The state panel on Wednesday voted unanimously to allow the Alliant Energy utility subsidiary to amend and extend its long-term contract with NextEra Energy’s Duane Arnold Energy Center in Palo from 2014 through 2025. The amended contract for 431 megawatts of power will lower the overall cost to IPL customers for electricity from the nuclear plant.
The resulting rate adjustments will be included in IPL’s energy adjustment clause, beginning on Feb. 22, 2014. Until the new contract becomes effective, electricity rates will continue at current levels for all IPL customers.
In the event that IPL does not file for an electric rate case in the first quarter of 2014, the utility’s energy adjustment clause rates will be reduced to offset capacity charges that are currently in base rates under the old contract. The reduction in rates would continue until IPL’s next general rate proceeding.
Any changes to cost allocation or rate design impacting IPL’s various customer classes will be determined in IPL’s next electric rate case.
The Duane Arnold Energy Center is estimated to supply 32 percent of Iowa’s emission-free power.
In a 2005 order regarding the sale of DAEC to NextEra and IPL’s purchase power agreement, the Iowa Utilities Board found that the nuclear plant provides fuel diversity and cost stability, is a unique carbon-free generation asset, creates economic benefits, contributes to reliability, and is vital to the transmission system in the area.
The extension of IPL’s purchase power agreement with NextEra is part of a multifaceted plan to meet the utility’s future electricity requirements.
The Cedar Rapids-based utility has filed for permits to construct a $700 million natural gas-fired power plant in Marshalltown with enough generating capacity to serve 500,000 households. IPL also will spend $430 million over the next five years to reduce emissions at its largest coal-fired power plants.
The coal-fired power plants face tougher regulations from the Environmental Protection Agency to reduce carbon dioxide emissions that are considered a contributor to climate change.