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Energy Efficiency Changes Take Effect In New Year

electric bill
Alliant Energy
A sample electric bill shows a new line for an "Energy Efficiency Programs Charge."

Starting in January, Iowans who buy energy from MidAmerican, Interstate Power and Light (Alliant Energy), and Black Hills Energy will get monthly bills that look a bit different. Electric and gas bills will list an energy efficiency charge as required by a new law.

But it’s not a new, additional charge.

“It’s reflecting a law change that previously prohibited us from listing that charge on a customer bill, and now we are required to list that charge,” said Geoff Greenwood, spokesman for MidAmerican Energy.

Many customers can expect to see the new energy efficiency section of their bill decrease later this year, because the law also caps how much money utilities can collect from ratepayers for energy efficiency programs.

The specifics of what this will do to customers’ bills and efficiency programs are still unknown, because the Iowa Utilities Board is still considering the plans submitted by companies. But there will be a lot less money overall for things like appliance and insulation rebates, retrofitting homes, and low-income weatherization assistance.

Iowa Consumer Advocate Mark Schuling said he is concerned because utilities are proposing spending far less on energy efficiency than they have in the past. MidAmerican’s proposal would cut two-thirds of its current efficiency spending.

“There is going to be less savings, potentially, for consumers and greater energy sales by utilities,” Schuling said.

He said if there are fewer energy efficiency opportunities, consumers will likely use, and pay for, more energy. Over time, Schuling said that can more quickly lead to utilities purchasing higher-cost energy or developing additional generation facilities.

But MidAmerican estimates their residential natural gas and electric customers will save an average of $81 each year.

“We are still able to effectively serve our customers with energy efficiency programs, and save energy, and save our customers money,” Greenwood said.

Schuling noted energy efficiency was championed as a “least-cost resource” in the Iowa Energy Plan, which was led by then-Lt. Gov. Kim Reynolds. She signed the new energy efficiency legislation into law in 2018, after others who worked on the Iowa Energy Plan urged her to veto it.

Iowa Department of Human Rights Director San Wong told officials at budget hearing she is expecting utilities’ contributions for a low-income weatherization program to drop by half. Combined with other sources, that amounts to a 17 percent funding reduction, and an estimated 200 fewer homes receiving weatherization assistance each year.

The new law also allows consumers to opt out of the energy efficiency charges, but it is unclear how that will play out. Greenwood said MidAmerican “does not envision” an opt-out provision for their customers.

More information will become available in the spring, when the Iowa Utilities Board issues decisions.

Katarina Sostaric is IPR's State Government Reporter