November 14, 2007

Power company seeks wind options

SALISBURY– Delmarva Power President Gary Stockbridge called on Delaware state agencies Tuesday to allow the utility company to halt contract talks with Bluewater Wind and open negotiations for future power supplies with renewable energy firms outside state boundaries.

Stockbridge held a news conference in Salisbury on Tuesday afternoon saying the 25-year, $25 billion offshore wind turbine proposal by Bluewater Wind placing 150 turbines 11.5 miles off the coast of Rehoboth Beach would unnecessarily lock the state into one renewable technology with financing on the backs of residential and small business customers.

Outside studies conducted for Delmarva Power estimate that $17 to $22 would be added to every residential and small business customer’s electric bill every month to finance the project. Larger commercial and industrial clients, which represent most – about 70 percent – of the utility’s delivery, would not be affected. The rates only apply to Delaware customers.

“Even without escalators, renewable energy from Bluewater would not be a good deal for our customers,” Stockbridge said, referring to annual material cost increases that Bluewater removed from a deal during recent negotiations. “Before we lock into any long-term contracts, we should look at all the competitive options.”

Backing up Stockbridge is a conclusion in one of the outside reports indicating an onshore wind farm would cost customers half as much as the offshore facility.

What the “right” price would be that makes Delmarva Power more agreeable to a particular contract was not revealed, but a competitive bidding process would encourage firms to reduce prices for its customers, he said. Utility spokesperson Matt Likovich said Bluewater Wind’s current bid might be the most competitive, but it won’t be known until all bids are placed.

Stockbridge said Bluewater Wind should be part of the bidding, too, as long as other firms within the regional PJM electric grid – crossing 13 states and the District of Columbia – are part of the process. If the renewable facility is tied to the grid, the energy created can be funneled to Delmarva. The utility then distributes the energy to meet the state requirement of delivering 20 percent of its electricity from renewable sources by 2019.

His comments come a few weeks after the Delaware Public Service Commission staff recommended Oct. 29 that bidding be opened to other power suppliers because Bluewater Wind has failed to lower prices on the potential cost as expected during negotiations. Delmarva Power also had not complied with the state by creating terms for the power arrangement.

“Instead of ‘sharpening its pencil,’ Bluewater has used the negotiations to dramatically escalate the potential cost of the project to Delmarva Power and its … ratepayers,” according to the Delaware PSC staff report. “This price adjustment shifts the energy payment rate in one direction, upward and toward the … ratepayers who will now bear 100 percent of the risk associated with these new price escalators.”

Bluewater Wind replied to the report Nov. 6 by eliminating escalators from its package. The company argued that the escalators were not intended to bring profit to the company, merely to keep it in business during uncertain energy and material prospects.

A Delaware Public Service Commission hearing is scheduled Nov. 20. If the PSC, Delaware Energy Office, controller general and the Management and Budget Office all agree to the terms, then Bluewater and Delmarva must move forward with the proposal. But if one agency disagrees, Delmarva would be allowed to seek other bids, Stockbridge said.

By Joseph Gidjunis
Staff Writer

The Daily Times

14 November 2007

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