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Report on wind farm: Agencies bent rules  

Sen. authors accused of trying to kill project

The Public Service Commission and two state agencies exceeded the law, distorted bidding rules, overlooked risks and ignored cheaper alternatives before endorsing a proposed offshore wind project, according to a recently obtained draft Senate report.

Senate Democratic caucus members discussed the document secretly last week and then called for revisions. But leaked copies circulated throughout the weekend as debate intensified over a stalled proposal that would make Delmarva Power sign a 25-year “must-take” electricity purchase contract with Bluewater Wind LLC.

“After a year and a half of proceedings, many factual uncertainties remain and key issues have not been explored to the depth that is warranted when making a $5.6 billion, 25-year commitment,” the report said.

The fact that the report was leaked drew immediate accusations that Senate Energy and Transit Committee Chairman Harris B. McDowell III, D-Wilmington North, was attempting to kill the offshore wind project with a highly negative draft that might never survive review by his colleagues.

“It appears to me that he is trying to damage prospects for the wind farm in the Senate before the members of his committee have a chance to issue a more balanced report,” said Chad Tolman, a member of the Sierra Club Delaware chapter.

Bluewater spokesman Jim Lanard said the company also received a leaked copy of the document over the weekend, adding that the document contained “major factual errors.” He attributed the contents to Randall Speck, an attorney hired by McDowell’s committee whose specialties include utility deregulation, energy regulation, and contract disputes.

“The draft report by the Washington, D.C., lawyer, Mr. Speck, reads like a Delmarva Power legal brief. Most of the arguments made in Mr. Speck’s draft have been made previously by Delmarva Power in their legal filings over the past few months,” Lanard said.

Although Bluewater is still reviewing the report, Lanard said, the company disputes issues ranging from cost estimates to job creation, the reliability of Delmarva’s present system and the environmental benefits of wind projects.

Sen. Minority Leader Charles L. Copeland, a member of McDowell’s committee, said he agreed with many of the draft report’s criticisms of Bluewater’s contract, but he also said the document needs a full committee review.

McDowell declined to comment on or release the draft report. But he acknowledged that a draft document was prepared by staffers before the other five members of the committee voted on it.

The draft report is based on a series of hearings in February and March to examine Bluewater’s proposal, the PSC process and alternative energy options.

The report’s contents have angered environmental groups supporting Bluewater and fueled new accusations that McDowell was trying to undermine the offshore wind project to benefit a different energy program, the Sustainable Energy Utility, that he now co-chairs.

Audubon Society reacts

“It was clear from the very beginning that Harris McDowell did not want this process to happen,” said Nicholas A. DiPasquale, conservation chairman for Delaware Audubon Society. “I think it’s shameful.”

Leaking of the draft fanned a movement Monday to force a resolution supporting the wind project passed last week in the House out of a Senate committee for final action, bypassing McDowell’s process entirely.

Bluewater wants to build a $1.5 billion, 150-turbine wind farm in federal waters 11 to 17 miles east of Rehoboth Beach. Delmarva Power would be required to purchase up to 300 megawatts. A $100 million, on-land, gas-fired plant would back up the wind farm. The total cost to ratepayers, including the purchase of power over 25 years, would be $5.6 billion, according go the draft report.

The PSC and agencies endorsed the plan after repeatedly modifying bidding procedures and exercising an “unprecedented” degree of control over negotiations between Bluewater and Delmarva, according to the report compiled for the committee after six hearings in February and March.

‘Hybrid’ plan ordered

After seeking formal proposals, the group ordered development of a “hybrid” plan that downsized Bluewater’s original offer while requiring a conventional power plant backup. That modification, the report said, was “not authorized” by the law that set the process in motion.

The draft document concluded:

•Lawmakers should reject the Bluewater project, in part because the PSC project “has not adhered to the General Assembly’s expectations.”

•The state should continue a related, PSC-supervised program requiring Delmarva to determine and meet its energy needs and clean energy options, including competitive bidding for land-based wind.

•Delaware should consider a fixed subsidy to promote offshore wind, similar to an ongoing effort in New Jersey rather than impose purchase requirements on Delmarva.

The report questioned nearly every aspect of the PSC process and recommendation.

Problems cited ranged from the PSC’s refusal to consider other offers and competing technologies, such as solar power and onshore wind. It also cited warnings that the offshore wind farm would be unreliable and more costly – averaging $25.84 per month by one estimate, or about four times higher than the $6.46 per month average cited by the PSC.

The report cited testimony from a regional power grid official that the wind project would not increase reliability in southern Delaware and would not force the shutdown of older, polluting power plant boilers on Delmarva.

Delmarva, PJM said, already has taken steps to bolster its system reliability, according to the report, but those improvements were not fully considered before Bluewater was selected. Delmarva was criticized, however, for waiting too long to pursue clean energy alternatives, including a recent proposal to buy power from on-land wind farms at rates lower than Bluewater’s.

McDowell defends report

McDowell said criticisms of the report reflect Bluewater’s unhappiness over its contents.

“I think it points out one of the problems: They want to be the only source of information,” McDowell said. He said the committee’s public hearings were open to the public, and said that the report evolved from an “exhaustive public record.”

Bill Yingling, Delmarva Power spokesman, said the company would withhold comment pending release of a final report.

McDowell said the committee might meet today to begin reviewing the draft report.

Senate Majority Leader Anthony J. DeLuca, D-Varlano, said last week the committee would meet behind closed doors for the review.
Sessions should be open

Sen. Karen E. Peterson, D-Stanton, a member of the energy committee, said she believed the sessions should be open to the public. She added that she disagreed with almost every recommendation in the report, but said she also believes that Bluewater’s project is in jeopardy.

“I don’t know if it’s salvageable,” Peterson said Monday. “It depends on whether or not Delmarva and Bluewater can work it out. Delmarva’s position at this point, if we force them to do something, is they’re going to follow through with the lawsuit.”

Critics have labeled the report a road map for Delmarva Power to file a lawsuit against the state.

State lawmakers in 2006 approved a measure requiring Delmarva to plan for its long-term needs and to seek new, stable, in-state supplies if required. That action was spurred by a 59 percent spike in electricity rates that followed a six-year rate freeze, and concern over the adequacy of local power supplies.

By Jeff Montgomery

The News Journal

15 April 2008

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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