State officials on Tuesday declined to pull the plug on negotiations to determine whether the nation’s first offshore wind farm should be built off the coast of Delaware.
Officials agreed with Public Service Commission staffers that Delmarva Power and Bluewater Wind LLC should be given until Dec. 10 to come up with a power purchase agreement, which state officials would consider at a Dec. 18 meeting.
Officials also said Widener University law professor Lawrence Hamermesh, who has served as a mediator in the negotiations, will take a more authoritative role and arbitrate differences between the two parties.
The PSC staff will offer advice and technical support to Hamermesh but will not be directly involved in the negotiations, which unlike earlier talks will focus solely on the proposed wind farm and not include provisions for planned backup power generation using natural gas.
Bluewater president Peter Mandelstam said he was pleased that the negotiations will continue and confident that the project will come to fruition.
Delmarva Power president Gary Stockbridge said the decision was merely another step in the process to determine whether the proposed Bluewater deal makes sense.
“Clearly, I think the deal has to be better than what we have today,” he said.
Stockbridge said Delmarva supports wind power and noted that lawmakers have mandated that 20 percent of the electricity Delmarva sells comes from renewable energy sources by 2019.
“We don’t have a choice not to get this done,” said Stockbridge, who believes the state should not limit wind power proposals to only one company. “Our issue all along is getting the best deal for our customers.”
In response to sharp rate increases for Delmarva Power customers following deregulation and the lifting of price caps, lawmakers last year directed Delmarva to request proposals for long-term supply contracts in an effort to ensure reliable, cost-effective energy for its customers.
In May, the PSC, along with the state budget director, controller general and environmental secretary, directed Delmarva to negotiate a power purchase agreement with Bluewater Wind, which wants to build a wind farm off the Sussex County coast. Officials also ordered that Delmarva negotiate with Conectiv and NRG Energy for a backup natural gas facility to provide power to southern Delaware when the wind doesn’t blow.
Supporters of the wind power project believe it will provide a clean, stable energy supply while protecting the environment and public health by not contributing to air pollution. Last month, however, the PSC staff recommended that state agencies reject the Bluewater project, saying the price premium that Delmarva Power customers would pay for wind energy is too high.
Delmarva has seized on the pricing concerns, arguing that the project is not in the best interests of its customers. Bluewater, meanwhile, has withdrawn many of its price escalators, saying Delmarva’s negotiating tactics were partly to blame.
Bluewater attorney Tom McGonigle said an independent consultant has estimated the rate increase for Delmarva residential customers under the current proposal at $6.76 a month over the life of the proposed 25-year power supply contract. Delmarva Power contends the increase would be at least $5 higher per month.
In response to Delmarva’s argument that residential customers should not have to bear the entire financial burden for a wind farm, officials suggested that the PSC staff consider spreading the cost among all Delmarva customers.
“If we can spread this across the entire Delmarva base, it might make it a lot more palatable,” said commissioner Jeffrey Clark.
Stockbridge suggested that lawmakers go further and spread the cost among all Delawareans.
“If it’s going to be a statewide benefit, let everyone in the state share,” said Delmarva Power attorney Todd Goodman. “There should be no free ride.”
The hearing began with several members of the public, including former Gov. Russell Peterson, speaking in favor of wind power.
“Now is the time for Delaware to face up to the serious threat of global warming by embracing a form of electricity generation that does not use the fossil fuels that cause global warming,” Peterson said.
The only member of the public to speak against the wind power proposal was Bernadette Winston, executive director of the Kingswood Community Center in Wilmington. Winston said low-income residents that her agency serves cannot afford huge increases in their electricity bills.
After Winston spoke, Green Delaware executive director Alan Muller noted that Stockbridge is chairman of the Kingswood Community Center board of directors.
By Randall Chase
Associated Press Writer
21 November 2007
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