Alliant’s $3.5 Billion Planned Buildout is Bad for Iowa’s Ratepayers

If the buildout for the data centers is done right, it can reduce costs for Iowa’s ratepayers. If done wrong, it will be costly.  

While the data centers have pledged to pay 100% of the cost for new power generation, Alliant Energy is choosing a more expensive path that threatens to shift costs to Iowa’s families and small businesses.

The Madison, Wis.-based utility is using the growth of data centers as justification for plans to build 2.6 Gigawatts of new gas peaker plants that will produce eight times its current peaker capacity, at an estimated cost of $3.5 billion, an almost 50% increase to its current rate base. 

 Iowa’s approach to utility regulation has created a situation where Alliant can build this massive infrastructure expansion without having to show that:

·         the gas plants are needed,

·         the plants are the best option to meet the need, or

·         the data centers will pay their fair share of the buildout.  

The costs for the new infrastructure will be built into future rates AFTER the plants are built.  To recover for the costs at that point, Alliant will merely need to show that they had a reasonable argument for building the plants – not that building the plants were the MOST reasonable alternative!

In the meantime, Alliant will be able to earn an additional $175 million a year in profits just for building the plants under the current formula that controls (and basically guarantees) Alliant a return on equity of over 10%. 

The question is simple: why shouldn’t Alliant be required to show this large investment is in the best interests of ratepayers and if it is, that the data centers are paying their share of the cost? Iowa needs transparency before ratepayers are locked into decades of higher costs.

The data centers are agreeing to pay for their own capacity in other states.  Google has even contracted directly with NextEra to reopen the Dwayne Arnold Nuclear Plant in Iowa. It was a unique situation that allowed Google to do so under an Iowa law that typically does not allow the data centers to contract for their own electricity needs.

There is a better way! A common best practice in other states is:

·          to require the utility to prove the need and

·          identify the least cost options before this type of expenditure.

 For the large data center buildout, the new best practices are:

·          to rely on the data centers themselves to bring their own capacity,

·          allow the date centers to incentivize other customers to bring capacity, and

·          use large-load public rates, rather than secret deals.

 What can Iowans do?  Two things:

• File comments in one of the open proceedings (referred to as dockets) with the Iowa Utilities Commission.  You can learn how to do so at https://iuc.iowa.gov/customer-assistance/how-do-i-file-comment-objection-or-letter-support-open-docket.  The respective dockets are GCU-2026-0002 and GCU-2026-0005.

• Talk to your local elected state legislators on the importance of utility regulatory reform.