Bluewater Wind will have its last, best chance to make a positive impression on four state agencies Monday.
That’s when a proposed 25-year contract is expected to be released that would commit Delmarva Power to buy power from Bluewater’s proposed 150-turbine wind farm off the coast of Rehoboth Beach.
When the contract is released, all eyes will be on one number: Bluewater’s proposed price of wind power.
Four state agencies are scheduled to review the contract, and cast a yes-or-no vote on the project Dec. 18.
Discussions have been proceeding in secret for the last two-and-a-half weeks after the agencies sent Delmarva and Bluewater back to the negotiating table.
In September, the last time they emerged from negotiations under orders to strike an agreement, the result was anything but agreeable. Delmarva placed asterisks next to several areas of the contract terms and conditions the utility disputed.
Delmarva officials later said they had to do that because of late additions to the term sheet by Bluewater.
This time, such indecision is unlikely to appear on a contract. The four state agencies agreed last month that the mediator between Delmarva and Bluewater would act more like an arbitrator. The mediator has the power to resolve any unfinished issues so a completed contract can be brought before the agencies.
“We’re past the asterisk stage,” said Rep. John Kowalko, D-Newark, a supporter of the wind farm. “I hope they won’t contest this in any court or litigation if the decision is to proceed with the wind farm.”
Under a legislative directive passed last year, the agencies have the power to force Delmarva to sign the long-term contract.
But that doesn’t mean Delmarva officials need to roll over if they don’t like it. They can argue their case to the four agencies, as they have been, that a long-term deal for offshore wind power would be too costly to ratepayers.
If Delmarva fails to win over the agencies, it can take its case to the Legislature, which could conceivably overturn their original order. And, as an avenue of last resort, Delmarva can take its case back to court. Delmarva already has a lawsuit filed contesting the process, but it put the suit on hold pending the outcome of negotiations.
Delmarva President Gary Stockbridge would not comment on the negotiations, but said his company was serious about completing negotiations.
“We’re coming at it from a perspective [that] we can do everything we can to make it be the right deal for our customers. We have nothing to lose from a company perspective,” Stockbridge said. “As far as I know, they’re meeting almost nonstop, every day, all day. All the parties are working very hard at this.”
Bluewater Wind spokesman Jim Lanard could not be reached for comment.
At the November meeting of the agencies, Public Service Commission staff counsel James Geddes said the big question for this final round of negotiations was whether Bluewater offered its best price for Delmarva to buy wind power in September.
Bluewater will not have the option of increasing its price. According to the agencies’ order, the price must be better than or equal to its last offer. Bluewater has already taken off the table price “escalators,” mathematical formulas that would have increased the price as commodities like steel increased in price.
On Monday, observers will watch whether Bluewater’s price goes lower than 10.59 cents per kilowatt hour, the amount set in September. That number is a raw figure that doesn’t take into account capacity charges and other possible surcharges, but may be an indicator of how much the parties have compromised.
Another point in Monday’s contract bound to attract attention is Bluewater’s proposed renewable energy credit price for Delmarva, which critics said was too high in September at $19.75 per certificate.
Other issues of contention include penalty prices for failure to provide wind power, and the amount of energy involved in the purchase.
So far, there has been wide disagreement about the effect on ratepayers.
Delmarva’s consultant said offshore wind power would cost its residential customers $16.74 to $25.49 more a month. Delmarva retained a second consultant, PACE Global Energy Services, whose analysis showed an increase of $2 to $34 more a month.
A Bluewater consultant, meanwhile, said the monthly increase would be between $5.34 to $7.19 in the first year of the contract, which would turn into a monthly savings of between $2.28 and $2.80 by the last year.
University of Delaware Professor Ed Ratledge said he hopes “nothing” comes out of Monday’s contract.
“I frankly don’t think Delmarva should sign any contract with them,” said Ratledge, who is director of the Center for Applied Demography and Survey Research. “I wonder if the state actually has the authority to make them do that anyway. I think it’s a bad deal for the citizens.”
PSC Executive Director Bruce Burcat said his organization could say very little because the negotiations were ongoing.
“At this time, PSC staff is focused on bringing the negotiations between Bluewater and Delmarva to conclusion and meeting the filing deadline” of Monday for a power purchase agreement, he said.
By Aaron Nathans
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