Alliant Marshalltown plant awaits Iowa board decision

The Iowa Utilities Board has set a May 21 hearing to consider a settlement that would allow Alliant Energy (NYSE:LNT) subsidiary Interstate Power & Light (IPL) to build the 600-MW Marshalltown combined-cycle natural gas plant.

IPL announced April 29 that it had reached a proposed settlement agreement with the Iowa Office of Consumer Advocate (OCA). IPL has not, however, reached agreement with the other interveners in the case.

The Environmental Law and Policy Center (ELPC), Iowa Consumers Coalition (ICC) and the Large Energy Group (LEG) have not settled. “Only the LEG believes the plant should not be built and that we should buy power from Illinois,” said a company spokesperson. That’s not a cost-effective though when you consider transmission costs, he added.

At the hearing, the IUB is expected to consider IPL’s request for a generation certificate for the $700m Marshalltown plant and also consider IPL’s proposed ratemaking principles.

IPL expects to receive an IUB decision by the fourth quarter. The IUB’s decision to grant a certificate for construction of the proposed combined-cycle plant would be contingent upon IPL receiving all necessary regulatory approvals, including approval for construction of a natural gas pipeline to supply fuel to the plant and an air permit from the Iowa Department of Natural Resources.

The plant would be supplied by the Northern Border Pipeline. Some existing turbines at Marshalltown would be converted from oil to natural gas. IPL has indicated it could announce selection of an engineering, procurement and construction (EPC) contractor this summer.

IPL had previously filed for approval of eight ratemaking principles prior to beginning construction of Marshalltown. Of these principles the OCA and IPL had differences on three terms which are resolved in the proposed settlement.

The proposed settlement includes the OCA recommended Return on Equity (ROE) of 11% for the project, a ROE of 10.3% used in the calculation of the allowance for funds used during construction, and both parties have withdrawn their respective positions on double leverage and agreed that the issue can be addressed in the context of a rate case or other proceeding.

The new Marshalltown combined-cycle plant is a key element in the resource plant that IPL submitted to the state in August 2012. The plan also calls for new emission controls on some coal-fired plants, retirement of some older coal units, a new long-term energy contract with NextEra’s (NYSE:NEE) Duane Arnold nuclear plant and greater use of renewables.

The gas plant would be built near the Sutherland coal plant Units 1 and 3. Plans are to retire those units by end of 2016 contingent upon approval of the gas plant, said the company spokesperson. “We will go from 46% coal to approximately 43% coal,” the company representative said. 

The proposed settlement agreement filing will be available on the IUB’s electronic filing system. The filing is under docket numbers GCU-2012-0001 and RPU-2012-0003.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.