Iowa regulator conditionally approves Marshalltown natural gas plant

Plans for plant were first announced in August 2012

Another large piece for Interstate Power and Light Company's proposed $700 million, 650-megawatt natural gas plant in Marshalltown was put into place on Friday.

Iowa Utilities Board chair woman Libby Jacobs conditionally approved the electric generation certificate and established advance rate making principles for the proposed Marshalltown Generating Station.  The decision and order will become final order unless the utilities board moves to review it or a party files an appeal within 15 days of its issuance.

Ryan Stensland, a spokesman for Alliant Energy, the parent of Interstate Power and Light, called the order a positive step forward. The utilities company was pleased that the order supports the need for the plant and Alliant will now evaluate the details of the order, he said.

The order establishes an overall cost cap of $920 million for the plant's construction as well as necessary transmission and related costs. It also establishes ratemaking principles for the proposed project and cost recovery factors to be included in a future rate case, including an 11 percent rate of return on equity and a depreciation lifetime of 35 years for this project during which the company can recover its investment.

The generating certificate will be contingent upon the utility obtaining all necessary pre-construction permits. According to Iowa law, to receive a generating certificate, a company must be able to develop facilities to ensure reliable electric service to Iowa customers as well as provide economic benefits to the state.

Requests for advance ratemaking principles enable utilities to establish regulatory treatment for a generation plant in advance of construction, but such cases do not immediately impact customer rates.

Interstate Power and Light will have 30 days from the date of the order to notify the Board whether it accepts the ratemaking principles awarded.

Alliant announced plans to build the natural gas fired power plant in August 2012. It had announced plans more than five years ago to build a coal fired plant in Marshalltown, but that idea received mixed support from state regulators.

Construction of the Marshalltown plant could is still on track to begin in 2014 and be completed by 2017, Stensland said. The company must still get approval of several permits on the local, state and national levels, including an air permit, water permits and a permit to build a gas pipeline, he said.

The proposed plant is part of Alliant's long-term energy plan that includes about $440 million in upgrades to existing power plants by reducing air emissions, a proposal to extend its nuclear power purchasing agreement from the Duane Arnold Energy Center, and more investment in renewables and energy efficiency.



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