A proposal to build a wind farm off the Delaware coast would be too expensive for ratepayers, and is not in the public interest in its current form, the Public Service Commission staff said in a report released today.
The staff’s 91-page report details its opinion on the proposed terms and conditions of a would-be agreement between Delmarva Power and Bluewater Wind to build 150 turbines off Rehoboth Beach.
The report suggested that negotiations between Bluewater and Delmarva led to dramatically higher prices. Ratepayers would bear those added costs, the staff wrote.
The proposal as it stands is far different from the one Bluewater first submitted, the staff wrote. The staff criticized Bluewater’s proposal to pass along to Delmarva increases in the cost of commodities like steel and fuel, noting that the terms allow the price to Delmarva to increase, but not decrease.
“The consequence of the changes in Bluewater’s project is a drastic increase in the price impact” for Delmarva’s residential ratepayers, the staff wrote. The original proposal would have cost ratepayers $6.23 more per megawatt hour for wind power, but the latest terms and conditions increased that price to a conservative estimate of $11.71 more per megawatt hour, the staff wrote.
But the staff suggested that factors like increases in the price of commodities and a delay in construction could push the additional price per megawatt hour above $55. That would represent a $1.7 billion increase over the original Bluewater bid, the staff wrote.
“After an informed and deliberative review . . . staff cannot recommend that the state agencies direct power purchase agreements based on any of the long-term generation proposals, including the backup arrangements,” the staff wrote, referring to plans to back up the wind farm with a natural gas plant.
“Although staff would like to be part of the effort to pioneer offshore wind power to take control of Delaware’s energy future, such a recommendation is – at this time – not in the public interest and is not consistent with the underlying principles of the Electric Utility Retail Customer Supply Act of 2006.”
By Aaron Nathans
The News Journal
29 October 2007
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