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Delmarva Power encourages rejections  

Delmarva Power has encouraged the state to reject all three energy plant bids, but the bidders are standing by their proposals and the game is far from over.

In a filing with the Public Service Commission, the utility company stated moving forward with any of the power plant proposals is not in the best interest of its customers. The company’s analysis indicated none of the three proposals offer any savings or price stability and all carry substantial costs.

The company received three proposals: a “clean coal” plant from NRG; a wind farm from Bluewater Wind; and a natural gas plant from Conectiv, an affiliate of Delmarva Power.

Delmarva Power ranked the three proposals on a point system designed to measure the merits of each bid. The biggest factors were price and price stability, but environmental impact and project viability were also considerations. Conectiv scored the highest with a total score of 66.7 points out of 100. Bluewater Wind came in second, scoring 50.4 points. NRG ranked third with 20.5.

“Even though our affiliate, Conectiv Energy, scores best under the system, we do not favor signing a long-term contract,” said Delmarva Power Regional President Gary Stockbridge in a statement. “All of the objectives of the legislation can be met by other means without any of the risks that come with long-term contracts.”

Such means include a combination of energy efficiency programs, purchases from the wholesale market, upgrading the transmission system and purchases of renewable resources.

“Our analysis shows that such a combination of steps remains the best option for our customers,” Stockbridge said.

Legislation passed in April 2006 required Delmarva Power to seek bids for long-term contracts from power plants in Delaware, in an attempt to help stabilize the price of electricity.
Cost Analysis

Delmarva Power’s analysis predicts that the proposals would cost as much as or more than buying power from the open market.

NRG’s bid would cost Delmarva Power customers $4 to $5 billion more than buying on the market, according to the statement. But NRG disputes some of the findings of the analyses.

“While we’re in the process of reviewing the two reports, we continue to stand by our projects and have already identified some areas in our reports that do not accurately identify the benefits described in our proposal,” said NRG spokeswoman Lori Neuman.

Bluewater Wind’s proposal would cost customers $2 billion over market costs, according to Delmarva Power’s analysis. But the company was not down for the count.

“Bluewater Wind believes the state intention is to require Delmarva to contract for additional electrical generation,” said spokesman Jim Lanard. “Based on our evaluation of the reports, Bluewater Wind believes that with some necessary adjustments to certain assumptions that the offshore wind proposal will be the preferred alternative.”

Conectiv’s bid, which was the most economically viable according to the analysis, offers no savings over the market forecast.

Conectiv stood behind their proposal. “We stand ready to serve Delmarva Power and its customers under the terms of our offer,” said Conectiv spokesman Bill Yingling. “If Delmarva chooses otherwise, that’s their decision.”

The proposals galvanized many in Sussex County. The wind farm in particular had much public support, with the Public Service Commission receiving dozens of letters in support of it.

Citizens for Clean Power were one of Bluewater Wind’s biggest proponents. John Austin, a member of the group and retired EPA scientist, said he still supports Bluewater Wind’s proposal. “If it were my decision, it would be to proceed with the wind project, because it is still less than many pay now and moves Delaware forward,” Austin wrote in an e-mail. “I think the case for accepting the wind bid is still strong, despite the review report. The project should be one to apprentice Delaware workers in the industry, which could rapidly expand on the east coast once installed.”

But Green Delaware agrees with Delmarva Power’s assessment. Delaware should invest in conservation and efficiency programs, rather than a new energy plant, said Alan Muller, executive director of the group.

“I think there’s a certain amount of momentum here that’s been built up regarding clean power and we need to figure out how Delaware can move ahead with that,” he said. “I think we need to go ahead with wind power, but I don’t think this is the way to do it.”
The Debate Continues

Delmarva Power’s decision is not necessarily a nail in the coffin for the three bidders. While the company was charged with reviewing each bid, the final decision makers are four state agencies: The Delaware Public Service Commission, the State Energy Office, the Controller General and the Office of Budget and Management.

The findings of the state agencies’ consultant were similar to those of Delmarva Power’s consultant. The state agency consultant ranked Conectiv first, Bluewater Wind second and NRG third in the point evaluations. But the evaluation isn’t over.

“We have several more months to go in this process,” said Bruce Burcat, executive director of the Public Service Commission. “We have to take the bids themselves and work through the integrated resource plant that Delmarva has proposed in December and see how each of these plans fit with working through that plan.”

An integrated resource plan, or IRP, is a 10-year look at a company’s resources and what kinds of resources a company wants to acquire in that time frame. The consultant for the state agencies will take a look at each proposal and see how they fit in Delmarva Power’s IRP. “It’s not clear-cut what the results will be,” Burcat said.

While Conectiv scored the best on price, Burcat said, the consultant will consider other factors like environmental impact, on which Bluewater Wind scored highest.

The Public Service Commission met in Dover Feb. 27 to discuss the evaluations of the proposals.

There will also be hearings to gather public input. The one in Sussex County is scheduled for March 7 at 7 p.m. in Georgetown at the Delaware Technical and Community College Jack F. Owens campus theater.

A final decision is expected in May.

To view the reports online, visit http://www.state.de.us/delpsc/irp.shtml

If You Go

Public hearing on power plants bids Where: Theater of Delaware Technical & Community College – Owens Campus, Georgetown When: March 7 at 7 p.m.

# Reach Sara Smith by e-mail at sarasmith@dmg.gannett.com

By Sara Smith
Staff Writer

delmarvanow.com

28 February 2007

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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