and New Jersey are the national leaders, our neighbors, Illinois, Michigan and Ohio, have recently set solar energy goals. [4]

— Prices for solar keep dropping. Panels cost 30 times less than they did in the 1970s. [5]

— Installing solar would have only a modest impact on electric rates. If Iowa were to install 300 MW over the next five years, and all was brought on by investor-owned utilities, the average customer’s rates would only increase by $1.70 a month.

— Solar is safe. It doesn’t need to be exported from other countries and there are no harmful byproducts.

— Sunshine is an inexhaustible resource. The more we use oil or coal, the higher the price will go. No matter how much solar power is tapped, the sun will always come up tomorrow.

For these reasons and more, solar should top Iowa’s list of energy choices.

Posted by Teresa Galluzzo, Research Associate

But what have you done for me lately?

An astounding number of people have no idea what their government does for them — even as they benefit from government programs.

Source: Suzanne Mettler, "Reconstituting the Submerged State: The Challenges of Social Policy Reform in the Obama Era," via Sara Robinson, Campaign for America's Future

This NYTimes blog post is interesting enough, but what really caught my attention was a table from a recent academic political science paper that has made its way from liberal bloggers to a former Reagan economic advisor.

An astounding number of people have no idea what their government does for them, even as they benefit from government programs.


Posted by Andrew Cannon, Research Associate

Iowa students find sustainable lessons in India

One example of how sustainability helps rural villagers in India is a solar lighting program for places not reached by the electric grid.

David Osterberg
David Osterberg

Deendayal Research Institute (DRI) in Chitrakoot, India, works with India’s poor. Ten University of Iowa students and Associate Professor David Osterberg have come to this holy city to study this organization’s approach to sustainability.

We had hoped to send a blog each day describing the school for tribal girls, the entrepreneurial center, villagers growing plants used in Ayurvedic medicine, the agricultural experiment stations and others of the 19 programs that exist in villages located within 50 kilometers of this center. However, the internet connection has been down most of the time. Thankfully it was up Wednesday evening so the students could go online for materials for the presentations they will make to our hosts today.

One example of how DRI makes the lives of villagers better is the solar lighting program for places not reached by the electric grid. Solar panels power 10-watt LED lamps, 60 of them in each of two villages we visited. Powering lamps solves the problem of storage of solar power generated during the day. The charge captured by a lamp on an average day will produce six hours of light at night.

A local village person, a woman in each of the places we visited, runs the solar charging station as a combination business and community activity. The setup — two 100-watt panels, 60 lamps and wiring — would be beyond the micro loan level so a hybrid arrangement, something akin to a U.S. public utility arrangement, was needed.

Charging the lamps and maintaining the system is a private-sector endeavor but because the system itself was given to the village, there is a limit to what can be charged. Villagers pay the charger woman about 4 cents for a nightly charge. She in turn maintains the system. She was trained in maintaining the system by the DRI’s entrepreneurial center so the systems are well-maintained.

By the way the system can also charge a couple dozen cell phones at a time. And it may be surprising to us but even poor villagers have cell phones.

This is one example of how sustainability works in rural India. We have seen many more during the seven days we have been here.

Posted by David Osterberg, Executive Director

Renewable energy and Iowa schools

We’re asking for your help as we seek to better understand where and why schools are choosing to invest in renewables and whether they are seeing benefits.

Will Hoyer
Will Hoyer

Almost five years ago IPP put out a report on Iowa schools that were using (or were considering using) wind power to generate electricity. We’re thinking about doing a followup report that might look at not only wind, but solar energy as well.

Do you know of schools around you that have solar panels on their property? Are any thinking about installing solar panels? Are solar panels or wind turbines being used in science classes or other parts of the curriculum in schools in your town? Has the installation of renewable energy generation impacted the way people think of renewables? We’re asking for your help as we seek to better understand where and why schools are choosing to invest in renewables and whether they are seeing benefits.

One example of a school that recently installed a small solar array on it is the Oak Ridge Middle School in Marion, Iowa.  A generous donation from the Linn County REC allowed the school to install 20 solar panels totaling 2.6 KW of capacity.  The solar array has been integrated into class work and is a valuable learning aide.  Real-time data about the system’s output is available online.

Iowa schools are expected to graduate students with a knowledge base that will serve them in the future. Clearly wind and solar power are a part of that future and students who grow up around renewable energy will likely be more comfortable with and accepting of the role renewable energy can and should play across Iowa.

Posted by Will Hoyer, Research Associate