Interstate Power and Light argues against new RFP for capacity

Interstate Power and Light (IPL) told the Iowa Utilities Board in a June 24 rebuttal that suggestions by two parties that it needs to issue a new request for proposals as an alternative to its gas-fired Marshalltown Generation State (MGS) project would constitute a waste of time.

Based on their concerns about the potential level of transmission network upgrade costs for the MGS, the Large Energy Group (LEG) and the Iowa Consumers Coalition (ICC) argue that the board should not approve ratemaking principles for MGS. The uncertainty regarding networkupgrade costs for MGS has lead both LEG and ICC to argue that a new RFP for alternative sources of generation should be initiated.”

“The argument regarding uncertainty, however, is misguided for two reasons, as explained in greater detail below: 1) the network upgrade costs are indeed uncertain, but not to the exaggerated extent in which LEG presents them; and 2) conducting an additional RFP will do nothing to introduce any increased level of certainty above that offered in IPL’s MGS proposal,” said IPL’s June 24 response.

LEG and ICC, in part, attempt to argue that a new RFP is needed to ensure IPL is appropriately choosing a supply resource which would, in part, alleviate some uncertainty regarding cost. “This, however, is a specious argument,” IPL said. “Realistically, adopting LEG’s and ICC’s suggestion to conduct a new RFP would only lead to additional cost uncertainty. Without any way to substantiate its claim, LEG alleges that other potential, unidentified bidders may offer new alternatives for IPL’s consideration. Such suggestions offer ‘cold comfort’ to IPL’s customers, and ultimately the Board. IPL managed an extensive RFP during the first half of 2012 that eventually led to the new power purchase agreement (PPA) with NextEra Energy Duane Arnold, LLC (New DAEC PPA). The 2012 RFP was then the foundation for IPL’s determination that MGS was a reasonable long-term resource for its customers.”

IPL added: “Quite frankly, there is no foundation for the argument that another RFP would lead to more certainty than IPL’s MGS proposal. If, as LEG contends, the 2012 RFP could not produce a clearly superior alternative to MGS, how can the Board expect another RFP to produce such a result?”

IPL says it has done enough to show Marshalltown is the right choice

By conducting the 2012 RFP, IPL said it has already gone above and beyond what is required to demonstrate reasonableness. MGS clearly satisfies Iowa’s public-policy regarding the development of in-state generation, it added. “There is no certainty regarding whether a future RFP would lead to an alternative resource (whether a PPA or an asset purchase) that satisfies Iowa’s public policy favoring instate generation,” the utility argued.

There are, IPL said, certain aspects of MGS proposal that should satisfy LEG’s and ICC’s concerns:

  • IPL has demonstrated the need for additional capacity and energy for its customers;
  • IPL issued an RFP in 2012 that solicited robust proposals;
  • IPL has proposed a cost cap for MGS which reduces customers’ risk for the cost of the next facility to meet their needs; and
  • MGS satisfies the Iowa public policy regarding the development of in-state generation.

Marshalltown is a 600-MW, gas-fired combined-cycle project to be located next to IPL’s existing Sutherland power plant. IPL is a unit of Alliant Energy (LNT). IPL applied last November with the board, in separate cases, for both a siting approval for the project and ratemaking principles associated with it.

The MGS will be made up of a power block containing two combustion turbine generators (CTGs), two heat recovery steam generators and a single steam turbine generator (STG), said the siting application. Northern Border Pipeline Co. owns a natural gas pipeline running from the northwest to southeast across Iowa, which is located about 10 miles northeast of the site. Northern Natural Gas Co. owns natural gas pipelines running east and west located about two miles north of the site. IPL currently procures natural gas for the operation of Sutherland through the Northern Natural Gas pipelines.

The MGS will be an intermediate load, baseload-capable, combined-cycle facility made up of three units. The MGS design will be based on an average of 260 starts per year, allowing dispatchers to place the MGS units in and out of service as required by transmission grid load and system reliability requirements. IPL expects the annual dispatch of the MGS will vary between a 10% and 50% capacity factor, dependent upon system requirements, Midwest ISO market considerations, and economic dispatch criteria.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.