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New Legislation Benefits Municipal Utility Solar Projects

Posted By IAMU, Wednesday, June 24, 2015

 

The end of the Iowa 86th General Assembly saw a flurry of activity, including the passage of HF 645 that makes municipal utilities eligible for renewable energy tax credits.  Governor Branstad will be signing the bill into law Friday in a formal signing ceremony that IAMU staff will be attending.

IAMU worked with many stakeholders throughout the session on passage of this legislation.  Municipal utilities could use these tax credits to reduce the cost of energy produced by a solar photovoltaic (PV) array owned or contracted for by the utility.  Many municipal utilities are considering building community solar arrays or utility scale solar, and this tax credit could provide benefits. 

Background

Iowa Code chapter 476C has provided transferable tax credits for renewable energy production to eligible entities since July 1, 2005.  The tax credit is available for electricity generated from renewable sources, as well as several non-electricity renewable energy sources.  For renewable electricity production, the tax credit is 1.5 cents per kWh generator for ten years.  Until now, municipal utilities were not eligible to receive the tax credit.  Investor owned utilities and rural electric cooperatives are also eligible for the tax credit.

HF 645 also adds 10 MW of generating capacity that is eligible for the tax credit, and reserves this for solar PV systems that are owned or contracted for by utilities.  The solar arrays can each be up to 1.5 MW in nameplate capacity.  Because the tax credits are transferable, municipal utilities can utilize the tax credit to make a project more attractive.

An expected use of the tax credits is to assist in the development of utility-led community solar projects.  In a municipal utility community solar array, the utility sponsors the construction of a central solar array, and customers subscribe to receive energy from the array.  Community solar allows any customer to invest in solar, achieve economies of scale compared to multiple small arrays, and allows the system to be optimized for capacity and energy production.

Apply Soon

There is significant interest in community solar projects across the state, and it is expected that the 10 MW of capacity reserved for utility solar projects will be used up quickly.  Municipal utilities developing a solar project are urged to submit an eligibility certification application to the IUB as soon as possible.    For information about the application process, please see the IUB’s website: https://iub.iowa.gov/renewable-energy-tax-credits.  For information on how the tax credit may apply to a project your utility is considering, please contact Joel Logan at IAMU at jlogan@iamu.org or 515.289.1999.

Tags:  Energy Efficiency  HF 645  Legislative  Solar 

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Governor Signs Key Priority Legislation - Connect Every Acre

Posted By IAMU, Wednesday, June 24, 2015

 

On Wednesday, June 22, Governor Branstad signed into law a bill addressing one of his key legislative priorities of the last two years - the “Connect Every Acre” bill.  House File 655 encourages the expansion of high-speed broadband internet.  IAMU has been generally supportive of broadband expansion in the state and was registered in support of the Governor’s broadband bill.

Most of the policy included in the bill is to promote expansion of broadband infrastructure in targeted service areas.  A “targeted service area” is defined as a United States census block within which no communications service provider offers broadband service at or above 25 megabits per second of download speed and three megabits per second upload speed.  

The state’s Chief Information Officer is given the duties to implement the various portions of the Act, including adopting rules and procedures to determine whether an area meets the definition of “targeted service area” and to administer the broadband grant program and the fiberoptic network conduit installation program. 

The broadband grant program will provide for grants to assist communication services providers to reduce or eliminate targeted services areas throughout the state.  Grants are limited to a maximum of 15% of the service providers project cost.  There was NO money appropriated for the grant program during the legislative session. However, once the grant program receives funding the office is to award grants on a competitive basis based on the following:

  • The relative need for broadband infrastructure in the area and the existing broadband service speeds.
  • The percentage of the homes, farms, schools, and businesses in the targeted service area that will be provided access to broadband service.
  • The geographic diversity of the project areas of all the applicants.
  • The economic impact of the project to the area.
  • The applicant's total proposed budget for the project, including the amount or percentage of local match, if any.
  • Other factors the office deems relevant.The purpose of the new fiberoptic network conduit installation program is to provide for the installation of fiberoptic network conduit where it doesn’t presently exist.  The CIO is to ensure that providers have the opportunity to lay of install fiberoptic network conduit wherever a state-funded construction project involves trenching, boring a bridge, roadway or opening of the ground, or alongside any state-owned infrastructure.

The Act requires political subdivisions with permitting authority to approve, approve with modification or disapprove nonwireless broadband permits within 60 business days.  If no action is taken within 60 days, the permit is deemed approved. 

A 100% property tax exemption for 10 years is provided in the bill in an amount equal to the actual value added by installation of the broadband infrastructure.  The exemption only applies to infrastructure built between July 1, 2015 and July 1, 2020 in targeted service areas. 

The bill also included the cell tower siting provisions which will be discussed in next weeks Informer.

Tags:  Connect Every Acre  Governor  House File 655  Legislative 

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IAMU Files Comments in Jurisdictional Docket to Support Municipal Home Rule

Posted By IAMU, Friday, June 19, 2015

by Julie Smith, IAMU Legislative and Regulatory Counsel

Background.  In the IUB’s payment plan agreement docket from 2014, IAMU protested that municipal gas and electric utilities were not subject to IUB rules on level payment plan agreements, or budget billing.  The IUB started a new docket to address that issue and other issues raised by MidAmerican Energy in regard to the statute of limitations and its application to reinstatement of service.  On January 12, 2015, IAMU filed Initial Comments in Docket No. 2014-0004 asking the IUB for clarification of its basis for asserting jurisdiction over municipal gas and electric utilities in recent formal complaints.   Specifically,  IAMU stated:

“Over the past two years, some individual complaints have been lodged against municipal gas and electric utilities stating that municipal utilities were not following Board rules in regard to various issues. The Board determined in its proceedings on these complaints that it has jurisdiction over municipal utility deposits and the imposition of late payment fees, with the basis for that authority being an expanded interpretation of “disconnection”. IAMU requests that the Board advise IAMU of the parameters of the Board’s interpretation of “disconnection”. At this point, it appears that the definition of “disconnection” as it is being interpreted in these recent proceedings encompasses or could potentially encompass many of the activities that municipal utilities view as a normal conducting of business and gravely impacts local control over the management of municipal electric and gas utilities. This incremental expansion of Board regulation over municipal gas and electric utilities disrupts 28 years of interpretation of the statutes, and creates confusion as to the appropriate course of action and the legal consequences.”

Workshop and Additional Comments.  The IUB scheduled a workshop to discuss all of the issues.  IAMU and several municipal utilities, Muscatine Power and Water, Cedar Falls Utilities, Atlantic, Pella, Mount Pleasant and Waukee participated in the Workshop on April 8.  We were given ample opportunity to talk to staff and make our case that the IUB has started to encroach into municipal utility home rule.  IAMU offered a copy of a newsletter from May 1986 discussing the municipal utility home rule statute that had passed that session. 

Following the workshop, an Order was filed requesting Additional Comments.  On Tuesday, May 26, 2015, IAMU filed Additional Comments in Docket No. 2014-0004.  This is an excerpt from the filing: 

At the workshop, IAMU provided copies of a newsletter written by IAMU in May 1986. That newsletter displayed a picture of then Governor Terry Branstad in a bill signing ceremony for legislation that created the “Municipal Utilities Home Rule Bill” codified as Iowa Code section 476.1B. The article included the following comment:

“The Bill as passed certainly is a major step in moving our municipal utility control from the Commerce Commission to our local governing bodies. Undoubtedly the greatest benefit from the Bill will be in the future in that when new utility laws are passed we will be excluded from Commerce Commission regulation unless we are specifically included. Of course the reverse has been our problem in the past, in that we were usually included unless specifically exempted by provision of the law. “

This passage is included in these comments and was discussed at the Workshop to provide a backdrop for IAMU’s interpretation of questions regarding the Board’s jurisdiction. IAMU strongly asserts that the purpose of section 476.1B was to clarify that the Legislature did not intend for municipal utilities to be regulated by the Board unless it was clearly stated in the Code and that the presumption when making such interpretation should be against regulation by the Board. For the past 29 years, municipal utilities have operated from the premise that the passage of section 476.1B limited the Board’s jurisdiction. It was clear at the Workshop that Iowa’s municipal utilities feel strongly about Home Rule. The fact that the Board does not have jurisdiction over certain actions of municipal gas and electric utilities does not mean that they are unregulated. Municipal gas and electric utilities ARE subject to local regulation by their governing bodies.

Issues of Board jurisdiction have arisen within the last two to three years when it has become clear that the Board and Staff have expressed and acted upon a more expansive view of their authority over municipal gas and electric utilities. This expansion crosses over into activities that municipal utilities view as within the purview of local regulation, including but not limited to setting the amount and interest on deposits and the establishment of late payments fees. This expansion of Board regulation over municipal gas and electric utilities disrupts 28 years of interpretation of the statutes, and creates confusion as to the appropriate course of action and the legal consequences.

IAMU respectfully requests that the Board clarify when Board jurisdiction begins in relation to disconnection – as this recent broad interpretation has led to much uncertainty and inconsistency with past Board and Staff practices and training. IAMU asserts that the Board does not have jurisdiction over municipal gas and electric utilities until such time as the act of disconnection comes into play.”

Tags:  Home Rule  IAMU  Julie Smith  Legislative 

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