WEST DES MOINES, IOWA (October 22, 2021) — A University of Texas study that gave Iowa a “D” for its electric competition raises questions about the state’s need for more free market forces in its electric utility market, the executive director of an Iowa business group for clean energy said today.
“While we typically don’t think of Illinois as a model, our neighbor to the east was awarded an “A” while Iowa received its ‘D,” said Bob Rafferty of Iowa Business for Clean Energy. “Iowa’s average commercial rates are 14.4% higher than Illinois’ rates[i], so that should really get our attention, too. It is a wake-up call for Iowa to start questioning the status quo.”
The University of Texas released a national “Electric Competition Scorecard”[ii] in conjunction with the release of “The State of Electric Competition in the United States of America,”[iii] an academic paper authored by Joshua D Rhodes PhD, Aaron Nisman, William Wade, and Michael E Webber PhD from the Webber Energy Group at the University of Texas. The report’s Executive Summary notes:
Because the regulation of electricity is often delegated to state-level commissions, each and every state is unique in their approach and scope. Some states fully regulate most aspects of the generation, transmission, and delivery of electricity, others have opened up most of the areas to competition, while most states fall somewhere between monopoly and full deregulation.
The report noted that while many states maintain strict government-protected monopoly status for the electric utilities, a number of them incorporate competitive aspects into their markets. Iowa, which has strict government-protected monopolies for electric sales, scored points for compensating distributed energy generation, such as rooftop solar, but it has no retail competition, no independent review of future generation acquisition, no financial incentives for utilities to encourage energy efficiency, no release of customer data, and only a very small percentage of its generation is owned by independent third parties.
“Despite the fact that electricity is often a major business expense, few business people have any idea on how electric rates are set — or how current regulatory policies might impact future rates,” Rafferty said. “With the major energy changes and innovations coming in the next two decades, Iowa needs its business leaders to be engaged in promoting policies that will ensure access to competitive electric prices.”
He said Iowa Business for Clean Energy, a 501(c)(3) nonprofit organization, was launched in 2020 to foster policy-discussions that will enable Iowa businesses to access the cleanest energy at a competitive price, ensuring a brighter future forward. Learn more at www.iowacleanenergy.org.
[i] https://www.eia.gov/electricity/monthly/. (see Electric Power Monthly, Previous Issues, February, 2021 Table 5.6.B for Year-To-Date State Averages through December 2020). This version contains full calendar year data for 2020. By using a full year’s data, seasonal fluctuations in pricing and weather that impacts monthly comparisons are avoided for more accurate comparisons.