Legislation to dramatically reduce energy efficiency programs financed by utility customers passed the Iowa Senate on Monday night after a heated debate between Republicans and Democrats on whether the measure will help or hurt Iowa’s electric consumers.
Senate File 2311 was approved 28-20 on a straight party-line vote, sending it to Republican Gov. Kim Reynolds for her consideration. The bill passed the Iowa House last week.
Republicans who supported the measure said it represents comprehensive changes in Iowa’s energy policies and promised it will provide clean, reliable energy at a lower cost for consumers.
Republicans said the bill will specifically reduce costs that rate-regulated utilities levy on customers for energy efficiency projects by $100 million while retaining more than $120 million for energy efficiency projects. The legislation also requires utilities to distribute millions of dollars in savings to consumers because of changes in the federal tax code.
Sen. Mark Chelgren, R-Ottumwa, predicted that Iowans will still make energy efficiency improvements, but they will have lower utility rates.
“What will happen is that people will have more money in their pockets and they will make the best decisions for themselves,” Chelgren said.
Democrats contended the legislation will hurt consumers with higher costs for energy while jeopardizing the jobs of 20,000 Iowans involved in installing energy efficient products.
“This is a really, really bad bill. … It undermines a good, strong energy policy that this state has had on a bipartisan basis for several decades,” said Sen. Robert Hogg, D-Cedar Rapids.
The bill will cap energy efficiency programs well below current levels and will allow customers to request an exemption from an electric energy efficiency plan. However, lawmakers said there will be no exemptions for gas energy efficiency plans, nor for so-called “demand response” programs that involve customers reducing or shifting their energy usage during peak periods.
Other provisions in the bill are intended to help extend natural gas service to underserved communities and provide more transparency for consumers.
Sen. Michael Breitbach, R-Strawberry Point and the bill’s floor manager, defended the legislation. He said that since 1990, Iowa utilities have collected $3 billion dollars for energy efficiency programs and utilities have kept $600 million in administrative costs.
The proposed caps are 2 percent of a utility’s annual rate revenue on electric energy efficiency plans and 1.5 percent on natural gas energy efficiency plans. Republicans said Iowa customers are now paying hidden costs of 7 to 9 percent for energy efficiency programs on their utility bills.
Breitbach said renters don’t get rebates from energy efficiency programs, nor do many other Iowans for a host of reasons even though they are charged for the programs as a part of their utility bills.
“There are the people who can’t afford it, but you take that money from them. Maybe somebody is older and they don’t feel it is worth putting the money in … or they just don’t choose to do it,” Breitbach said.
Senate Democrats strongly objected to the bill. They predict reduced participation in energy efficiency programs and related job losses.
“Putting a cap on these programs is the wrong way to go,” said Sen. Joe Bolkcom, D-Iowa City. “Saving energy is cheaper than building new plants. So if we can save energy, every consumer is ahead.”
Democrats said the Iowa Energy Plan, drafted under the leadership of Gov. Reynolds, lists energy efficiency as one of “four foundational pillars” to keep Iowa in a key position in the national energy market. They also contend the legislation will make it harder for Iowa to attract new businesses as energy costs for all consumers will increase.
Iowa Consumer Advocate Mark Schuling, whose staff investigates the legality of rates and practices of Iowa utilities, wrote a letter to lawmakers Monday saying the bill is good for Iowa utilities but will ultimately result in higher rates for Iowa customers.
“This change will reduce energy efficiency in programs going forward. Energy efficiency has saved millions of dollars in energy savings and benefits all customers with lower rates. It has added thousands of jobs in energy efficiency across Iowa,” Schuling said.
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