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Retail Unbundling - Iowa
Status: The State has no unbundled services for residential customers, although three marketers are authorized to serve small-volume customers.
Overview: Iowa has been considering customer choice options for many years. In October 1997, the Iowa Utilities 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 because of 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 (MidAmerican) and Interstate Power and Light Company’s (Interstate) pilot small-volume transportation programs, which had 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. In November 2007, the board directed MidAmerican and Interstate to file proposed permanent small-volume transportation tariffs to replace the pilots.  The tariffs were to be filed by December 31, 2007, with an effective date of April 30, 2008.  The tariffs are to be available to all small-volume customers with the exception of residential customers and may include a cap on the total number of participants.  The MidAmerican and Interstate proposed permanent tariffs are currently being reviewed.

All marketers operating in the State must be certified by the Iowa Utilities 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. As of December 2007, 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.
EIA State Data: In 2006, Iowa had 858,915 residential and 97,823 commercial customers who consumed 62 and 44 billion cubic feet of natural gas, respectively. The average prices paid for natural gas purchased from local distribution companies by residential and commercial customers were $12.42 and $10.38 per thousand cubic feet, respectively.
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 11/07 The Iowa Utilities Board directed MidAmerican Energy Company and Interstate Power and Light Company to Propose Permanent Small-Volume Transportation Tariffs to Replace Pilots. The tariffs are to be filed by December 31, 2007, with an effective date of April 30, 2008. The tariffs are to be available to all small-volume customers except residential customers and may include a cap on the number of participants.
  08/04 Board approved settlement regarding 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 the utility has the 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 regarding 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 that operates an aggregation program for Iowa school boards. Program operated as a pilot for the past 4 years.
  07/01 Nicor Energy marketer application approved (Docket No. CGP-01-2).
  02/01 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.
  03/00 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.