Reynolds’ energy bill includes nuclear generation

How would the legislation impact Iowans’ energy bills? On that, there is much disagreement.

And the pace of legislative activity on Reynolds’ proposal has stalled in recent weeks.

Reynolds highlighted energy policy in her annual Condition of the State address to the Iowa Legislature on Jan. 14, and by the end of that month she produced those policy proposals in sweeping legislation.

The five-division, 53-page bill would do several things if passed into law:

— Conveys an intent to develop nuclear power generation and attract energy storage in the state.

— Would create a right of first refusal provision by which incumbent electric transmission companies in Iowa would be granted the first opportunity to construct any new transmission line project. The right of first refusal provision has become perhaps the most controversial element in the bill, generating criticism from the federal justice department.

— Would allow for advanced ratemaking for new or renovated electric power generating, alternate energy production, or energy storage facilities. Advanced ratemaking is a process by which state regulators establish regulations and a rate of return ahead of a project, reducing the risks for energy companies investing in infrastructure projects.

— Would establish land restoration and conservation requirements for companies that conduct electric transmission line projects.

— Would allow utility companies to offer tariffs to encourage innovative public utility programs and pricing. The tariff programs would be optional and paid for by participating customers, and the costs would not be imposed on non-participating customers.

— Would require regulated electric utility companies to file a report every five years detailing the company’s energy supply and expected future demand.

— Would change the state’s Energy Infrastructure Revolving Loan Program to the Energy and Water Infrastructure Revolving Loan Program, add water infrastructure to eligible projects for the fund to support, and place the program under the Iowa Economic Development Authority.

During those January remarks, Reynolds touted Iowa’s existing energy portfolio — including renewable energy and fuel sources — and competitive electricity prices relative to other states. She also said the state must look to future energy needs as the world becomes more dependent upon technology like artificial intelligence.

Reynolds said that means a focus on nuclear energy and an “all-of-the-above” energy portfolio that ensures Iowa has a stable electrical grid “regardless of whether it’s hot, cold, windy, or cloudy.”

“We want to send a message to businesses: Invest in Iowa, and you won’t regret it. You’ll have the workforce, the energy infrastructure, and the low cost of doing business to compete with any company in the world,” Reynolds said during her address.

“As our nation prepares for increased energy demand in the years to come, (Reynolds) is encouraging a mix of energy resources to ensure Iowa remains a leader in cheap, reliable energy for customers,” Reynolds spokesman Mason Mauro said this week in a statement to The Gazette.

The bill’s right of first refusal provision — commonly referred to by its acronym ROFR — has created a debate not just inside the Iowa Capitol, but between Reynolds’ administration and President Donald Trump’s.

A U.S. Department of Justice antitrust official appointed by Trump, responding to an inquiry from a pair of Iowa Republican legislators, warned in a March letter that the provision would stifle competition and potentially raise prices and lower the quality of service for Iowa electricity customers.

Reynolds said she shares Trump’s goals for energy production and that the right of first refusal provision “is the most effective way to ensure that federally registered transmission line projects are built efficiently and reliably.”

The Trump administration is not alone in its belief that right of first refusal policies stifle competition and thus lead to higher costs. The Iowa chapter of Americans for Prosperity, a free-market advocacy group founded by the billionaire Koch brothers and a frequent supporter of Reynolds and conservative policies, has registered in opposition to the bill over the ROFR provision.

“We know that competition produces better outcomes for consumers in terms of cost and innovation. So when you’re outright eliminating that so that one or two companies can profit off the backs of Iowans, we’re just going to be opposed to that every time,” said Tyler Ragor, the state director for Americans for Prosperity in Iowa.

Dusky Terry, president of the energy company ITC Midwest, said there is no proof that right of first refusal laws lead to higher energy costs for consumers. Terry said that ever since a 2011 federal regulatory rule change that ended national ROFR requirements but allowed states to enact their own, transmission project savings have not been realized.

“On the surface it’s easy to say competition leads to lower cost. And in certain places, that’s true, and in a true competitive market that’s true. But that’s not what this is. And if you look at the actual results of (the federal rule change), it has not led to the claimed savings,” Terry said. “These claims of savings have not materialized and are completely fabricated.”

Supporters and opponents of right of first refusal laws have their own studies that they point to while arguing their position.

Opponents frequently cite a 2019 study by The Brattle Group research firm, commissioned by the energy transmission company LSP Transmission Holdings, which found expanded competitive processes produce cost savings of roughly 20 percent to 30 percent.

Supporters of right of first refusal laws dispute those numbers and point to reports published in 2022 and 2024 by the energy consulting firm Concentric Energy Advisors and a 2024 report fom ITC Midwest and five other energy and utility companies. The latter report suggests a lack of ROFR laws leads to project delays and costs that exceed project estimates.

“A ROFR is important to ensure we can build reliable and secure infrastructure in a timely fashion and grow our economy,” Mauro said. “Without a ROFR, build out of projects within the highly regulated utility industry takes 14 to 18 months longer on average, hindering economic development. ROFR also ensures that companies who care about Iowans are the ones maintaining the transmission lines — that they show up and work around the clock to restore power when a storm rolls through and that they have an incentive to protect Iowans’ property rights.”

Environmental groups expressed concern with the framework for the bill’s requirement that energy companies produce resource planning reports every five years. Those advocates say Reynolds’ proposal gives too much authority and flexibility to the energy and utility companies; the advocates say the process should include a method for Iowans to raise concerns through state regulators.

Iowa is among 11 states that do not require energy and utility companies to file long-term plans, according to a 2024 report by Lawrence Berkeley National Laboratory for the U.S. Department of Energy’s Office of Electricity.

“That’s a best practice for utilities, and most other states require integrated resource planning. And they do it in a way that is transparent, and the way they accomplish it is through a contested case that the utility commission oversees. And that is what we think the best practice is,” said Josh Mandelbaum, a senior attorney with the Des Moines-based Environmental Law and Policy Center.

Mandelbaum called the bill’s provision a missed opportunity.

“What we would have liked to see in this bill is a contested case that allows customer groups a seat at the table, that allows folks advocating on behalf of ratepayers a seat at the table, and the ability to present evidence and to make a case over what is going to be cost effective and what is going to work best for the system,” Mandelbaum said. “And that gives the utility commission the most information to make an informed decision. And instead, what exists in the bill is a utility-run process that doesn’t require input, that doesn’t provide accountability, that doesn’t really give the utility commission oversight.”

Momentum to get the bill passed through the Iowa Legislature — so Reynolds could sign it into law — appears to have stalled in recent weeks at the Iowa Capitol.

Reynolds’ proposal was introduced in the form of twin bills, one each in the Iowa House and Senate. The House bill, House File 834, passed the first two legislative steps in mid-February when it was approved by a three-member legislative subcommittee and then the full House Commerce Committee. It was then moved to the tax policy Ways and Means Committee, where it has languished.

The Senate bill, Senate File 585, passed a five-member subcommittee in mid-February and the full Senate Commerce Committee in early March. It was then moved to the Senate budget committee, where it passed another, three-member subcommittee on March 31. It has not been taken up by the full budget committee.

Iowa House Speaker Pat Grassley, a Republican from New Hartford who helps set the agenda in the Republican-majority chamber, recently said his colleagues have been discussing the bill. He said the fact that the Trump administration weighed in on the right of first refusal provision drew the attention of some House Republicans.

“I think from our perspective, where we stand, we want to see Iowa have a more certain future in our energy policy. I think right now, we’re lacking that,” Grassley said.

Iowa Rep. Jennifer Konfrst, a Democrat from Windsor Heights who leads the minority-party House Democrats, earlier this month said she has heard concerns about the right of first refusal and resource planning provisions in the bill. Konfrst said she also believes the debate over the bill has been politicized, and that she cannot get a clear answer as to whether the provisions would lower energy costs for Iowans.

“The question of will utility rates go down for Iowans is nowhere near the question when running this bill through, and that should be the thing we’re looking at: what will cause utility rates to go down,” Konfrst said. “If you can show me that one of these measures or all of these measures will do that, that’s a different conversation than if it’s just behind the scenes, sort of moving things around for big companies.”

The companies and groups registered in support of the proposal include energy companies like MidAmerican, Alliant, Black Hills and ITC Midwest; statewide organizations representing electricity cooperatives and developers; labor unions that represent electrical and construction workers; and the Iowa Farm Bureau, according to state lobbying records.

The groups registered in opposition to the proposal include environmental groups, Americans for Prosperity, and energy companies that would like to construct and maintain transmission lines in Iowa.

Iowa legislators are expected to conclude their work for the 2025 session sometime in May.