IAMU Leadership Conference February 5, 2013

Julie Smith, Legislative and Regulatory Counsel

Iowa Association of Municipal Utilities literally all choked up…

Iowa Association of Municipal Utilities Politics of 2014 Session

• Session started Monday January 13th – Push to end session early ‐ first and second funnels to be moved up one week ‐Feb. 21 and March 14 • Second year of 85th General Assembly – “It is ALIVE” • It’s ALL about the elections

Iowa Association of Municipal Utilities 2014 Elections

• March 14 filing… will know who won’t run again • Senate D’s 26/R’s 24 • House R’s 53/D’s 47 • Senate R’s and House D’s – think they can be in majority in 2015 – Senate: 11R seats/14 D seats – House: all 100 seats up • Will be a lot of pressure to make • Political campaign contributions and a good time to help with a local campaign

Iowa Association of Municipal Utilities Who are our legislators?

Average age – House 54~Senate 55 Women – House 25% ~Senate 20% Professions: Farmers –House 18%~Senate 24% Retired –House 18%~Senate 14% Teachers –House 12%~Senate 6% Lawyers –House 10%~Senate 6% Public Safety –House 1%~Senate 8%

Iowa Association of Municipal Utilities Statewide Races

• Congressional Races ‐Iowa will be VERY high profile –a LOT of money • WHY so many legislators and others? – opportunities for higher office are rare –wait 75 years…. 3 major seats w no incumbent • June 3 primary –a candidate needs 35% to win …otherwise election goes to a convention – those people who are elected to state convention vote for candidate who wins

Iowa Association of Municipal Utilities Senate

Senate –Tom Harkin’s seat 6 Republicans • D’s Bruce Braley • Joni Ernst –Lt. Colonel Army National Guard, State Senator, endorsed by Lt. Gov.

• Matt Whitaker, Sam Clovis, Mark Jacobs, Scott Schaben, Paul Lunde • Rumors of Bob VanderPlaats

Iowa Association of Municipal Utilities District #1 –Bruce Braley’s seat

• 5 Democrats • 3 Republicans • Rep. Anesa • Rep. Walt Rogers Kajtazovic • • Monica Vernon • Dave O’Brien • • Rep. Pat • Steve Rathje Murphy

Iowa Association of Municipal Utilities District #2

• D – Representative • R’s ‐ Rep. Dave Loebsack

Iowa Association of Municipal Utilities Congressional District 3

• Tom Latham not running • State Senator –Likely R to Toss‐Up • D ‐ Former State Senator – Rumors of Former Gov. Chet Culver • 6 R’s – Monte Shaw, – Robert Cramer, – Secretary of State Matt Schultz – David Young – Joe Grandanette

Iowa Association of Municipal Utilities Congressional District #4

• R ‐ Congressman Steve • D ‐ Jim Mowrer King

Iowa Association of Municipal Utilities Governor’s race

Governor Branstad State Senator

Iowa Association of Municipal Utilities Democrats and Republican Party #s • Secretary of State’s Office #’s of registered votes – R’s outnumber registered D’s by 1,334 voters Registered No Party voters –more than R and D • As of January 2nd: – Democrats: 615,428 – Republicans: 616,762 – No Party: 719,917

Iowa Association of Municipal Utilities • MuniPAC small compared to other utility PACs ‐ but we appreciate any contributions – $$ is used in an election year –to support legislators who support us • BID on MuniPAC silent auction items • As of Jan. 2014 ‐ $3900 • 2012 – distributed $5,000

Iowa Association of Municipal Utilities What are we up against?

• More Money ‐ Cash on hand as of Jan. 2014 – MEC –2 PACs • MEC Effective Government Committee ‐ $43,788 • MEC Executive PAC ‐ $198,168 – REC’s ‐ $81,798 – Alliant ‐ $27,540 • More Manpower • More Lawyers

Iowa Association of Municipal Utilities Board and Manager campaign

• PLEASE participate in MuniPAC and attend the legislative breakfast

Iowa Association of Municipal Utilities IAMU Legislative Events

• Water Day at the Capitol 2‐3‐2013 –IAMU gave legislators low‐flow showerheads • Joint statement –IRWA, AWWA, IAWA, DMWW, IAMU, League of Cities ‐ drinking water infrastructure needs • Special Presentation of water day gift to Bob Haug “If there is magic in Iowa, it is in the rural water!”

Iowa Association of Municipal Utilities Pictures from Water Day

Iowa Association of Municipal Utilities The new “Bob Haug” “and I am not talking about the Governor”

Iowa Association of Municipal Utilities Legislative Breakfast

• Legislative Breakfast at the Capitol – tomorrow 7:00 –8:30 – Parking –easy to park at bottom of stairs on WEST side – Written invites – distributed to legislators at Capitol – IAMU ‐ notepad, mechanical pencils, IAMU brochures, • Talk about legislation and Position statements • What can you do to foster legislative relations? – Offer to hold a legislative forum at the utility – Offer to give your legislator a tour of your facility – If your legislator is someone you support, you can offer to help put up yard signs, put up a yard sign in your yard, make calls, hold a fundraiser, etc…

Iowa Association of Municipal Utilities 2014 Legislation

• Rural Water –2 Mile Limit • Water Infrastructure • IUB Jurisdiction • Telecom ‐ Broadband Expansion • Distributed Generation • CleanLine • One Call • Open Meetings • Heating Costs

Iowa Association of Municipal Utilities Water “service territories”

• HF 516 ‐ Last session –tough fights with rural water over two‐ mile limit bill – State, federal action ‐ put a lot of pressure on rural water groups to work something out – Representative Dave Deyoe – champion for cities, particularly in his district, Nevada, Ames • IRWA proposal (Oct.) ‐ goal of coming to an agreement that will provide more clarity in the 2 mile limits • Close to an agreement –hope to pass a bill this session • Please talk to your legislators and ask them to support our efforts – Position Statement – Discuss your own issues with two mile limit and planning outside your city

Iowa Association of Municipal Utilities “Agreed to” amendment

• All Rural water subject to two mile limit notification requirements – Must comply after July 1, 2014 – Notice not required if rural water is serving new customers or improving facilities within the existing service area or agreement with the city • Requires water plan be filed by certified mail with Board of Trustees • Shortens time city has to provide water service to 3 years instead of 4 years. Requires city to provide rural water with a map showing the city’s incorporated borders and the areas currently served • Creates reciprocal requirement on part of city and rural water. If city or rural water can’t provide service within three years, other party to be notified by certified mail • Shortens city’s response time from 90 days to 75 days. – If the city fails to respond within 75 days –rural water may provide service – City may request additional time–must respond within 165 days (current law is 180 days) – All notification must be by certified mail

Iowa Association of Municipal Utilities Agreement cont…

• If city reserves the right to provide water service the city must show intent and ability to provide service by providing rural water with a copy of its plan • Creates similar protection from liability for city for failure to provide fire protection outside the city limits • Provision of service defined to mean delivering water in sufficient quantity and quality to meet the customer’s desired need. The DNR determines whether quantity is sufficient through construction permitting process • Allows for either party to request mediation if land is annexed

Iowa Association of Municipal Utilities Thanks Rep. Dave Deyoe

• (R, District 16), Chair • (R, District 73), Vice Chair • Roger Thomas (D, District 55), Ranking Member • Dwayne Alons (R, District 4) • (R, District 47) • Bruce Bearinger (D, District 64) • Dave Deyoe (R, District 49) • Nancy Dunkel (D, District 57) • (D, District 81) • (D, District 46) • Dave Jacoby (D, District 74) • (R, District 6) • Mark S. Lofgren (R, District 91) • (D, District 9) • Brian Moore (R, District 58) • (D, District 26) • Walt Rogers (R, District 60) • (R, District 18) • Larry Sheets (R, District 80) • (R, District 44) • Frank Wood (D, District 92)

Iowa Association of Municipal Utilities Water Infrastructure

• Joint statement by IAMU, IAWA, DMWW, IRWA, AWWA –“water infrastructure plays a critical role in protecting public health, promoting economic prosperity , and ensuring a good quality of life across the state” – Systems are aging and neglected – Expensive system upgrades to comply with stringent regulations • State appropriation for grants and loan funding • Water quality trading • Cost effective alternative technologies • Bill hasn’t been filed yet

Iowa Association of Municipal Utilities IUB Jurisdiction Deposits • Rockford Municipal Light Plant ‐ FCU‐2013‐0008 – IUB found they DID have jurisdiction over electric and gas deposit amount • Calculation of deposit based on past 12 months usage –if unoccupied –move to prior 12 months • Primghar complaint ‐ Primghar – complaint against deposit of $250 for all utilities • Primghar response –IUB deposit would be higher for customer –electric ($191.15) + garbage, sewer ($73.80) = $265.10

Iowa Association of Municipal Utilities IUB Jurisdiction, cont.

• SSB 3018, Bob Dvorsky, Ch, , Mark • HSB 594, Quentin Stanerson, Ch, Ted Gassman, Frank Wood • THANKS to House Local Government Chair, Jason Schultz and Senate Local Government Chair Mary Jo Wilhelm • Please talk to your legislators about this issue – Position Statement – What does your utility do? What problems do you encounter with deposits? Why is home rule important? • If legislation doesn’t pass ‐ Adopt IUB deposit policy (highest month billing in previous 12)

Iowa Association of Municipal Utilities Local Government Committees

• HOUSE • SENATE • Jason Schultz (R, District 18), Chair • Mary Jo Wilhelm (D, District 26), Chair • (R, District 28), Vice Chair • Chris Brase (D, District 46), Vice Chair • (D, District 66), Ranking Member • (R, District 14), Ranking Member • (R, District 24) • Mark Chelgren (R, District 41) • (R, District 72) • Robert E. Dvorsky (D, District 37) • John Forbes (D, District 40) • (R, District 4) • Mary Gaskill (D, District 81) • Rita Hart (D, District 49) • Tedd Gassman (R, District 7) • Herman C. Quirmbach (D, District 23) • Mary Ann Hanusa (R, District 16) • Brian Schoenjahn (D, District 32) • (R, District 39) • Rich Taylor (D, District 42) • Bob M. Kressig (D, District 59) • Brad Zaun (R, District 20) • Daniel Lundby (D, District 68) • Dawn E. Pettengill (R, District 75) • Henry V. Rayhons (R, District 8) • Joe Riding (D, District 30) • Kirsten Running‐Marquardt (D, District 69) • Larry Sheets (R, District 80) • Quentin Stanerson (R, District 95) • (D, District 93) • Matt W. Windschitl (R, District 17) • Frank Wood (D, District 92)

Iowa Association of Municipal Utilities Telecom Policy • Governor –STEM Advisory Council’s Broadband Committee ‐ “Connect Every Iowan” ‐ goal to Increase access, adoption, and use of broadband – Long‐term strategic plan by 1‐1‐2015 • IAMU L & R Committee passed a motion to support the Position Statement in your packet – Municipal telecom are included

Iowa Association of Municipal Utilities Governor’s Main Policy Agenda Broadband Expansion • HSB 515 – “Connect Every Iowan Act” – Wholesale broadband access over ICN to communication service providers – Unserved or underserved areas of state • No service with download speeds of greater than 50 megabits per second and upload speeds of 15 megabits per second to residential customers – Property tax exemption for installation of new infrastructure July 1, 2014 –Dec. 31, 2018 – Education incentives/Internships – Cell siting – uniform policies

Iowa Association of Municipal Utilities House Broadband Subcommittee

Iowa Association of Municipal Utilities SSB 3119 “Statewide Broadband Expansion Act”

• Creates statewide broadband coordinating council and information exchange • “unserved or underserved communications service area” defined as inadequate or insufficient download and upload speeds as determined by rule • Allows wholesale access to ICN • Additional Incentives – Creates broadband revolving loan fund ‐ low interest loans ‐ $250,000 limit – Tax credit ‐3% of amount expended by a communication service provider for new installation of broadband infrastructure w cap of $750,000 per installation – Property tax incentive ‐ twenty‐year exemption broadband infrastructure installed from 2014 to 2018 • First Subcommittee Monday afternoon

Iowa Association of Municipal Utilities Broadband Expansion ‐ Committees

House Commerce Senate Economic Growth • (R, District 42), Chair • Steven J. Sodders (D, District 36), Chair • Mark Brandenburg (R, District 15), Vice Chair • (D, District 13), Ranking Member • (D, District 29), Vice Chair • Chip Baltimore (R, District 47) • (R, District 7), Ranking Member • Dave Dawson (D, District 14) • (R, District 24) • Dean Fisher (R, District 72) • John Forbes (D, District 40) • Mark Chelgren (R, District 41) • (R, District 50) • Jeff Danielson (D, District 30) • Dave Jacoby (D, District 74) • William A. Dotzler Jr. (D, District 31) • Bob M. Kressig (D, District 59) • (R, District 37) • Rita Hart (D, District 49) • (D, District 89) • Jack Hatch (D, District 17) • (D, District 33) • (R, District 11) • (D, District 41) • Scott Ourth (D, District 26) • (D, District 34) • Dawn E. Pettengill (R, District 75) • Charles Schneider (R, District 22) • Joe Riding (D, District 30) • Thomas R. Sands (R, District 88) • Rich Taylor (D, District 42) • Jeff Smith (R, District 1) • (R, District 19) • Chuck Soderberg (R, District 5) • Mary Jo Wilhelm (D, District 26) • Rob Taylor (R, District 44) • (R, District 79) • Ralph C. Watts (R, District 19)

Iowa Association of Municipal Utilities IUB Telecom

• Appropriate Scope of Telecommunications Regulations 1‐11‐ 2013 (IUB: NOI‐2013‐0001) • IUB legislation – substantive changes –IAMU amendment – technical changes – update Code

Iowa Association of Municipal Utilities VOIP

• Providers want to take IUB out of regulation • IUB considered during NOI – decided NO change – Loss of consumer protection, inability to solve intercarrier disputes –FCC would govern – Rural call completion – Regulatory treatment should be technologically neutral • IAMU is opposed • Voice is Voice, No Matter the Call –Iowa Communications Alliance, Sprint, U.S. Cellular, Iowa Institute for Cooperatives, INS, Mediacom

Iowa Association of Municipal Utilities Wind Energy

• Senate Resolution 103 –encourages federal delegation to support extension of federal production tax credit for wind energy – sponsored by 41 Senators ‐ debated today on Senate Floor • Wind Energy Incentive –SF 372 –voted out of Senate Ag last session – Rumored attempts to move it this session – Require use of standardized interconnection contracts and allows IUB to set rates for wind energy production facility of up to 20 MW

Iowa Association of Municipal Utilities Nuclear

• HF 2046 ‐ No certificate can be issued until DNR certifies that the fed. Govt. has identified and approved a demonstrable technology or means for disposal of high‐level nuclear waste AND construction of facility has specifically been approved by a majority vote of both House and Senate. • HF 2047 ‐ 60% of voters within 250 mile radius of proposed facility must vote to approve construction. 8 year limitation on next election.

Iowa Association of Municipal Utilities Tax Credits

• Extending solar tax credits and allowing taxpayer to claim more than one credit providing separate installations –SF 431 • CNG/Electric Vehicle Tax Credits –SF 434 – $5 M in tax credits for compressed natural gas and electric vehicle charging stations • Both of these bills are stopped in House

Iowa Association of Municipal Utilities One Call Subcommittee

Iowa Association of Municipal Utilities One Call –HSB 518

• Requires electronic response from operator when marking complete – notification center notifies excavator • Requires excavator to use white paint, flags, stakes or combination to show proposed area of excavation • Notice of planned excavation must be given not more than 10 calendar days prior to start of excavation. All requests for locates received after 5:00 p.m. processed as if received at 8:00 a.m. the next business day. Original notice valid for 20 days. • Unless otherwise agreed in writing, an excavation shall NOT be performed within 25 feet of a natural gas transmission line or other critical underground facility until operator is present at the planned excavation area • Heavy Highway contractors and Associated General Contractors against • IAMU –FOR

Iowa Association of Municipal Utilities Clean Line –DC Transmission Line

Iowa Association of Municipal Utilities Clean Line

• Informational meetings across the state • Filed request with IUB to bifurcate franchise process – Issues of whether the line serves a public purpose thus allowing grant of franchise are heard in combination with a request for eminent domain authority – Costs would be exorbitant if had to figure that out before knowing whether IUB will approve franchise – 1,247 private easements, 2,295 separate individuals • IUB denied request

Iowa Association of Municipal Utilities Legislation to Oppose CleanLine

• Preservation of Rural Iowa Alliance protesting Clean Line – Filed 100s of letters and objections with the IUB • HF 2054 by Grassley, Kaufmann, Rogers, Fisher, Watts, Heartsill, Schultz, Pettengill, and Byrnes • Prohibits allowing a bifurcated hearing unless approved by a majority of House and Senate • HF 2056 by Grassley, Kaufmann, Rogers, Fisher, Watts, Heartsill, Pettengill, and Byrnes • Must show minimum of 25% of electricity used in state • If 250 signatures on petition, opposing party gets equal time at information meetings • Not similar issues in Senate

Iowa Association of Municipal Utilities Open Meetings

• SF 2053 –by Senator expands the times when an advisory committee must comply with open meetings requirements – Eliminates the exception for social and ministerial functions – IAMU is AGAINST • HSB 216 –Office of Citizen’s Aide access to closed session audio recordings without getting a court order – Citizen’s Aide (used to be Ombudsman) claims they had this authority in the past and the AG changed the rules? – Much discussion last year – Subcommittee yesterday – amendment accepted –to be voted out of Govt. Oversight – IAMU and other local government groups AGAINST

Iowa Association of Municipal Utilities High Heating Costs

• High costs of propane this winter leading to overall discussion on high heating costs • Governor’s Actions – doing everything possible to resolve • Senate D’s – SSB 3137 ‐ $2M to LIHEAP – voted out of Senate Approp. yesterday • House D’s –HF 2075 ‐ $1M to LIHEAP

Iowa Association of Municipal Utilities State Regulatory Issues

• NOI – 2014 – 0001 Distributed Generation • NOI – 2014 – 0002 Peak Alert • EPA Meeting – Carbon Emissions

Iowa Association of Municipal Utilities NOI‐2014‐0001 Distributed Generation • IUB issued Jan. 7, 2014 • Invited comment from public – Benefits and challenges of DG for utilities and ratepayers – State, local policies – Identify technical, financial, regulatory and safety aspects of DG • Potential rate implications, impact on reliability of transmission and distribution systems, need for future transmission, economic impact of widespread DG, consumer protections – Initial Comments due Feb. 25 –expect Reply comments and possible hearing/workshop in a few months • IAMU will work with L & R Committee to develop comments

Iowa Association of Municipal Utilities NOI‐2014‐0002

• Peak Alert Rules – filed 1/23 rules effective in 1983 –last reviewed 2003 – Each electric utility is required to file annual written notice to customers explaining how growth in demand affects a utility’s investment costs and why reduction of customer usage during peak demand may help delay or reduce the amount of future rate increases. – Additional notification requirement imposed on IOUs –MEC has waived since 2004 • Municipal Utilities specifically asked to respond by March 14, 2014 – Should peak alert rules be rescinded or changed? – Do peak alert notification requirements conflict with other communications of the utility? – Describe any recent studies re: customer responsiveness to utility notifications via the media of an approaching peak demand – Do utilities load control programs more effectively reduce peak usage than the peak alert notifications?

Iowa Association of Municipal Utilities EPA Carbon Emission Regulation

• New Source Performance Standards –for new plants –Jan 8, 2014. APPA Comments: “The American Public Power Association (APPA) is extremely disappointed with the re‐proposed New Source Performance Standard for new coal and natural gas‐fired power plants published in the Federal Register by the U.S. Environmental Protection Agency (EPA) today. In our view, this re‐proposed rule effectively precludes coal going forward as a resource for electricity generation. This will limit our future resource options and could likely lead to higher electricity rates in the coming years.”

Iowa Association of Municipal Utilities EPA –Rules for existing plants

• Draft Rules expected to be filed June 2014 • Dec. 12 ‐ IAMU/muni stakeholders met with IUB/OCA/EPA/DNR/other utilities to discuss possible impacts on existing utilities • Focus on Energy Efficiency efforts likely • New York Times Article today – – “EPA Staff Struggle to Create Pollution Rule” –want lawsuit proof regulation – most significant action ever taken by U.S. to curb climate change

Iowa Association of Municipal Utilities IUB comments cont…

• IUB filed Comments w EPA ‐ “allow states to include a wide variety of state programs and actions as the best system of emission reduction” • State programs include: – Proven and cost‐effective energy efficiency programs – Investments in renewable energy – Programs to encourage investment in renewables, emission control equipment, and increased plant efficiency – Other state policies to encourage investment in renewables – Any action taken by a utility that has the effect of reducing CO2 emissions • Set base year in range of 2000‐2005

Iowa Association of Municipal Utilities Legal issues

• Hawkeye Land • Little Sioux • Eagle Point Solar • FEMA

Iowa Association of Municipal Utilities Hawkeye Land

• IAMU ‐ “joint utility intervenors” – Hawkeye Land –Does IUB have jurisdiction and whether “pay and go” statute violates the “just compensation” guarantees of the U.S. and State Constitutions. – This case has been going on for a long time – 10‐14‐2010 –ALJ denied relief –HL appealed – 9‐30‐2011 –IUB affirmed – 10‐24‐2011 –HL petitioned Dist. Ct to judicial review IUB – 12‐31‐2012 –Dist. Ct. affirmed IUB – 9‐4‐2013 –HL appealed to Iowa Supreme Court • No word yet on when case will be decided

Iowa Association of Municipal Utilities Little Sioux –Gas Replacement Tax

• Little Sioux appealed a decision by the Department of Revenue – upholding the Constitutionality of Iowa’s gas replacement tax • Sept. 20, 2013 ‐ hearing was held in Polk County District Court – Judicial review of whether the Dept. of Revenue made the right decision in upholding the tax – Arguments on behalf of Dept. of Revenue by Don Stanley and Jim Miller, AG’s office. – No intervention by utilities … YET • Rumored legislation

Iowa Association of Municipal Utilities Eagle Point Solar

• Dubuque entered Purchase Power Agreement to buy solar power from Eagle Point ‐array on roof of city building • Alliant claimed violation of exclusive service territory law • Eagle Point asked IUB for ruling –IUB agreed with Alliant –that sale violated exclusive service territory law • E.P. appealed and district court reversed IUB –so court found that Eagle Point wasn’t a utility and so the exclusive service territory law didn’t apply • Decision stayed, pending appeal • Supreme Court to heard oral arguments January 22– decision could be as early as 6 weeks

Iowa Association of Municipal Utilities • Claims made for winter storms of 4‐9‐13 –4‐11‐13 • Sanborn ($69,000); Lyon REC ($4.5M); Iowa Lakes REC ($145,000); Osceola Electric REC ($14.5M) • Emergency repairs made and FEMA payment received • Payment for conductor replacement denied • Initial appeal submitted to Homeland Security October 28, 2013. • Homeland Security appealed to FEMA –Dec. 24, 2013. FEMA has 90 days but likely to get extension • HCR5/SCR102 unanimously passed Iowa GA the first week of session. – Asks FEMA to reconsider “detrimental policy decision denying storm recovery funding”

Iowa Association of Municipal Utilities Iowa Association of Municipal Utilities