As supporters came to the defense of an embattled offshore wind farm proposal, the developer announced it would submit a revised plan to rein in costs.
The move comes in response to a state report that calls the plan too risky for ratepayers.
But time for maneuvering is running out.
Four state agencies could decide the fate of the proposed wind farm and backup natural gas plant at a Nov. 20 meeting at Legislative Hall.
“It would be a shame to have gone through all this effort and to not have a project that offers the potential benefits, provided that the price is affordable,” said Lt. Gov. John Carney, a Democratic candidate for governor. “I think we ought to push forward to try to find a workable solution.”
A report by the Public Service Commission staff, released on Monday, criticized Bluewater Wind for undermining what should have been its project’s most appealing strength: price stability.
Being at the forefront of this nation’s effort to build offshore wind farms had some appeal, said Bruce Burcat, the PSC’s executive director. But upon seeing Bluewater Wind’s latest proposal as negotiated with Delmarva Power, “we were very surprised, shocked, discouraged, disappointed I guess is a better word, to see that the proposal had changed dramatically,” Burcat said.
The plan included too much cost variability, and the PSC staff couldn’t assign a number to how high costs could go, Burcat said.
“That’s a very scary thought,” he added. “There’s just too much price uncertainty here for us to make a recommendation that these talks should go forward any longer. Our interest is in protecting the public interest.”
But State Treasurer Jack Markell, also a Democratic candidate for governor, said it would be a shame to give up on offshore wind now. Health and environmental impacts should be weighed against a price increase, he said.
“People spent a lot of money, a lot of time preparing their bids,” Markell said. Bluewater should have a chance to change the escalator, he said. “Let’s see what they do.”
Bluewater officials have advertised the project, which would be built 11.7 miles off the coast of Rehoboth Beach, as an environmentally friendly way to lock in a price for electricity, free of the volatility of the natural gas or coal markets.
But the PSC staff chastised Bluewater Wind for adding “escalators” into the cost, allowing the price of wind power to increase during the years between the time the contract is signed and parts are delivered.
Under the plan, Delmarva customers would pay more as the price of commodities like steel increase, and as foreign exchange rates lead to a weaker dollar.
The PSC staff recommended ending negotiations and urging Delmarva to seek renewable energy through a different long-term planning process.
Bluewater plans to submit a revised proposal sometime in the next week, said company spokesman Jim Lanard.
“Bluewater Wind agrees that the worst-case scenario evaluated by the PSC staff is not acceptable. We never imagined in our evaluations outcomes that were so expensive,” Lanard said. “We are going to propose caps to make sure that those unacceptable outcomes cannot be realized.”
Tom Noyes, editor of the environmental blog TommyWonk, suggested Bluewater try to sign a futures contract with a supplier, choosing commodity prices now instead of letting the market dictate costs.
It was no surprise that the base price of wind power went up as the number of turbines was scaled back, said University of Delaware researchers Jeremy Firestone and Willett Kempton. Bluewater was told to build a smaller wind farm, but that meant less wind power from an already large investment, resulting in higher prices, they said.
But Burcat, the PSC director, said he didn’t agree. Bluewater wasn’t told to build a smaller wind farm; it was told to supply Delmarva with less power, he said.
Bluewater could have driven down the price of wind power by building the extra turbines and arranging power purchase contracts with customers other than Delmarva, Burcat said.
Although the staff’s recommendation traditionally carries a good deal of weight, it’s not the final word. The PSC and representatives of the comptroller general, the Office of Management and Budget, and the Department of Natural Resources and Environmental Control are expected to be at the Nov. 20 meeting.
After a public hearing and discussion, they could vote on whether to accept Bluewater’s latest proposal, reject it and end negotiations, or send the parties back for further talks.
Kempton criticized the PSC staff report for failing to adequately consider health impacts, global warming and increased fossil fuel costs. Most Delaware residents would consider those factors in their own decisions, but the state consultant didn’t do that, he said. The wind bid, he said, is still a “no-brainer.”
Pat Gearity, spokeswoman for Citizens for Clean Power, said the state needs to give the wind farm another chance.
“I can appreciate the fatigue everyone may be feeling right now, at the end of such a long and challenging process. But my experience tells me the problem cited by the PSC staff can be addressed simply and quickly by Bluewater Wind,” Gearity said. “We’ve come too far to quit now over what is essentially a single issue.”
By Aaron Nathans
4 November 2007
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