Commerce – All-Bill Summary 2020

All bills assigned to the Senate Commerce Committee, passed by the Legislature and sent to the Governor for her signature in 2020.

SF 583 – Electric utility rates for private (solar) generation  

SF 583, which passed the Senate last year, allowed investor-owned utilities to set minimum infrastructure charges for private net-metered customer generation. It exempted certain large renewable energy producers from the requirements for utility infrastructure charges: (1) a cogeneration facility, including, without limitation, combined heat and power facilities; (2) a facility that manufactures renewable fuel registered with the U.S. Environmental Protection Agency; (3) a facility that uses a de minimus amount of biomass in its operations (less than 10% of all fuel used in the generation processes); and (4) a private generation facility with a nameplate generating capacity greater than one megawatt. Opponents maintained that the proposal protected the largest renewable energy producers, and would in essence eliminate solar energy companies that work with consumers and small businesses.

This controversial bill passed the Senate March 18, 2019, on a bipartisan vote of 28-19. It was placed on the House Unfinished Business Calendar and was re-referred to the House Commerce Committee.

During the interim, stakeholders, including MidAmerican Energy, Iowa’s solar industry, agricultural interests and environmentalists, worked to craft a compromise. The result was a re-working of the entire proposal. This version passed the House unanimously on March 3, 2020. Lobbyists in support include the Iowa Environmental Council, Iowa Pork Producers, MidAmerican Energy, Iowa Solar Energy Trade Association, Center for Rural Affairs, Environmental Law and Policy Center, The Nature Conservancy, North Central States Regional Council of Carpenters, Iowa Association of Business and Industry, Greater Des Moines Partnership, Citizens for a Healthy Iowa and the Iowa Conference of United Methodist Church.

The amended bill codifies net metering, grandfathers in the current plans of existing solar customers, and provides a transition to a “Value of Solar” utility rate in the future.

The House “strike after” amendment:

  • Creates new billing methods for distributed generation (solar) customers, including net metering billing or inflow-outflow billing. Solar customers would pay the retail rate for any kilowatt-hour (kWh) they import (inflow) while any kWh exported to the grid (outflow) is credited to the customer at an outflow rate.
  • Codifies net metering as a single meter monitoring only the net amount of electricity delivered and exported to solar customers.
  • Allows outflow credits to be credited monthly as dollar amounts to offset the customers’ monthly bill, which can be carried forward up to 12 months.
  • Permits utilities to recover credited outflow amounts through an Energy Adjustment Clause or other rider mechanism.
  • Initially sets the outflow rate at an applicable retail rate for each rate class.
  • Creates a Value of Solar (VOS) study when distributed solar penetration reaches 5% of total peak demand, or by July 1, 2027, if the utilities petition the Iowa Utilities Board (IUB) to begin VOS process, whichever is sooner.
  • Customers would receive a locked-in outflow rate for 20 years that is set: (1) equal to the retail rate prior to the VOS implementation; and (2) at the current VOS rate after VOS rate is determined.
  • Allows any excess credits to revert to investor-owned utilities after 12 months to offset the rider mechanisms’ collections.

The Value of Solar (VOS) is created through a stakeholder process, overseen by the IUB, using an independent third-party consultant. The VOS rate must be unique to each utility based on the utility’s specific inputs. The tariff must be updated annually and the methodology must be updated every three years. The rate cannot fluctuate more than 5% annually.

Both net metering credit and outflow rate must cover all volumetric charges, including rider charges on a kWh basis. Existing net metering customers may retain their current net metering rate for the duration of their current contract.

Investor-owned utilities are prohibited from: (1) using customer’s demand instead of energy use to limit system size; (2) charging solar customers additional fees; and (3) placing solar customers in a separate class until VOS or 2027.
[3/4: CONCUR 48-0 (Absent: Rozenboom, Wahls)]

SF 2131 – Reinsurance collateral requirements 

SF 2131 is a recommendation from the Iowa Insurance Division (IID). It puts Iowa among the first states to adopt necessary federal provisions. All states have five years to act to reduce reinsurance collateral requirements for certified non-U.S. licensed reinsurers that are licensed and domiciled in qualified jurisdictions or face potential federal preemption by the Federal Insurance Office under the federal Dodd-Frank Wall Street Reform and Consumer Protection Act. In exchange, the European Union and the United Kingdom will not impose local presence requirements on U.S. firms operating in the EU and the UK, and effectively must defer to U.S. group capital regulation for U.S. entities of EU-based and UK-based firms. The bill puts Iowa ahead in the insurance market, and alleviates concerns of insurance companies in the state, as well as for carriers looking to domicile in Iowa.
[2/25: 50-0]

SF 2132 – Life insurance companies legal reserve requirements

SF 2132 modifies the Iowa Code definition of highly effective hedging transactions to match the National Association of Insurance Commissioners accounting guidance.
[2/24: 48-0 (Absent: Feenstra, Shipley)] 

SF 2137 – Mortgage extension filing requirements 

SF 2137 modifies a requirement that a mortgage extension agreement be filed in the same way as the original instrument (a.k.a. “ancient mortgages”). Currently, a mortgage (which is the underlying collateral for a debt instrument or promissory note) is enforceable for either 20 years or 10 years beyond any stated maturity in the debt instrument, as long as the extension is filed of record. The bill does not change any timeframes, but allows that the signing of the original mortgage authorizes the lender to file the extension on behalf of the borrower. This is compatible with real estate law by establishing the same procedure for extending financing statements under the Iowa Uniform Commercial Code. It will make loan administration for mortgages much easier for both financial institutions and borrowers.
[2/25: 50-0]

SF 2196 – Extension of Iowa Cell Siting Act

SF 2196 extends the future repeal date of the Iowa Cell Siting Act from July 1, 2022, to July 1, 2025. The extension is effective upon enactment.
[2/24: 50-0]

SF 2198 – Notification requirements for open-end credit accounts

SF 2198 modifies notification requirements for an open-end credit account to mirror federal regulations. A creditor may make a change in the terms of an open-end credit account applying to any balance incurred after the effective date of the change, only if the creditor delivers or mails to the consumer a written disclosure of the change at least 60 days before the effective date of the change.
[2/25: 50-0]

HF 426 – IID background checks, fraud investigators

HF 426 is based on a non-controversial proposal recommended by the Iowa Insurance Division (IID) that clarifies the IID’s authority to review possible fraud cases in all areas regulated by the Insurance Commissioner. It also adds authorization of criminal history background checks for insurance producers and updates licensing requirements to meet the new standards. Almost all states require a criminal history background check (which includes fingerprints) for insurance producers. The IID worked with the Department of Public Safety’s Division of Criminal Investigation to ensure that the language would be acceptable to the FBI, which conducts the federal background checks. This will be applicable to new and out-of-state insurance producers, public adjusters and viatical settlement providers.

The House passed HF 426 last year on a vote of 94-0. The Senate amended the bill to include the additional language limiting two of the three investigators to reviewing only workers compensation issues. The Division was concerned that this stipulation is detrimental to its current fraud bureau staff, which consists of a director, three investigators and a criminal intelligence analyst. In 2018, 83 of the 1,046 investigation referrals were related to workers compensation issues (about 9%), consistent with the past three years of data. The bill, as amended, passed the Senate March 13, 2019, on a 32-17 party-line vote, Democrats voting no. The House took no further action. This year, the House refused to concur and the Senate receded.
[3/4: RECEDE 48-0 (Absent: Rozenboom, Wahls)]

HF 2452 – Acquisition of small water utilities

HF 2452 modifies legislation passed in 2018 that established a process for communities that may want to sell their water systems. Currently, the cities of Blue Grass and Dixon are using this process to sell their wastewater systems, but challenges for smaller systems, often the most in need of help, have been identified.

This bill creates a category of communities referred to as “at-risk” communities, defined as a community that meets the Department of Natural Resources’ (DNR) definition of “disadvantaged community,” which is based on the finances of the community; a system that has violations of federal or state regulations that impact the safety, adequacy or efficiency of the operations; or a system that has failed to have a certified operator for more than a 12-month period.

The bill allows the DNR to provide an alternate enforcement timeframe in the event of a sale, to give the new organization time for compliance without threat of penalties. It also gives the Iowa Utilities Board 180 days to review, approve or disapprove an acquisition. The bill passed the House 98-0.
[6/12: 49-0 (Absent: Hogg)]