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.”