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Utility Basics

What is a public utility?

An enterprise that supplies, directly or indirectly, continuous or repeated services through more or less permanent physical connections between the plant of the supplier and the premises of the consumer.

What is the role of a public utility?

A utility must provide service on a nondiscriminatory basis to all requesting service within the utility's service territory. The service must be provided on a reliable basis and must be responsive to the consumer's needs. Utilities, until recently, have been viewed as natural monopolies. Utilities are capital-intensive businesses.

What is assigned area of service?

The Iowa General Assembly enacted service territory legislation in 1976. This assigned area of service law established boundaries clearly identifying which electric utility would provide service in a given area, without discrimination. This law has saved Iowa ratepayers millions of dollars in capital and planning expenditures and has resulted in many other valuable benefits.

Electric utility companies aren't spending time and money in legal battles over service territories. The assigned area of service law directed that all electric utilities continue to serve the same area that was closest to their existing lines in 1976.

The law also has permitted Iowa's utilities to plan for future energy needs in their assigned service area. This enables utilities to avoid duplication of facilities and unnecessary expenditures, which are significant factors in a capital-intensive industry like electric power.

The state also benefits from the assigned area of service law. Electric utilities pursue economic development projects; promote aggressive strategies to attract new businesses and industries to their respective service areas work to develop rural housing projects. The local rural electric cooperatives encourages growth in the territory it is obligated to serve. The result is more jobs and stabilized utility rates.

What is the position of Iowa's electric cooperatives with respect to assigned areas of service?

Iowa's cooperatives strongly support retaining the current assigned area of service law in Iowa. We believe that, even in a competitive environment, these exclusive service areas should be retained for the poles and wires function. In this way, some of the existing benefits would be maintained.

What type of services do utilities provide?

Any type of utility provides a service that is important, essential,  vital, or necessary for growth of a society.

How are utilities different from other businesses?

Public utilities historically have had some special rights: 1) the right to collect a reasonable price for their services; 2) the right to render service subject to reasonable rates and regulation; 3) the right of protection from competition when providing services at a reasonable price; 4) the right of eminent domain.

What is the right of eminent domain?

Eminent domain is the power to take private property for public use. This right must be exercised if the property is needed to provide service. It is important that this right is not abused by the cooperative.

What obligations does a utility have?

A utility has the obligation to: 1) provide service to all who apply for service; 2) render safe and adequate service; 3) serve all customers on a equal basis; 4) charge only a just and reasonable price for services rendered.

Who are public utilities?

Electric cooperatives, investor-owned utilities and municipal utilities are all electric public utilities.

What is a tariff?

The tariff is the entire body of rates, tolls, rental, charges, classification, rules, procedure, policies, etc., adopted by and filed with the Iowa Utilities Board by an electric utility in fulfilling its role of furnishing service.

What is the Iowa Utilities Board?

The Iowa Utilities Board is a part of state government. The Iowa Utilities Board regulates electric, gas, telephone, telegraph and water utilities, and pipelines and underground gas storage. The board regulates the rates and services of public utilities.

Who are the members of the Iowa Utilities Board?

The Iowa Utilities Board consists of three individuals appointed by the governor and confirmed by the Iowa Senate. The appointments must have gender and political balance. One board member is appointed by the Governor as the chairperson of the Iowa Utilities Board. Boards members serve six-year terms and may serve more than one term. To view current board members, visit the Iowa Utilities Board Web site at: http://www.state.ia.us/government/com/util/util.html.

The Iowa Utilities Board has a staff of about 75 people. The staff includes engineers, accountants, economist, attorneys and other support personnel.

What utilities are rate regulated and service regulated?

Investor-owned utilities, Mid American Energy and Alliant Energy in Iowa, are subject to both rate and service regulation by the Iowa Utilities Board. Rural electric cooperatives are only subject to service regulation. A cooperative can be rate regulated by a vote of the cooperative board or its members. Municipal utilities are subject to limited service regulation by the Iowa Utilities Board.

What is the Office of Consumer Advocate?

This office has the authority to investigate and participate in all proceeding before the Iowa Utilities Board. The Office of Consumer Advocate acts for, and represents, all consumers generally and the public in all proceedings before the IIowa Utilities Board.

Who is the Consumer Advocate?

The Consumer Advocate is appointed by the Iowa Attorney General and confirmed by the Senate. The Consumer Advocate is the chief administrator of the Consumer Advocate division of the Department of Justice. The current Consumer Advocate is John Perkins.

The Office of Consumer Advocate has a staff of about 30 people. The staff includes attorneys, engineers, accountants, economist and other support personnel.

 
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