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Alliant Seeks to Build $700 Million Power Station in Marshalltown

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MARSHALLTOWN, Iowa - Alliant Energy unveiled the "plan B" to its 2009 cancellation of a $1.3 billion generating station Thursday that removed much of the sting of the cancellation for Marshalltown.

Alliant announced plans $700 million natural gas fired power plant in Marshalltown. It had announced plans more than five years ago to build a coal fired plant near its Sutherland Generating Station in Marshalltown.

The coal-plant plans, on the cusp of regulatory changes to combat carbon emissions had upset environmental groups, and ultimately received mixed support from state regulators.

Despite being smaller than the canceled coal plant, the project would be the largest single investment in the history of Marshall County, according to Tom Deimerly, president of the Marshall Economic Development Impact Committee, which has been working with Alliant for about one year.

Marshall County's economy has been softer than the state overall by some measures, including a 6.5 percent June unemployment rate compared to a 5.1 percent statewide rate.

"That kind of development is going to trickle down and really be a boon to the community," Deimerly said. The benefits will include an estimated 600-plus construction jobs, and a big boost in the local property tax base.

To supplement the power from the 600-megawatt Marshalltown plant, Alliant announced it will extend an expiring agreement to buy power from the state's only nuclear plant for 11 years.

The agreement to buy 431 megawatts of power from NextEra Energy's Duane Arnold Energy Center in Palo from 2014 through 2025 will lessen the capacity needs of the new plant, and keep nuclear as a significant part of the utility's energy mix.

Alliant issued notice in November 2011 that it didn't plan to renew the agreement, but equities analyst David Parker, who follows Alliant's stock for Robert W. Baird, said NextEra apparently sweetened the deal it was offering Alliant.

"The last time I spoke with them (Alliant) four to six weeks ago, the discussions were going nowhwere," Parker said. "It's a changing marketplace."

The 11-year nuclear power deal with provide cheaper power for Alliant customers than the current contract, according to Tom Aller, president of Alliant's Cedar Rapids-based Interstate Power & Light subsidiary, which provides Alliant's services in Iowa.

The utility also said it will spend $430 million over the next five years to reduce emissions at its largest coal-fired power plants, including the Ottumwa Generating Station. Those plants face tougher regulations coming down from the EPA to reduce carbon dioxide emissions that are considered a contributor to climate change.

Alliant Energy's new generation plans don't come as a surprise to Parker. He said natural gas has become the fuel of choice with utilities because of improvements in production technology that have increased production and lowered prices. It has fewer environmental drawbacks than coal, with a better carbon emissions profile.

Utilities try to enlist a blend of different generation sources to reduce the impact of spikes in the prices of various commodities on customer bills. Parker said Alliant didn't lean very heavily on natural gas compared to other utilities.

Alliant Energy CEO Patricia Kampling said the utility has been studying its power supply needs for the past several year.

Utilities don't make a profit on the cost of natural gas, coal or enriched uranium they buy for fuel. Changes in the cost of generating fuel show up on customer bills in a sort of fuel surcharge.

"We wanted to make sure we focused on the total customer bill," Kampling said. Adding more natural gas generation to the portfolio is an example of that approach, Kampling said, and is "truly in the best interests of our customers."

Utilities have been pressured by environmental groups to get more of their power from wind energy because of climate change. Aller said Alliant Eneryg has already met state requirements for the percentage of its power supply coming from wind, and would not be certain of regulatory approval if it requested permission to build more.

Alliant looked at 131 different sites before choosing Marshalltown to build the natural gas plant. The company has land in Marshalltown and it is close to two interstate natural gas pipelines, according to John Larsen, senior vice president of generation for Alliant.

Aller said he was especially pleased Marshalltown was selected because of the strong community support Alliant has enjoyed in the city and its long history of successful operations in Marshalltown.

Alliant plans to ask the Iowa Utilities Board for permission to extend the NextEra nuclear power contract on August 7 and to file a petition in November for advance ratemaking principles on construction of the Marshalltown plant.

Construction of the Marshalltown plant, if approved by the utilities board, would begin in Spring 2013 and be completed in early April of 2017.

The existing Sutherland Generating Station in Marshalltown originally burned both coal and natural gas, but has recently been converted to burning natural gas only. It will not be affected by construction of the new plant.

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