Alliant Energy Corp. subsidiary Interstate Power & Light Co. has agreed to a smaller-than-requested electric base rate increase in 2020.
A partial settlement agreement filed Oct. 3 with the Iowa Utilities Board, or IUB, calls for the utility known as IPL to receive an annual retail electric revenue increase of $127 million. Pointing to a need to recover wind energy investments and other reliability enhancements, the utility in March asked for an increase of nearly $204 million, with final rates starting Jan. 1, 2020. An interim base rate increase took effect April 1.
In a news release, IPL said the agreement reached with groups representing customers, environmental interests, employees and others would result in a "modest" base rate increase from interim rates in 2020. The utility said it also would use one-time credits to lessen the overall impact to customers in that year.
Under the deal, which still needs approval from the board, the return on equity for all assets that do not have advanced ratemaking principles would be 9.5%. IPL initially asked for an ROE of 9.8%. The deal also allows recovery, through a new renewable energy rider, for facilities built as part of IPL's push to add 1,000 MW of new wind in Iowa.
The agreement further calls for IPL in 2020 to undertake a resource planning process with respect to its generation fleet. IPL agreed to a series of conditions and modeling or scenario parameters for that planning process. Those include consulting with parties to the settlement on modeling inputs, including cost projections for wind, solar and battery storage; energy efficiency and demand response cost assumptions; commodity price forecasts; and a carbon price forecast.
IPL also will consult with the parties on potential retirement scenarios for IPL-operated coal-fired generating units and will analyze reasonable retirement scenarios for such units.
As part of its resource planning process, IPL will prioritize an analysis of the Lansing Generating Station and aim to complete that analysis by June 1, 2020. Three of the plant's four units already have been retired. Under the deal, IPL will limit capital spending on the remaining unit to $10 million while the planning analysis is ongoing, though it can spend more if emergency work is required.
Additionally, IPL agreed to wait to request approval from the board for the controls required by the utility's National Pollutant Discharge Elimination System permit in a forthcoming April 1, 2020, emissions plan and budget. IPL can, however, provide information regarding potential controls for informational purposes.
If, after completing its resource planning analysis on the Lansing plant, IPL decides to install the controls required by the Lansing NPDES permit, the utility will file a supplement to its emissions plan and budget and the parties may address those proposed controls within that proceeding.
Among the signatories to the settlement were the Iowa Office of Consumer Advocate, the Environmental Law and Policy Center, the Iowa Environmental Council, the International Brotherhood of Electrical Workers Local 204, the Iowa Business Energy Coalition, the Sierra Club and Walmart Stores Inc.
An IUB hearing on the electric rate case (IUB Docket No. RPU-2019-0001) is set to begin Oct. 7.
The settlement does not cover the company's proposed $21 million natural gas rate increase (IUB Docket No. RPU-2019-0002). A hearing for that request is set for Nov. 4.
