Delmarva Power will have until Sept. 14 to come to an agreement to buy power from a proposed wind farm and a backup natural gas plant.
That’s an extension from the original 60-day deadline that expired late last month.
At a meeting of the Public Service Commission, four state agencies agreed to grant Delmarva the extension to come to terms with Bluewater Wind on a long-term agreement to buy power from a wind farm off the Delaware coast.
By that date, Delmarva should also conclude negotiations with Conectiv Energy and NRG Energy to back up the wind farm with natural gas power, the agencies agreed. Only one of the companies will win the backup contract.
The state-mandated negotiations are part of Delaware’s effort to ensure its long-term energy future by developing homegrown sources of power.
Bluewater Wind, NRG and a representative of the Public Advocate’s Office argued that it was important to enforce the new deadline. The longer negotiations drag on, the more costs will trickle down to ratepayers, said Justin Murphy of the advocate’s office.
And Tom McGonigle, attorney for Bluewater Wind, said: “We need to have deadlines that keep things moving, keep the pressure on. I think that’ll work to everyone’s benefit.”
McGonigle said negotiations have been harder than company officials imagined. Bluewater Wind has had to make sure every proposal from Delmarva makes financial sense for his company, McGonigle said.
“Nothing worth doing is easy,” McGonigle said.
Sept. 14 is the deadline to submit “terms and conditions,” or a detailed summary, of an agreement. If the agencies approve the summary, the parties would try to conclude a full, legally binding agreement.
Widener University Professor Lawrence Hamermesh, who is mediating the negotiations, said efforts to reach an agreement were “uniquely complicated,” noting an arrangement for offshore wind power is unprecedented in this country, much less between several parties.
“Delmarva and Bluewater Wind both feel they’ve made considerable progress, but believe the issues that remain are complex,” Hamermesh said. He said the failure to come to an agreement so far “is not due to neglect, antagonism, bad faith.”
Hamermesh said Delmarva and Bluewater Wind have found common ground on issues of project milestones, penalties for Bluewater failing to build the turbines on time, and Bluewater’s ability to terminate the contract if federal guidelines governing offshore wind farms are not favorable.
But he said they have not reached agreement on such important issues as costs, the size of the wind farm, the amount of power the farm should be obligated to provide, and the amount of power it could provide if operating at peak capacity.
The parties have been dealing with PJM Interconnection, which runs the area’s power market, on the question of how to manage the sale of wind power, which, unlike fossil fuels, is available in less predictable amounts. Supplies of wind power depend on how hard the wind is blowing.
Todd Goodman, Delmarva’s regulatory counsel, said his company has conducted more than 20 face-to-face sessions with the other parties, and as many phone calls.
“It’s been a two-, three-month marathon so far, and it will continue,” Goodman said.
8 August 2007
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