Text: HSB118            Text: HSB120


House Study Bill 119

HOUSE FILE BY (PROPOSED COMMITTEE ON NATURAL RESOURCES BILL BY CHAIRPERSON FREEMAN) Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act providing annual purchase or generation requirements for 2 certain electric utilities from alternate energy production 3 facilities, requiring establishment of a system of alternate 4 energy credit trading, making related changes, and providing 5 an effective date. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 7 TLSB 1196HC 80 8 jj/sh/8 PAG LIN 1 1 Section 1. Section 476.42, Code 2003, is amended by adding 1 2 the following new subsection: 1 3 NEW SUBSECTION. 3A. "Small distributed generation" means 1 4 a qualifying alternate energy production facility located at 1 5 or near a user's point of delivery with a capacity of three 1 6 megawatts or less, and connected at a voltage of less than 1 7 sixty kilovolts. To be a qualifying alternate energy 1 8 production facility, users of distributed generation 1 9 facilities must maintain ownership of the alternate energy 1 10 production facility through majority voting membership. The 1 11 alternate energy production facility may be connected in 1 12 parallel operation to the electric utility system. 1 13 Sec. 2. Section 476.44, subsection 2, Code 2003, is 1 14 amended to read as follows: 1 15 2. a. An electric utility subject to this division, 1 16 except a utility which that elects rate regulation pursuant to 1 17 section 476.1A, shall not be required to purchase, at any one 1 18 time, more than its share of one hundred five megawatts of 1 19 power or generate at least the following percentages of its 1 20 total annual Iowa retail electric sales from alternative 1 21 alternate energy production facilities or small hydro 1 22 facilities at the rates established pursuant to section 1 23 476.43:. The board shall allocate the one hundred five 1 24 megawatts based upon each utility's percentage of the total 1 25 Iowa retail peak demand, for the year beginning January 1, 1 26 1990, of all utilities subject to this section. 1 27 (1) By December 31, 2004, four percent. 1 28 (2) By December 31, 2005, five percent. 1 29 (3) By December 31, 2006, six percent. 1 30 (4) By December 31, 2007, seven percent. 1 31 (5) By December 31, 2008, eight percent. 1 32 (6) By December 31, 2009, nine percent. 1 33 (7) By December 31, 2010, and annually thereafter, at 1 34 least ten percent. 1 35 b. A maximum of two percent of each utility's total annual 2 1 retail electric sales may be derived from alternate energy 2 2 production facilities or small hydro facilities placed in 2 3 service before January 1, 2004. 2 4 c. At least twenty percent of an electric utility's yearly 2 5 percentage pursuant to the schedule in paragraph "a" shall be 2 6 derived from small distributed generation facilities. 2 7 If a utility undergoes reorganization as defined in section 2 8 476.76, the board shall combine the allocated purchases of 2 9 power for each utility involved in the reorganization. 2 10 Notwithstanding the one hundred five megawatt maximum, the 2 11 board may increase the amount of power that a utility is 2 12 required to purchase at the rates established pursuant to 2 13 section 476.43 if the board finds that a utility, including a 2 14 reorganized utility, exceeds its 1990 Iowa retail peak demand 2 15 by twenty percent and the additional power the utility is 2 16 required to purchase will encourage the development of 2 17 alternate energy production facilities and small hydro 2 18 facilities. The increase shall not exceed the utility's 2 19 increase in peak demand multiplied by the ratio of the 2 20 utility's share of the one hundred five megawatt maximum to 2 21 its 1990 Iowa retail peak demand. 2 22 Sec. 3. Section 476.44, Code 2003, is amended by adding 2 23 the following new subsection: 2 24 NEW SUBSECTION. 3. The board shall establish and 2 25 administer a system for trading of alternate energy credits 2 26 through which a utility shall satisfy its obligation pursuant 2 27 to subsection 2. 2 28 a. Alternate energy credits shall be issued by the board 2 29 to alternate energy production facilities and small hydro 2 30 facilities, and shall represent the production of one 2 31 kilowatt=hour of electrical generation by such facility. 2 32 b. Alternate energy credits may be sold or exchanged by 2 33 the facility to which the credits are issued, or by any other 2 34 person who acquires the credits. 2 35 c. The board shall adopt rules to administer and enforce 3 1 this subsection that, at a minimum, shall include the 3 2 following requirements: 3 3 (1) An alternate energy credit may be counted only once 3 4 toward compliance with subsection 2. 3 5 (2) The energy generation represented by an alternate 3 6 energy credit that is used to satisfy subsection 2 may not 3 7 additionally be used to satisfy obligations to consumers to 3 8 sell energy produced by alternate energy production 3 9 facilities. 3 10 (3) Each alternate energy credit that is not used in the 3 11 year of its creation may be banked, and remains valid for the 3 12 next two compliance years. 3 13 (4) A utility otherwise unable to satisfy its obligation 3 14 under subsection 2 shall purchase credits directly from the 3 15 board at the cost of three and one=half cents per kilowatt= 3 16 hour. The cost shall be adjusted annually for inflation, 3 17 according to application of the percentage change of the 3 18 consumer price index for all urban consumers, United States 3 19 city average, as published in the federal register by the 3 20 federal department of labor, bureau of labor statistics. The 3 21 board may by rule adopt a different adjustment for inflation 3 22 if it is found to be more appropriate for the pricing of 3 23 energy credits. 3 24 Sec. 4. EFFECTIVE DATE. This Act, being deemed of 3 25 immediate importance, takes effect upon enactment. 3 26 EXPLANATION 3 27 This bill provides for a schedule in Code chapter 476 for 3 28 purchase or generation requirements by certain electric 3 29 utilities of energy from alternate energy production 3 30 facilities, more commonly known as a renewable portfolio 3 31 standard, and related requirements, including a system of 3 32 energy credit trading. 3 33 The bill creates a schedule in Code section 476.44 that 3 34 increases the minimum annual percentage of renewable energy 3 35 that electric utilities, except for those utilities that have 4 1 elected rate regulation pursuant to Code section 476.1A, are 4 2 obligated to purchase from alternate energy production 4 3 facilities. As defined in Code section 476.42, an alternate 4 4 energy production facility means a facility that produces 4 5 energy from solar, wind turbine, waste management, resource 4 6 recovery, refuse=derived fuel, agricultural crops or residues, 4 7 or woodburning sources; the land, building, or improvements at 4 8 the project site; and the transmission or distribution 4 9 facilities necessary to conduct the energy produced. Current 4 10 Code language requires electric utilities to purchase 105 4 11 megawatts, which is approximately 2 percent of Iowa retail 4 12 load. The bill would shift the requirement to 4 percent of 4 13 Iowa retail sales by December 31, 2004, and then increase that 4 14 percentage annually by 1 percent per year, culminating in a 10 4 15 percent annual purchase or generation requirement by December 4 16 31, 2010. 4 17 The bill adds provisions to specify that only 2 percent of 4 18 each utility's total annual retail sales may be derived from 4 19 alternate energy production facilities placed into service 4 20 prior to January 1, 2004, and that at least 20 percent of a 4 21 utility's yearly purchase or generation requirement must be 4 22 derived from distributed generation sources. A new definition 4 23 is added for "small distributed generation" in Code section 4 24 476.42 that specifies size, use, and business organization 4 25 requirements. 4 26 The board is directed to establish an energy credit trading 4 27 system in conjunction with these changes. Credits are issued 4 28 to alternate energy producers for each kilowatt=hour of 4 29 electricity produced. The credits may then be sold or 4 30 exchanged by those producers. Buyers may utilize the credits 4 31 to fulfill purchase or generation obligations under the new 4 32 provisions of Code section 476.44, or may sell or exchange the 4 33 credits with another buyer. An energy credit may only be 4 34 redeemed once toward fulfillment of the statutory purchase or 4 35 generation requirement, however. Energy credits may be banked 5 1 for up to two compliance years. A utility unable to satisfy 5 2 its purchase or generation requirement will be required to 5 3 purchase credits directly from the board. 5 4 The bill takes effect upon enactment. 5 5 LSB 1196HC 80 5 6 jj/sh/8
Text: HSB118            Text: HSB120