Iowa Clean Energy Group Calls for Scrutiny of Data Center Energy Costs
Iowa Business for Clean Energy alleges that Alliant Energy is using confidential rate agreements with data centers to justify building new natural gas plants, potentially shifting costs to existing ratepayers. Alliant Energy refutes these claims, stating that new growth costs are borne by large energy users and reviewed by the Iowa Utilities Commission. The dispute highlights concerns over energy costs and transparency in Iowa's utility sector.
Iowa Business for Clean Energy (IBCE) has accused Alliant Energy of exploiting "loopholes" and "secret" rate agreements with data centers to rationalize the construction of natural gas "peaker" plants, potentially passing the associated costs to general ratepayers. Bob Rafferty, executive director of IBCE, argues that current Iowa law does not mandate Alliant to prove these plants are the most cost-effective solution for ratepayers before construction begins, calling the system "backwards, unfair and wrong."
Alliant Energy denies these allegations, asserting that "existing customers will not pay for new large-energy-user growth." A spokesperson for the utility emphasized their obligation to serve all customers and plan for reliable, cost-effective energy, noting that growth from new users can help stabilize rates by spreading costs. Alliant is planning three natural gas plants: the Morgan Valley Energy Center in Cedar Rapids, Bobcat Energy Center in Marshalltown, and Riverhawk Energy Center in Cerro Gordo County, stating these are necessary to meet growing demand but not specifically due to data centers.
However, Alliant's recent earnings reports indicate 3.4 gigawatts of contracted demand from data centers and an anticipated 60% load growth by 2031 across its service areas in Wisconsin and Iowa. IBCE contends that Alliant is using data centers as a pretext to increase profits, pointing out that gas peaker plants are among the most expensive forms of new energy generation according to Lazard's analysis. The group Growing Iowa's Economy, which promotes data center development, countered IBCE's claims, arguing that the generation methods are not always interchangeable and that future rate cases provide oversight.
Alliant also has confidential individual customer rate filings with the Iowa Utilities Commission (IUC) for entities like QTS's Cedar Rapids data center. These agreements, designed to recover marginal costs from the large energy user and protect existing customers, are reviewed and approved by the IUC. Rafferty, however, worries that if data center usage does not materialize as projected, the expenses could ultimately fall on Iowa households and businesses, advocating for greater public scrutiny of the financial implications.