November 15, 2007

Minner hopes to keep wind power project alive; Agencies could quash Bluewater deal, but governor says more time needed

Gov. Ruth Ann Minner is cautioning state agencies not to hastily reject Bluewater Wind’s $1.6 billion wind power project off the shore of Rehoboth Beach.

The two agencies she oversees will not reject the project when they next meet on Tuesday, Minner said Wednesday. “We won’t be voting no on this project.”

Four state agencies – the Public Service Commission, the Department of Natural Resources and Environmental Control, the comptroller general and the Office of Management and Budget – could vote next week to end negotiations between Bluewater and Delmarva Power for a 25-year contract to buy wind-generated electricity. The controversial 150-turbine project received a poor grade from the PSC’s staff last month.

Minner oversees two of the agencies that will be voting: DNREC and the Office of Management and Budget. Opposition by any of the agencies could derail the project.

“She believes there still needs to be additional time to make a decision on this issue,” said Kate Bailey, Minner’s spokeswoman.

Joining the debate are the two pro-wind Democrats vying to replace Minner, who said the Public Service Commission should step in and negotiate a wind farm deal on Delmarva’s behalf. Former Happy Harry’s CEO Alan Levin, whom Republicans see as a leading contender for the 2008 governor’s race, said he wants to see negotiations continue.

Oil prices have increased rapidly in the past few years, Levin said, and Delaware has a unique opportunity to become more energy independent.

“Delaware needs to seize the momentum we’ve started and move forward. I’d hate to see us close the door,” Levin said.

The utility has been a reluctant partner in negotiations, and Bluewater has accused Delmarva of trying to drive up the price of its wind power. But Delmarva said in a PSC filing this week that Bluewater has only itself to blame for the high cost of the project.

In a separate filing with the commission this week, Delmarva argued it was time to end the negotiations. The company estimated that adding Bluewater’s offshore wind power to its portfolio would add $16.74 to $25.49 per month to an average residential customer’s bills.

Delmarva spokesman Bill Yingling said he hoped the state agencies would follow the lead of the PSC staff “and move this process forward in a way that all renewable energy providers can compete to meet the needs of our customers in Delaware, at the best available price.”

Thumbs down from staff

Late last month the PSC staff recommended ending negotiations with Bluewater, saying the proposed deal was too expensive and risky.

Delmarva has said it would prefer to buy “green power” from out-of-state sources, which the utility claims are cheaper.

Todd Goodman, assistant general counsel for Delmarva, rejected Bluewater’s claim that Delmarva undermined negotiations by trying to drive up the price of wind power so the utility could later argue it was too expensive.

Two days before the end of the summer negotiations, Bluewater inserted into its bid “escalators” that increased the cost of wind power as prices of commodities, such as steel, increased, Goodman said. That forced Delmarva to state that it had not agreed to the proposed price listed in Bluewater’s bid, Goodman wrote.

Bluewater has since offered to remove the escalators in an attempt to revive a deal.

“Why did Bluewater knowingly submit price escalators that were so harmful to those customers in the first instance?” Goodman wrote.

In a letter to the PSC this week, Treasurer Jack Markell, a Democratic candidate for governor, said the commission may have to step in and negotiate on behalf of Delmarva.

“What is most important is that the PSC continue these negotiations alongside, or on behalf of, Delmarva Power so that all the facts come out, all the options will be displayed, and what is best for all Delawareans can be made clear,” Markell wrote.

Lt. Gov. John Carney, Markell’s opponent for the nomination, also said he’d like to see Bluewater and the PSC negotiate directly.

“We have reached a critical juncture in this process, and it’s important that all parties move forward in good faith,” Carney said.

Also weighing in before Tuesday’s hearing was Insurance Commissioner Matt Denn, another Democrat, who wrote that the only way a contract is likely to be reached is “if the PSC staff is permitted to take over negotiations from Delmarva – a company that has said from the outset that it is opposed to the very concept of negotiations.”

In its filing, Delmarva wrote that it is hard to envision any scenario under which the state would be justified in excluding Delmarva from negotiations.

The Division of the Public Advocate also weighed in recently, filing a report that said it was time to end the process. Bluewater’s current proposal exposes Delmarva’s residential and small business customers to too much risk over a long period, the division’s report argued.

Letters in support

There was also plenty of activity on the ground. In four New Castle County legislative districts, nearly two thousand residents signed letters asking their representatives in the General Assembly and the state agencies to support an offshore wind contract. The Clean Air Council organized the letter-writing campaign.

Two Wilmington groups representing low-income residents took opposing views. The Peoples’ Settlement, a social service organization, submitted a letter to the public advocate’s office arguing that the plan risked raising electricity bills beyond an acceptable level for low-income residents.

The state should reject the offshore wind farm in favor of buying renewable power on the open market, wrote the organization’s executive director, Keith Lake.

Meanwhile, Delaware ACORN President Angela Walker wrote a letter to the four state agencies, saying her group’s more than 3,000 members have endorsed the wind farm, saying it was the best way to stabilize prices. Bluewater should complete negotiations directly with the PSC staff, she wrote.

By Aaron Nathans

The News Journal

15 November 2007

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