The need for Iowa to reform its approach to regulating our electric grid has never been more urgent.
A few weeks ago, we highlighted an academic report that gave Iowa a “D” for the competitiveness of its electric grid, while giving Illinois an “A”. After digging through the U.S. Energy Information Office’s data, we also discovered that in 2010, Iowa’s average commercial electric rate was over 10% lower than Illinois' average rate, but in 2020, Iowa’s average rate was 14.4% higher than Illinois, a 25% swing in just 10 short years!
Then we came across a Department of Energy report on several successful pilot projects implementing new voltage optimization technologies – resulting in a 3% reduction of energy used with a better than 5-year payback (we will cover this topic in greater depth in a future newsletter). While Iowa has utility-based energy efficiency programs, these programs are focused on behind-the-meter customer programs, voltage optimization technology is one example of the significant potential of front-of-the-meter energy efficiency efforts.
Unfortunately, under our current regulatory approach, Iowa’s investor-owned utilities would be penalized for implementing these new technologies. Yes, that is correct. There is a significant disincentive for Iowa’s utilities to invest in this new technology. The utility must spend resources to implement the technology, which will then reduce revenue and lower long-term profits. The savings flow exclusively to the customer.
Similarly, if our investor-owned utilities leverage third-party generation and storage, greater demand response, or other energy efficiency initiatives, while the system becomes more efficient, the utilities’ short-term and long-term profits will suffer.
We need to start the dialogue and change the game. The electric utilities’ financial interests must better align with Iowa’s ratepayers’ interests.
Iowa Business for Clean Energy has started visiting Iowa’s communities to highlight the urgency of modernizing the way we regulate our electric grid to respond to the demands of an emerging low-carbon, clean grid. If your local business group, Rotary, or other community organization would like us to come present on the importance of Iowa’s electric grid, please contact us.
If you are in the neighborhood, please join us for two events coming up:
Upcoming Events:
