S.F. _____ Section 1. NEW SECTION . 476.49 Distributed generation —— 1 purchase requirements —— penalties. 2 1. Notwithstanding section 476.44 or any other provision 3 of law to the contrary, the board shall require rate-regulated 4 public utilities and generation and transmission electric 5 cooperatives to purchase specified amounts of their required 6 electrical output from distributed generation facilities. For 7 purposes of this section, “distributed generation facility” 8 means a biomass conversion facility, a solar energy conversion 9 facility, or a wind energy conversion facility, as those 10 terms are defined in section 476C.1, which is located on 11 farm property and meets the requirements of section 476C.1, 12 subsection 6, paragraph “a” , and section 476C.1, subsection 6, 13 paragraph “b” , subparagraph (2) or (6). For purposes of this 14 section, “generation and transmission electric cooperatives” 15 means the same as defined in section 437A.3, subsection 10. 16 2. An electric utility or generation and transmission 17 electric cooperative subject to this section shall submit 18 filings to the board documenting the following: 19 a. (1) That by July 1, 2020, the utility or cooperative 20 is purchasing a minimum of two percent of their required 21 electrical output from distributed generation facilities. 22 The utility or cooperative shall submit a filing by January 23 1, 2016, and by each January 1 through January 1, 2020, 24 demonstrating proportional progress toward attainment of this 25 requirement. 26 (2) That the electricity is purchased from distributed 27 generation facilities in the following percentage amounts: 28 (i) Sixty percent from wind energy conversion facilities. 29 Of this sixty percent, fifteen percent shall be purchased 30 from facilities with a nameplate generating capacity or the 31 energy production capacity equivalent of each of the following: 32 between zero and ten kilowatts; between ten and one hundred 33 kilowatts; between one hundred and one thousand kilowatts; and 34 between one thousand and two thousand five hundred kilowatts. 35 -1- LSB 2599XC (3) 86 rn/rj 1/ 5

S.F. _____ (ii) Twenty percent from solar energy conversion 1 facilities. Of this twenty percent, five percent shall be 2 purchased from facilities with a nameplate generating capacity 3 or the energy production capacity equivalent of each of the 4 following: between zero and ten kilowatts; between ten and 5 twenty kilowatts; between twenty and one hundred kilowatts; and 6 between one hundred and two thousand five hundred kilowatts. 7 (iii) Twenty percent from biomass conversion facilities. 8 Of this twenty percent, five percent shall be purchased from 9 facilities with a nameplate generating capacity or the energy 10 production capacity equivalent of each of the following: 11 between zero and one hundred kilowatts; between one hundred and 12 five hundred kilowatts; between five hundred and one thousand 13 kilowatts; and between one thousand kilowatts and two thousand 14 five hundred kilowatts. 15 (3) If the utility or cooperative fails to document 16 purchasing of the required amounts and percentages of 17 electricity from distributed generation facilities pursuant to 18 this paragraph “a” , the utility or cooperative shall be subject 19 to the penalty provisions of section 476A.14, and possible 20 suspension or revocation of a license or permit as determined 21 by the board by rule. 22 b. That the utility or cooperative is in compliance with all 23 applicable rules relating to distributed generation facilities 24 adopted by the board. 25 3. a. The board shall develop standard offer contract 26 forms and utilize existing standard interconnection forms to 27 facilitate interconnection between the utility or cooperative 28 and a distributed generation facility as required pursuant to 29 this section. The standard offer contracts shall continue 30 in effect for a twenty-year period, subject to termination 31 provisions for failure to perform, to be established by the 32 board by rule. The board shall ensure that the contracts are 33 calculated at reasonable rates which reflect and are based on 34 the utility’s cost, inclusive of its rate of return, for the 35 -2- LSB 2599XC (3) 86 rn/rj 2/ 5

S.F. _____ new development of the form and size of alternate energy which 1 is subject to the interconnection. Rates shall remain fixed 2 once a contract is entered into. Rates for new projects should 3 be periodically reviewed by the board to assure the rates are 4 sufficient to facilitate development. The forms shall be made 5 available for utilization by July 1, 2015. 6 b. The contracts shall be made available to any distributed 7 generation facility of up to two and one-half megawatts of 8 nameplate generating capacity. In satisfying the minimum 9 purchase requirements in each respective percentage category 10 specified in subsection 2, a utility or cooperative shall 11 enter into every contract proposed by a distributed generation 12 facility which meets the requirements of this section. 13 c. The standard offer contracts shall not contain any 14 provision or impose any requirement which could create 15 or constitute an unreasonable barrier to or burden on the 16 development of distributed generation in this state. 17 Sec. 2. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 18 immediate importance, takes effect upon enactment. 19 EXPLANATION 20 The inclusion of this explanation does not constitute agreement with 21 the explanation’s substance by the members of the general assembly. 22 This bill establishes farm-owned distributed generation 23 facility purchase requirements applicable to certain public 24 utilities and generation and transmission electric cooperatives 25 to purchase designated amounts of their required electrical 26 output from distributed generation facilities. 27 The bill defines a “distributed generation facility” to 28 mean a biomass conversion facility, solar energy conversion 29 facility or a wind energy conversion facility as those terms 30 are defined in Code section 47C.1, and located, owned, and 31 defined as provided in that Code section. Accordingly, 32 such facilities would be located in Iowa and consist of an 33 authorized farm corporation, and authorized limited liability 34 company, an authorized trust, a family farm corporation or 35 -3- LSB 2599XC (3) 86 rn/rj 3/ 5

S.F. _____ limited liability company, specified other forms of trusts, or 1 a cooperative corporation organized pursuant to Code chapter 2 497 or a limited liability company organized pursuant to Code 3 chapter 489 whose shares and membership are held by an entity 4 that is not prohibited from owning agricultural land under Code 5 chapter 9H. The bill defines a “generation and transmission 6 electric cooperative” with reference to Code section 437A.3 as 7 meaning an electric cooperative which owns both transmission 8 lines and property which is used to generate electricity. 9 The bill provides that an electric utility or generation 10 and transmission electric cooperative shall submit filings to 11 the Iowa utilities board indicating that they are purchasing a 12 minimum of 2 percent of their required electrical output from 13 distributed generation facilities by July 1, 2020, and earlier 14 filings demonstrating proportional progress toward that goal. 15 Additionally, the filings shall demonstrate that electricity 16 is being purchased from wind energy conversion facilities, 17 solar energy conversion facilities, and biomass conversion 18 facilities in specified percentages and from facilities of 19 specified nameplate generating capacities or energy production 20 capacity equivalents. Further, the filings shall specify that 21 the utility or cooperative is in compliance with all applicable 22 rules relating to distributed generation facilities adopted by 23 the board. 24 The bill requires the board to develop standard offer 25 contract forms and utilize existing standard interconnection 26 forms to facilitate interconnection between the utility 27 or cooperative and a distributed generation facility. The 28 contracts shall continue in effect for a 20-year period, and 29 shall be calculated at reasonable rates which shall remain 30 fixed once a contract is entered into. The bill provides that 31 contracts shall be made available to any distributed generation 32 facility of up to 2.5 megawatts of nameplate generating 33 capacity, and that a utility or cooperative shall enter into 34 every contract proposed by a distributed generation facility 35 -4- LSB 2599XC (3) 86 rn/rj 4/ 5

S.F. _____ which meets the bill’s requirements. 1 The bill provides that a utility or cooperative which fails 2 to document purchasing the required amounts and percentages of 3 electricity shall be subject to the penalty provisions of Code 4 section 476A.14. Those provisions consist of a civil penalty 5 of not more than $10,000 for each violation or for each day 6 of continuing violation, injunctive relief, and the criminal 7 penalty of a simple misdemeanor punishable by confinement for 8 no more than 30 days or a fine of at least $65 but not more than 9 $625 or by both. Further, the bill adds that the utility or 10 cooperative could face possible suspension or revocation of a 11 license or permit as determined by the board by rule. 12 The bill takes effect upon enactment. 13 -5- LSB 2599XC (3) 86 rn/rj 5/ 5