Settlement reached on Marshalltown power plant

Alliant Energy Corp.'s Interstate Power and Light subsidiary said Monday it has reached agreement with the Iowa Office of Consumer Advocate (OCA) regarding construction of a new $700 million natural gas-fired electric generating plant in Marshalltown.

Interstate Power previously filed for approval of eight rate-making principles before beginning construction of the 600-megawatt Marshalltown Generating Station. The OCA and the utility resolved its three remaining differences in the proposed settlement.

The agreement, which must be approved by the Iowa Utilities Board, includes an OCA-recommended return on equity of 11 percent for the project and a return on equity of 10.3 percent used to calculate the allowance for funds used during construction.

Interstate Power had asked for an 11.25 percent return on equity for the project.

The OCA and Interstate Light and Power have withdrawn their positions on double leverage and agreed that the issue can be addressed within the context of a rate case or other proceeding. Double leverage involves debt used both at the utility subsidiary and the parent holding company levels to help finance a utility.

The Iowa Utilities Board has set a May 21 hearing to consider Interstate Power's request for a generation certificate for the Marshalltown station and to consider the utility's proposed rate-making principles.

Interstate Power has not reached agreement with other organizations seeking to intervene in its request for a generation certificate.

The utility expects a decision from the utilities board on the Marshalltown station by the fourth quarter of this year. The decision to grant a certificate for construction of the facility would be contingent on the utility receiving all necessary permits and regulatory approvals.

The decision would include approval for construction of a natural gas pipeline to supply fuel to the Marshalltown station and an air permit from the Iowa Department of Natural Resources.

"The 600 megawatt, combined-cycle natural gas Marshalltown Generating Station is a key piece of our long-term energy resource plan," said Tom Aller, Interstate Power president. "Reaching a fair and reasonable settlement agreement with the OCA is a significant step forward in executing our plan."

If approved, the power plant could be put in service in spring 2017.