TF-2025-0047

The docket identifies several financial and timeline risks and concerns regarding the proposed Individual Customer Rate (ICR) service agreement for the QTS Cedar Rapids Infrastructure I, LLC data center:

Financial Risks and Concerns:
- There is concern about the risk of stranded costs if facilities are built to serve the new load but the anticipated customer load does not fully materialize. This is particularly relevant given that data center and other hyperscale loads can take years to develop, and some portion of the load may never be realized 1.
- The service agreement does not include sufficient safeguards to protect IPL and non-ICR customers from these stranded costs. Other utilities have addressed this by requiring minimum contract capacities and terms to mitigate risk, but similar provisions are not clearly present in the proposed agreement 1.
- There is concern about whether IPL has reasonably determined the marginal costs to serve the ICR load in setting the ICR rate and whether the service agreement terms are adequate for that purpose. The Office of Consumer Advocate (OCA) and others have noted the need for a detailed review to ensure costs are properly assigned and non-ICR customers are held harmless 2, 3.
- The settlement approved by the Commission requires that any costs to serve a specific ICR customer be assigned to that customer, and if the ICR customer’s rate revenue is less than the cost to serve them, IPL must adjust its revenue to cover the shortfall so non-ICR customers are not impacted. However, there is a need to ensure this is rigorously enforced 3, 3.

Timeline Risks and Concerns:
- There are risks related to the "load ramp period"—the time required for the data center load to reach its contracted capacity. It can take several years for the full load to develop, increasing exposure to financial risk if the full load is delayed or not realized 1.
- If regional transmission upgrades are needed, the in-service date is only a high-level estimate and can be delayed due to factors outside of IPL’s control, affecting when the customer can be fully served and when anticipated revenues will materialize 1.
- The absence of clear contract capacity requirements and term structures, such as those adopted by other utilities (e.g., minimum contract capacity ramp-up over four years), increases uncertainty regarding the timeline for realizing full financial benefits and recovering investments 1.

In summary, the main risks include the potential for stranded costs, insufficient contractual safeguards, uncertainty in cost recovery, and possible delays in load development or infrastructure readiness, all of which could negatively affect both IPL and its existing customers if not properly managed 1, 2, 3.

The key stakeholders in Iowa Utilities Commission Docket No. TF-2025-0047 are:

- Interstate Power and Light Company (IPL): The utility proposing the Individual Customer Rate (ICR) service agreements for QTS Cedar Rapids Infrastructure I, LLC. IPL seeks approval for these agreements under its revised ICR tariff 1, 1.

- Iowa Business Energy Coalition (IBEC): An association of Iowa’s largest and most energy-intensive employers, intervening to ensure that the ICR agreement does not negatively impact non-ICR (captive) customers. IBEC’s position is primarily to protect its members from adverse effects due to the proposed ICR contract; it is not explicitly for or against the proposal but wants to ensure non-ICR customers are held harmless 2, 3.

- Large Energy Group (LEG): Represents major electric service customers of IPL, particularly in southwest Cedar Rapids. LEG does not currently object to offering the ICR rate to QTS Cedar Rapids Infrastructure due to potential benefits but expresses concerns about local reliability, cost-shifting, and transmission impacts. LEG’s position is cautious support, contingent on non-ICR customers being protected from harm 4, 4.

- Office of Consumer Advocate (OCA): A division of the Iowa Department of Justice, representing consumer interests. OCA has raised concerns about the potential risks of large new loads and has objected to IPL’s request pending further review, seeking a procedural schedule for more thorough evaluation. OCA’s position is not strictly against the proposal but is skeptical and seeks to ensure other customers are not harmed 5, 6.

- QTS Cedar Rapids Infrastructure I, LLC: The customer who would take service under the proposed ICR agreement. QTS is the direct beneficiary of the proposal but is not described as participating as an intervenor in the docket excerpts.

Summary:
- IPL and QTS support approval of the ICR agreement.
- IBEC and LEG are neutral to cautiously supportive, with a primary focus on ensuring non-ICR customers are protected.
- OCA is cautious and has objected until further review, focusing on preventing harm to current (non-ICR) customers.

The docket identifies several areas of growth associated with the proposed data center project and related utility service expansion:

Areas of Growth:

- Economic Development from Data Center Construction and Operations:
- Construction activities for the data center are expected to support nearly 1,500 jobs annually over a 3-4 year period, generating about $200 million per year in local economic activity during construction. Once operational, the data center is projected to create 70 permanent jobs with an average annual salary of $70,000, plus an additional 77 indirect and induced jobs, for a total labor income of $11.6 million per year and an overall economic impact of nearly $40 million annually. The project also anticipates $3.73 million in annual tax revenue (outside of property taxes) and $471 million in property tax revenue over the first 20 years for local governments 1, 2.

- Utility Load Growth:
- The Individual Customer Rate (ICR) rider is designed to attract large, incremental loads (such as data centers) to Interstate Power and Light’s (IPL) service territory. The intention is to increase contributions to cost recovery and more efficiently utilize existing utility assets, while spurring further economic activity in the communities IPL serves 1.

Key Considerations Related to Each Area:

- Economic Development:
- The economic impact studies highlight both direct and indirect benefits, including job creation across various sectors and increased tax revenue. There is also a focus on community benefits, such as the customer's commitment to fund a community betterment account of up to $18 million over 20 years 1, 1.

- Utility and Ratepayer Impacts:
- There are explicit "hold harmless" provisions to ensure that non-ICR, or captive, customers are not adversely affected by the incremental load. The ICR customer’s rate revenue must cover the costs to serve them; if it does not, IPL is required to adjust its revenue so non-ICR customers are not burdened by any shortfall 3, 3.
- Stakeholders have raised concerns regarding local electric reliability, the potential for increased curtailments, possible cost shifting, and transmission system impacts and costs. These issues are particularly pertinent given the concentration of load and limited local generation capacity in the Cedar Rapids area 3, 3.

- Competitive Position and Confidentiality:
- Certain information pertaining to cost, revenues, usage, and contract terms is kept confidential to protect IPL’s competitive position in negotiations with current and future customers and suppliers 4.

In summary, the docket highlights economic growth driven by major data center investment and associated utility load, but also identifies key considerations including economic benefits, customer rate protections, reliability concerns, and confidentiality of commercially sensitive information.

Key events and submissions in this proceeding include:

- April 28, 2025: Interstate Power and Light Company (IPL) filed a proposed tariff with the Iowa Utilities Commission (IUC) in docket TF-2025-0047 1.
- June 16, 2025: IPL filed its request for review of individual customer (ICR) service agreements and specific ratemaking treatment, and application for confidential treatment 2.
- June 19, 2025: IPL filed various agreements and confidential attachments with the commission, including electric service agreements and supporting documents 3, 4, 5.
- July 9, 2025: The Office of Consumer Advocate (OCA) filed an objection and request to establish a procedural schedule 2.
- July 10, 2025: The commission issued a notice of docketing and suspended the proposed tariff for further review 6, 1.
- July 15, 2025: The commission established a procedural schedule and set an intervention deadline of July 24, 2025 6, 2.
- July 16, 2025: Petitions to intervene were filed by the Iowa Business Energy Coalition (IBEC) and the Large Energy Group (LEG) 7, 2.
- July 24, 2025: Deadline for intervention 7.
- July 28, 2025: The commission granted the petitions to intervene filed by IBEC and LEG 7, 7.
- August 14, 2025: Deadline for parties to submit statements of position and supporting information, as directed by the procedural schedule 8.

This timeline summarizes the major procedural milestones and scheduled submissions in the docket.

Docket No. TF-2025-0047 concerns Interstate Power and Light Company's (IPL) request for Iowa Utilities Commission (IUC) review and approval of individual customer rate (ICR) service agreements and specific ratemaking treatment for QTS Cedar Rapids Infrastructure I, LLC, a new large data center customer in Cedar Rapids, Iowa.

Key points:
- The ICR tariff is designed to attract large, high-load customers by offering competitive, cost-based rates while ensuring existing customers are not negatively impacted. It requires every ICR service agreement to be filed with the IUC for approval before rates can be effective. The agreements must ensure that all costs to serve the ICR customer are assigned to that customer, and if the revenue from the customer falls short of the costs, IPL must cover the shortfall so non-ICR customers are held harmless 1, 1, 2.
- The QTS data center is expected to have a contract demand greater than 25 MW, take service at transmission voltage, and operate under a service agreement with a term of at least 5 years. The data center project is estimated to create nearly 1,500 construction jobs, 70 permanent jobs, and generate significant economic and tax impacts for Cedar Rapids and Linn County over 20 years 3, 3.
- The docket includes issues regarding local generation and transmission capacity, reliability, and the potential impacts on existing customers. Stakeholders such as the Office of Consumer Advocate (OCA), Iowa Business Energy Coalition (IBEC), and Large Energy Group (LEG) have intervened to ensure non-ICR customers are protected and to raise concerns about system impacts 4, 1, 1, 5.
- Some information in the filings, including cost and contract details, is confidential, and the commission has deferred a decision on public disclosure pending any records request 5.

The commission has established a procedural schedule for reviewing the agreements, and final approval is contingent upon the commission’s determination that the ICR agreement is economic and beneficial for IPL and its customers 2.