ARC 8203C - Iowa Administrative Rules

Adopted and Filed

Management efficiency evaluation, ch 29

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ARC 8203C

UTILITIES COMMISSION[199]

Adopted and Filed

Rulemaking related to management efficiency evaluation

The Utilities Commission hereby rescinds Chapter 29, “Management Efficiency Evaluation,” Iowa Administrative Code, and adopts a new chapter with the same title.

Legal Authority for Rulemaking

This rulemaking is adopted under the authority provided in Iowa Code section 476.2.

State or Federal Law Implemented

This rulemaking implements, in whole or in part, Iowa Code section 476.52.

Purpose and Summary

The Commission commenced this rulemaking as part of its Executive Order 10 review. The rulemaking promulgates a methodology by which the Commission may evaluate a utility’s management efficiency.

The Commission issued an order on April 23, 2024, commencing this rulemaking. The order is available on the Commission’s electronic filing system, efs.iowa.gov, under RMU-2023-0029.

Public Comment and Changes to Rulemaking

Notice of Intended Action for this rulemaking was published in the Iowa Administrative Bulletin on May 29, 2024, as ARC 8030C. A public hearing was held on the following date(s):

●June 18, 2024

●July 2, 2024

Commenters were supportive of the proposed rulemaking. No changes from the Notice have been made.

Adoption of Rulemaking

This rulemaking was adopted by the Commission on July 22, 2024.

Fiscal Impact

This rulemaking has no fiscal impact to the State of Iowa.

Jobs Impact

After analysis and review of this rulemaking, no impact on jobs has been found.

Waivers

No waiver provision is included in the amendments because the Commission has a general waiver provision in rule 199—1.3(17A,474,476) that provides procedures for requesting a waiver of the rules in this chapter.

Review by Administrative Rules Review Committee

The Administrative Rules Review Committee, a bipartisan legislative committee which oversees rulemaking by executive branch agencies, may, on its own motion or on written request by any individual or group, review this rulemaking at its regular monthly meeting or at a special meeting. The Committee’s meetings are open to the public, and interested persons may be heard as provided in Iowa Code section 17A.8(6).

Effective Date

This rulemaking will become effective on September 25, 2024.

The following rulemaking action is adopted:

ITEM 1.Rescind 199—Chapter 29 and adopt the following new chapter in lieu thereof:

CHAPTER 29

MANAGEMENT EFFICIENCY EVALUATION

199—29.1(476) Policy and purpose. It is the policy of the commission that a public utility shall be operated in an efficient manner. This chapter describes the methodology by which the commission may evaluate the management efficiency of a rate-regulated utility and the actions that the commission may take upon a finding as to the efficiency of a utility’s management.

199—29.2(476) Efficiency considered in a complaint or rate case proceeding. In a complaint proceeding conducted pursuant to Iowa Code section 476.3 or in a rate proceeding conducted pursuant to Iowa Code section 476.6, the commission may determine whether a public utility subject to rate regulation is being operated in an efficient or inefficient manner. In making such a determination, the commission shall evaluate the management of the utility in the manner prescribed by this chapter.

199—29.3(476) Management efficiency evaluation. The commission may evaluate a utility’s management efficiency based upon the utility’s particular circumstances and considering a range of factors that may differ among utilities. In evaluating a utility’s management efficiency, the commission may consider any of the factors listed in this chapter and any additional relevant factors. No single factor will be deemed conclusive evidence of efficiency or inefficiency. In performing the evaluation, the commission may collect data to compare a utility to other rate-regulated utilities providing the same service within the state of Iowa. The commission may consider data for time periods outside a rate case test year.

29.3(1) Factors. The commission may consider the following factors:

a.Price per unit of service (including amounts collected subject to refund) by customer class and type of service.

b.Operation and maintenance costs per unit of service. Low operations and maintenance costs may not support a finding of efficiency if quality of service is substandard.

c.Quality of service, as reflected in objective measures of service quality, customer complaints shown in company and commission records, findings made in complaint proceedings, penalties assessed, and measures of customer satisfaction.

d.Customer mix.

e.Total compensation for each officer of the utility.

f.Company’s bad debt ratio.

g.Innovative practices implemented by utility management that result in improved service or that control costs.

h.Geographic service territory.

i.Economic conditions in the areas served.

j.Weather patterns and disasters.

k.Development and implementation of energy efficiency programs.

29.3(2) Electric utilities. When evaluating an electric utility, in addition to considering the factors listed in subrule 29.3(1), the commission may consider factors specific to electric utilities, including the following:

a.Fuel cost per kilowatt-hour.

b.Availability for each generating unit with 2,000 or more service hours per year.

c.Companywide load factor.

29.3(3) Natural gas utilities. When evaluating a natural gas utility, in addition to considering the factors listed in subrule 29.3(1), the commission may consider factors specific to natural gas utilities, including the following:

a.Total cost per unit of gas purchased from a pipeline (to be considered separately from operations and maintenance costs).

b.Total cost per unit of gas purchased from other sources (to be considered separately from operations and maintenance costs).

c.Residential and commercial sales volume in relation to investment in the system (rate base).

d.Unaccounted-for gas as a percentage of total sales volume.

199—29.4(476) Rewards and penalties. If the commission makes a determination as to the efficiency of the management of a utility pursuant to this chapter, except for an electric cooperative that has elected rate regulation, the commission may prescribe an adjustment of the utility’s return on common equity or revenue requirement as allowed pursuant to Iowa Code section 476.52. Upon making a determination as to the efficiency of the management of a rural electric cooperative that has elected rate regulation, the commission may prescribe an adjustment of the rates charged by the cooperative as part of an adjustment to the utility’s revenue requirement.

These rules are intended to implement Iowa Code section 476.52.

[Filed 8/1/24, effective 9/25/24]

[Published 8/21/24]

EDITOR’S NOTE: For replacement pages for IAC, see IAC Supplement 8/21/24.