An offshore wind farm is the answer to shoring up the state’s energy future, the Public Service Commission staff has recommended.
In a report released Friday, the staff wrote that approval should be contingent upon spreading out the costs to all Delmarva Power ratepayers, including large businesses that buy power in bulk.
The recommendation will carry great weight when four state agencies vote on the wind power contract on Tuesday in Dover
The agencies could order Delmarva to sign a 25-year deal with Bluewater Wind for electricity from 150 turbines off the coast of Rehoboth Beach.
The state also should consider legislation to spread the cost to all ratepayers, including those of the Delaware Electric Cooperative and the municipal utilities, the staff wrote.
The staff did not suggest making the wind power deal contingent upon any legislative action.
“Bluewater’s project is a cost-effective mechanism that takes control of Delaware’s energy needs and provides a price hedge against the unpredictable and volatile movement of the PJM market,” the staff wrote in the report.
PJM operates the 13-state regional power grid, which encompasses the mid-Atlantic states, running west to parts of Ohio, Indiana and Illinois.
If the agencies spread the costs, it could force some of the state’s largest employers to consider their own plans of action. If industrial customers embrace the wind farm, they would pay more but gain environmental bragging rights they could use in advertising. If they fight it, they could save money but risk appearing responsible for the project’s demise
The recommendation comes a day after a state consultant gave a largely favorable report about the wind farm, estimating the above-market price to the average Delmarva residential customer to be $6.50 a month. That cost could be cut in half if all Delmarva ratepayers are included, and lower still if all Delaware electricity users – such as those in the Delaware Electric Cooperative – are included, the consultant wrote.
The staff report noted that no one knows exactly how high fossil fuel costs will go, but the wind contract offers a stable price.
The wind farm can also improve electrical reliability in southern Delaware, especially if backed up by a natural gas plant, the staff wrote.
“We are very pleased with the staff recommendation. It’s well reasoned, and makes solid arguments why Delaware, the First State, should be the first state to host a stable-priced, renewable and emission-free offshore wind park,” said Bluewater spokesman Jim Lanard.
He said approval of the contract must not be conditioned upon a legislative mandate to expand the customer base beyond Delmarva ratepayers.
“The Public Service commissioners, and their staff, and the three state agencies have worked very hard to keep the politics out of this very important policy decision. Bringing it back to the Legislature introduces a level of politics that is not warranted at this time,” Lanard said.
Even making approval of the wind farm contingent upon spreading out costs to all Delmarva customers risks causing delays in final passage, said Jeremy Firestone, assistant professor of marine policy at the University of Delaware.
Delmarva spokesman Bill Yingling said the company was pleased the PSC staff recognized “the fairness issues,” referring to spreading the costs to all electricity users in the state.
If the state persists in moving forward with the offshore wind farm, no contract should be finalized before the Legislature figures out how to spread costs to all electricity users, Yingling said.
Onshore wind power can be 45-50 percent less costly to build than offshore wind power, and can be constructed faster, but there’s little potential to build such resources in Delaware, the staff wrote. The Legislature directed the agencies to vote on in-state generation only.
The agencies could allow Delmarva to pursue out-of-state renewable power, but then they give up their power to compel the utility to sign a contract, the staff wrote, which risks squandering the current opportunity to buy renewable power that offers a stable price.
By Aaron Nathans
15 December 2007
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