Retail Unbundling - Iowa


Status: The state has no unbundled services for residential customers but is considering action.


Overview: Iowa has been considering customer choice options for many years. In October 1997, the Iowa Utility Board adopted rules that gave utilities the option to file tariffs to implement unbundled service to small customers, including residential customers. All utilities in the state filed plans in late 1998, but the plans were quite diverse. Several workshops were conducted, but there was still disagreement among utilities, marketers, and consumer advocates as to how to proceed. In March 2000, the board dismissed the unbundling plans, determining that they either moved too slowly or too quickly in opening the residential market to competition. Instead, the board ordered each utility to propose tariff changes that "remove the primary barriers to providing a competitive option for small-volume customers interested in transporting gas." In its order, the board also noted that some of the issues raised during the workshop process might need to be resolved through legislation. All the utilities filed new unbundling draft tariffs in November 2000.


In July 2003, the board decided that implementation of a small volume gas transportation plan would no longer be in the public interest owing to significant industry changes. Instead the board initiated (October 2003) an inquiry that focused on ways to limit price risk for small volume customers. At a workshop held in July 2004, discussions centered on fixed bill alternatives and proposals to modify rules and tariffs to give small volume customers the same options as large volume customers. In a separate proceeding in August 2004, the board approved expansions of MidAmerican Energy Company’s and Interstate Power and Light Company’s pilot small volume transportation programs, which have been in place since 1997, to include participation by governmental entities with predictable heat-sensitive loads, in addition to the schools and community colleges that were already eligible. The pilots are scheduled to continue until August 2007, and the utilities are required to report annually on such issues as participation levels, cost effectiveness, reliability, and program costs. According to the board, these reports will be used for input into further decisions regarding rule changes affecting small volume non-residential customers.


All marketers operating in the state must be certified by the utility board. According to rules adopted in February 2001, applicants must demonstrate operational and financial capability to deliver services and file financial statements. Certified marketers must file an annual report giving the number of small and large customers served each month, total sales to small- and large-volume users, and revenues collected. Marketers must file rates each month for each customer class. Application processing began in April 2001, with eight marketers certified by October 2001. As of December 2004, three marketers, including the Joint Utility Management Program which provides gas aggregation service to participating school boards, were certified to provide service to small-volume users. The school board aggregation program began in 1997 as a pilot project.



EIA State Data: In 2003, Iowa had 832,230 residential and 96,701 commercial customers who consumed 74 and 48 billion cubic feet of natural gas, respectively. The average prices paid for natural gas purchased from local distribution companies (LDCs) by residential and commercial customers were $9.14 and $7.71 per thousand cubic feet, respectively.


Iowa: Legislative and Regulatory Actions on Retail Unbundling


Summary: Several regulatory changes have been made in anticipation of unbundling gas service to residential customers.


Regulatory and Legislative Actions

Regulatory Actions

08/04

Board approved settlement re small-volume transportation tariffs for MidAmerican Energy Company and Interstate Power and Light Company (IPL). Agreement reached by the Iowa Joint Utility Management Program, the Consumer Advocate, MidAmerican, and IPL that expands the availability of pilot small volume transportation programs to state and local governments with heat-sensitive predictable loads. IPL’s pilot continues through August 1, 2007, and utility has right to stop enrolling new customers at each anniversary date. Customers can return to system supply for a $50 fee (rather than $500) if notification occurs between May 1 and July 1 or at an agreed upon date prior to November 1. MidAmerican’s pilot will run from September 1, 2004, through August 31, 2007, with similar terms as IPL’s. An administrative charge cap of $0.25 per dekatherm (Dth) will continue through the pilot period and be “trued-up” annually. The administrative charge for the first year will be $0.08 per Dth. The two utilities must respond annually to 10 information requirements during the pilot, which include the number of eligible customers, participation levels, names of participating marketers and numbers they serve, comparison of monthly pilot delivery prices vs. prices of system supply, program costs, problems encountered, and program evaluation.


 

05/04

Workshop scheduled (July 1, 2004) on bill risk management. Issues to be discussed include: definition of small volume customers, types and variety of risk reduction options, energy efficiency and conservation components, and hedging.

 

10/03

New inquiry into bill risk management. A marketer and municipality requested reopening of the small-volume transportation docket. Instead, the Board opened a more directed inquiry that would focus on ways to limit price risk for small volume customers.

 

07/03

Docket closed re small-volume gas transportation rules. Board decided implementation of a small volume gas transportation plan would no longer be in the public interest, citing significant industry changes.

 

04/03

Board granted Nicor Energy’s request to discontinue service. Board granted Nicor Energy’s request to surrender its certificate to operate as a competitive natural gas provider (CNGP) in the state. Effective April 1, Nicor had either assigned its customers to another CNGP or terminated the contracts.

 

10/01

Board certified eight marketers, including the Iowa Joint Utility Management Program which operates an aggregation program for Iowa school boards. Program operated as a pilot for the past 4 years.


 

7/01

Nicor Energy marketer application approved (Docket No. CGP-01-2).


 

2/01

Rules adopted for certifying marketers (RMU-00-7). Applicant must demonstrate operational and financial capability to deliver services and file financial statements. Board will issue decision within 90 days of application unless it needs another 60 days. Application processing scheduled to begin April 25. Certified marketers must file an annual report giving the number of small and large customers served each month, total sales to small- and large-volume users, and revenues collected from both small and large customers. Marketers must file rates each month for each customer class.


 

11/00

Utilities filed new draft tariffs to unbundle services. Expected to be in place in the spring of 2002.


 

3/00

Board dismissed utilities' unbundling plans. Instead, the board ordered each utility to propose tariff changes that "remove the primary barriers to providing a competitive option for small-volume customers interested in transporting gas," and requested comments within 30 days regarding the procedural steps for designing these tariffs. In its order, the board also noted that some of the issues raised during the workshop process may need to be resolved through legislation.


 

12/98

Board authorized a workshop process for development of competitive markets (Docket NOI-98-3). In order to reach more uniformity, the utility board authorized a workshop process that would bring together utilities, marketers, and consumer advocates to discuss issues related to creating a competitive market. Five workshops were conducted between January and mid-April 1999, with parties agreeing on the concepts of regulation of gas delivery services, the obligation to serve, and the need for educating consumers. However, there was still disagreement as to how to proceed, with some advocating a legislative approach, others proposing aggregation programs, and others proposing quite diverse alternatives  

 

10/97

New rules adopted (Docket No. RMU-96-12 )that allow utilities to file tariffs to implement unbundled service to small customers, including residential customers.



 

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File last modified: 01/31/2005