Alliant Energy has unveiled the “plan B” to its 2009 cancellation of a $1.3 billion generating station in Marshalltown, a move that removed much of the sting of the cancellation for the central Iowa city.
Alliant on Thursday said it would build a $700 million natural gas-fired power plant in Marshalltown with enough generating capacity to serve 500,000 households. 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, upset environmental groups and ultimately received mixed support from state regulators.
Despite being smaller than the canceled coal plant, the natural gas plant will 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 also will extend for 11 years an expiring agreement to buy power from the state’s only nuclear plant.
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 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 nowhere,” 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. Those plants face tougher regulations coming down from the Environmental Protection Agency 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 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.
Alliant Energy CEO Patricia Kampling said the utility has been studying its power supply needs for the past several years and decided the plans announced Thursday are the best way to keep costs manageable for its customers.
“We wanted to make sure we focused on the total customer bill,” Kampling said. Adding more natural gas generation to the company’s portfolio is an example of that approach, Kampling said.
Alliant looked at 131 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.
A petition seeking Iowa Utilities Board approval to extend the NextEra nuclear power contract will be filed Aug. 7. A petition will be filed in November for advance approval of costs related to the Marshalltown plant.