Iowa Watchdog Group Demands Transparency on Alliant Energy's Data Center Deals
A clean energy advocacy group is pressing Iowa regulators to ensure that the state's booming data center industry doesn't leave everyday ratepayers footing the bill for new power plants.
Iowa Business for Clean Energy is calling on the Iowa Utilities Commission and state lawmakers to close what it calls loopholes that allow Alliant Energy to build natural gas plants based on confidential agreements with data centers, without first proving the projects benefit regular customers.
Bob Rafferty, executive director of Iowa Business for Clean Energy, said current state law lets Alliant move forward with construction without demonstrating that data centers will cover the costs.
“Iowa law does not require Alliant to prove this is the best option for ratepayers, nor do they need to prove the data center rates will cover the cost before these plants are built,” Rafferty said. “That's backwards, it's unfair and it's wrong.”
What are the new Alliant Energy peaker plants in Iowa?
Alliant is planning three natural gas “peaker plants” designed to quickly ramp up during peak electricity demand. They include the Morgan Valley Energy Center in Cedar Rapids, the Bobcat Energy Center in Marshalltown, and the Riverhawk Energy Center in Cerro Gordo County.
The company says these projects are necessary to meet growing demand and load obligations, and specifies they are not driven by data centers. But recent earnings reports show Alliant has 3.4 gigawatts of contracted demand from data centers and expects 60% load growth by 2031.
Why does Iowa Business for Clean Energy say ratepayers are at risk?
Rafferty argues that Alliant is using data centers as an excuse to build plants that boost its profits. He points to a Lazard analysis showing gas peaker plants are the most expensive form of new energy generation.
Under Iowa's utility-friendly laws, the Iowa Utilities Commission won't review whether these plants are appropriate until the next rate case, after construction is already complete. That means ratepayers could be stuck paying for expensive infrastructure if data center demand doesn't materialize as projected.
What does Alliant Energy say about protecting customers?
Alliant spokesperson said existing customers will not pay for new large-energy-user growth. The company points to a five-year base rate freeze and says new generation costs are only included in rates after review by the IUC.
“The agreements are structured to ensure large energy users pay the full cost of serving their load, including costs associated with new infrastructure, rather than shifting those costs to existing customers,” the spokesperson said.
Are data center rates really secret?
Alliant has filed confidential individual customer rate agreements with the IUC for QTS's Cedar Rapids data center. These rates are designed to spur economic development by attracting large loads, and Alliant says they recover at least the marginal costs of serving those customers.
Iowa Business for Clean Energy notes that marginal costs are roughly half of the full costs of peaker plant developments. If data center usage falls short, Rafferty warns expenses could show up in public rates paid by Iowa households, small businesses, manufacturers, farms, schools, and local governments.
What does the pro-data center group say?
Growing Iowa's Economy, which promotes responsible data center development, pushed back on the clean energy group's claims. Spokesperson Jesse Harris said it's fair to question major energy investments but argued critics are ignoring existing safeguards.
“It is not fair to tell Iowa families they are being handed a multibillion-dollar energy bill while ignoring the agreements, regulatory oversight and customer protections specifically designed to prevent that from happening,” Harris said.
Will the Iowa Utilities Commission act?
The IUC did not respond to a request for comment Thursday. Rafferty said if the projects are truly good for Iowa, the numbers should withstand public scrutiny.
As Iowa's data center industry continues to expand, the debate over who pays for the energy infrastructure to support it is likely to intensify. For now, the question remains whether state regulators will demand more transparency before more plants break ground.