Non-Utility Costs in Utility BillsM. Sarafolean

J. Kaman

Iowa Industrial Energy Group Meeting

April 9, 2013

Utility Bills

• Special Riders, Surcharges• Above Market PPAs• Cross Class Subsidies• Taxes• City Franchise Fees

Bill Markup

More to come…

Riders

• Renewable development funds• Energy efficiency charges• Special pollution surcharges - externalities• Carbon surcharges• System/Public Benefits Funds

Administrative Code - Riders

• Specifies criteria for whether a rider could apply [e.g. electric rates 199 IAC 20.9(1)]– Incurred in supplying energy– Beyond direct control of management– Subject to sudden important change in level– Important factor in total cost to serve– Segregated in utility accounts

• Recent Iowa examples– Alliant’s electric Energy Adjustment Clause (EAC), electric utility AEPs– Electric (and Gas) EECRs, 199 IAC 35.12– Capital Infrastructure, e.g. 199 IAC 19.18 (gas)

Tariff

• Cities Served- Electric Service territory maphttp://www.iowadot.gov/maps/msp/electrical/electrical.html

• Riders• Franchise Fees imposed

Above Market PPAs

• Wind power mandates • Solar power mandates• Other PPA embedded cost risk

Cross Class Subsidies

• Built into IOU cost of service allocations• Tiered kWh purchases• Allocation of variable costs to demand

charges• Increased CP events

Taxes

• Phantom income taxes– State and Federal taxes included in base

rates but never paid to States and the Feds.• Local taxes on utility assets• State and local sales taxes on utility

revenues

Fees

• Municipal fees • Low income assessments• Meter charges• Customer charges• City franchise fees

Utility Franchise Fees• By the CITY• In lieu of municipalization?• Des Moines franchise fee lawsuit• Iowa Code 480A (local option) and 364.2 (franchise fees)

– mutually exclusive• Now (since 2009):

– Up to 5% without proving costs are for “inspecting, supervising, and otherwise regulating…” the franchise

– Can use excess for property tax relief, public improvements, low-income energy conservation, public safety, public works and transportation, streets, economic development….

A Story About Waterloo…

• Cities need revenue, property tax concerns in Iowa• Energy bill taxes are disproportionate to

industry/employers• Appears can:

– Modify for different customer classes– Apply to Electric, Nat Gas, Telecom, (etc.) any combination or

none– Apply a cap per customer

Non-Utility Costs in Utility BillsM. Sarafolean

J. Kaman

Iowa Industrial Energy Group Meeting

April 9, 2013