Delmarva Power filed a lawsuit Wednesday challenging the Delaware Public Service Commission’s order that the company negotiate to buy power from a proposed offshore wind farm and a natural gas plant.
The lawsuit, filed in Sussex County Superior Court, comes eight years after the state embraced deregulation, which has led to soaring electricity bills and engendered resentment from ratepayers and lawmakers.
“Perhaps this is the right legal move,” Delaware Treasurer Jack Markell, a 2008 Democratic gubernatorial candidate, said Wednesday. “But it’s not clear to me that it’s the right move for the people of Delaware when we have a chance to be the first state to have an offshore wind farm producing clean energy at a stable price that has no negative impact on health or the environment.”
Last month, four state agencies and the PSC ordered Delmarva to negotiate with Bluewater Wind to buy electricity from a proposed offshore wind farm, and with NRG Energy and Conectiv Energy for a backup power source fueled with natural gas.
The agencies were seeking a long-term, stable-priced, home-grown and environmentally friendly source of power for Delmarva’s residential customers, who saw a 59 percent increase in electricity costs after deregulation took effect last year. Some small businesses and industrial owners received rate increases of more than 100 percent.
Last month, Delmarva President Gary Stockbridge said an order to negotiate with Bluewater and NRG could force his customers to pay too much for power they don’t need. He threatened to sue May 3, but softened his stance later that month after the agencies ordered negotiations to begin.
It is unclear what has happened during negotiations, since all parties are keeping talks confidential. Delmarva released a statement Wednesday saying it “will continue these good faith negotiations and hopes to achieve a favorable result for its customers,” but “Delmarva Power felt it necessary to file an appeal at this time in order to preserve its right to challenge in Court any future decision that may force its customers to pay for unneeded and costly purchased power on a long-term basis.”
Negotiations to continue
PSC Executive Director Bruce Burcat said the commission will continue to negotiate “to a successful conclusion.” “The appeal is now in the hands of the Commission’s legal counsel and will be defended vigorously by this agency,” he said.
In the Superior Court filing, Delmarva argued that the PSC:
• Ignored the Legislature’s mandate to get the state’s citizens cost-effective power.
• Ignored its own criteria for evaluating the bids, which included price as a major consideration.
• Chose an option that was not a formal bid.
• Failed to provide time for public and bidder response to the wind-and-gas approach recommended by PSC staff.
• Is forcing Delmarva and its customers to bear the risks of contracts that Delmarva believes are not in the best interest of its customers.
Pat Gearity, spokeswoman for Citizens for Clean Power, a grassroots environmental advocacy group, said it was hard to believe Delmarva is negotiating in good faith while it sues to overturn the agencies’ order.
Delmarva “appears to use the mantra ‘cheap power at any cost’ throughout this process, and even now its customers’ support for the offshore wind project has been overwhelming and consistent,” Gearity said.
Lt. Gov. John Carney, also a Democratic candidate for governor in 2008, agreed Delmarva was sending mixed signals.
“You hate to think they’re at the table saying they’re negotiating in good faith, and really trying to undercut it,” he said. “I guess we’ll see.”
Delmarva’s lawsuit is the second challenge to Delaware’s push for new power generation. Last week, Delmarva’s sister company, Conectiv Energy, filed a petition for the agencies to reconsider their order. Conectiv argued that its plan to build a natural gas plant at its New Castle County facility should have prevailed. Instead, the agencies sided with the wind farm, and directed a backup natural gas plant be built in Sussex County, allowing Conectiv and NRG Energy to bid for it.
The order disregarded the Legislature’s intent that price be an essential component of choosing a new power plant, Conectiv argued. A consultant under contract with the state ranked Conectiv’s proposal the best of the three initial bids, based mainly on the fact that it offered the lowest price.
Delmarva previously argued building and operating the wind farm as originally proposed – as a 600-megawatt facility with 200 wind turbines – would cost ratepayers $22 more a month, and $1 more a month for a natural gas plant. Last month, the PSC recommended the wind farm be half the size Bluewater Wind envisioned – a 200- to 300-megawatt facility with as many as 100 turbines.
PSC staff counsel James Geddes responded this week with a filing to commissioners saying the legislation set price as just one consideration, and the PSC was not bound to follow the consultant’s ranking.
Geddes wrote that Conectiv’s suggestion that Conectiv and NRG be allowed to file competing wind farm proposals “a desperate, last-minute attempt to stall the current negotiations.”
Jim Lanard, spokesman for Bluewater Wind, said in response to Wednesday’s lawsuit: “We’re troubled by the back-to-back filings of Conectiv and Delmarva. We remain hopeful that if Delmarva negotiates in good faith, that we can reach an outcome that is in Delmarva’s customers’ best interests.”
Conectiv spokeswoman M.Q. Riding said the company had not formulated a position on what Delmarva was doing. She said that despite Conectiv’s status as Delmarva’s sister company, the two were acting independently.
Officials from NRG had no comment Wednesday.
By Aaron Nathans
21 June 2007
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