Bluewater Wind proposes building 150 wind-power turbines off the coast of Rehoboth Beach by about 2014, under terms of an agreement the company released Thursday.
But Delmarva Power said it has not agreed to those terms and plans to release its own statement today, the deadline for the two companies to submit details that could go into a long-term power supply contract.
The deal is headed for a make-or-break review before the Public Service Commission and four state agencies.
Bluewater officials acknowledged that Delmarva could fight the proposal after it delivers its own summary of details today.
Delmarva underscored that view in a brief statement late Thursday, and said it would elaborate today after providing the PSC with its submission.
“These term sheets do not reflect an agreement or a contract,” said Bill Yingling, spokesman for Pepco Holdings Inc., Delmarva’s parent company. “It’s our job to fully evaluate the costs on behalf of our customers.”
Bluewater delivered its summary a day before the deadline and asked for the methods Delmarva used to estimate costs.
“Although Bluewater acknowledges and very much appreciates that Delmarva worked diligently during these negotiations, we fear Delmarva may oppose approval of this Term Sheet,” Bluewater’s attorney, Thomas McGonigle, wrote in a letter to the PSC and state agencies. “To that end, Delmarva may argue that this project is too expensive for its ratepayers, citing its own evaluation to support this claim.”
Bluewater spokesman Jim Lanard put it more bluntly: “Our biggest concern is that Delmarva has a secret black box they may use to try to blow up the process.”
Debates over the wind farm and competing power plant projects have raged for months as the PSC and Delmarva worked through a General Assembly order to secure new, in-state electricity supplies for Delmarva’s customers.
Some environmental groups have urged state officials to approve the project, saying the wind farm would provide a source of clean energy at prices largely immune from oil and natural gas price fluctuations. Critics warned that the project’s construction price – now estimated at $1.6 billion – is steep, and cautioned that wind farms have never operated on a large scale in the United States.
It is unclear at this point how the proposal would affect what an average Delaware resident would pay for electricity.
Yingling warned against drawing conclusions from the terms released by the companies.
“In evaluating this document, you cannot compare Bluewater Wind’s price to Delmarva’s current rates, because they have different components,” Yingling said.
McGonigle wrote in his letter that Bluewater wanted to see what other charges Delmarva would factor into the final cost to consumers, but Delmarva would not provide them.
Offshore wind energy is more expensive than energy generated by coal, which sells on the wholesale market for roughly 4 cents per kilowatt hour, but unlike coal, produces no harmful emissions.
The wind farm, which would be in federal waters about 11.5 miles offshore, would be large enough to provide 30 percent of the power to about 300,000 homes when operating at full capacity, more than the total number of Delmarva’s Delaware customers, Bluewater reported.
Delmarva would pay 10.59 cents per kilowatt hour for the wind energy, McGonigle wrote. That’s 1.05 cents higher than Bluewater originally bid in December. The difference is largely due to building a smaller wind farm than the one Bluewater originally proposed, Lanard said.
The turbines would reach 400 feet above sea level at their blades’ highest point.
Lanard said they would be barely visible from shore on clear days, and invisible on hazy days.
Public Service Commission Executive Director Bruce Burcat said officials would be unable to comment on the submissions “for a number of weeks,” with nothing likely before Oct. 15.
“There are a bunch of terms. Whether they are in agreement or not remains to be seen,” he said.
Late last year, the state solicited bids for homegrown sources of electricity. That’s after Delmarva raised residential electricity rates by 59 percent when rate caps expired.
In May, the PSC and three other state agencies ordered Delmarva to negotiate with Bluewater for a 25-year power-purchase agreement from an offshore wind farm. The agencies also ordered Delmarva to negotiate with NRG Energy and Conectiv on a bid for energy from a proposed natural gas plant to back up the wind farm.
Delmarva filed suit to stop the process, saying it could force the company to buy too much electricity or pay too much for it. But Delmarva has stayed its suit pending the results of the negotiations.
The planned startup for the wind farm could be as early as June 1, 2014, and as late as spring 2015, McGonigle wrote.
Still unreleased are the terms of competing power-purchase agreements with NRG Energy and Conectiv Energy for the natural-gas-fired backup plant. Only one of those projects will be selected. Those agreements are expected to also be released today.
By Aaron Nathans
14 September 2007
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