The Iowa Utilities Board (IUB) today decided the rate-making principles to be applied to Interstate Power and Light Co.’s proposed Sutherland Generating Station Unit 4 in Marshall County. The board established a requirement of 10.1 percent return on equity for up to $985.6 million of investment in a 350-megawatt portion of the primarily coal-fired power plant.

Last spring, the IUB granted Interstate Power a conditional generating certificate. The company must now decide whether to proceed with construction of the facility. Interstate Power had requested to be allowed a 12.55 percent return on equity.

“We will need to review the IUB’s written order to determine our next steps,” Interstate Power President Tom Aller said in a release. “However, the conditions placed by the IUB on the proposed hybrid power plant present a number of challenges in today’s financial climate, and we are disappointed that this decision seemingly does not take that reality into account. We will continue to work with our partners to determine how today’s decision will impact our respective companies’ long-term generation plans.”

Interstate Power, a subsidiary of Wisconsin-based Alliant Energy Corp., has promoted the project as a means for the utility to significantly reduce the amount of electricity it purchases from outside Iowa. The company currently purchases approximately 30 percent of its energy. Interstate Power has formed an alliance to sell about one-third of the plant’s output to four Iowa electric power cooperatives.

The IUB expects a written decision will be issued within the next two to three weeks.