Draft offshore wind farm report gets mixed reviews from legislators 

Lawmakers gave mixed views on a draft copy of the Senate Energy and Transit Committee’s renewable energy hearings report, which has been leaked to some legislators and others. The report recommends Delaware not pursue an offshore wind farm and challenges the Public Service Commission proceedings that led to the proposal.

A University of Delaware professor who received the leaked document says the report could leave a permanent stain on the state and could set the state up for a major lawsuit.
Following the tabling of a proposed power purchase agreement between Bluewater Wind and Delmarva Power, the Senate Energy and Transit Committee – headed by Sen. Harris McDowell, D-Wilmington North – held lengthy hearings to address some of the concerns about the offshore wind farm, including the cost of the power it would generate.

McDowell has been acknowledged by fellow lawmakers as an expert and authoritative figure in renewable energy. He chairs the state’s Sustainable Energy Utility.

MacDowell could not be reached for comment.

The draft report says the wind farm proposed by Bluewater Wind is not in the best interest of Delaware ratepayers because of the risk and cost associated with the project. It recommends the state pursue other options for green power generation. The report is also critical of the way the Public Service Commission (PSC) conducted its hearings on in-state renewable energy, which led to the Bluewater Wind proposal going into contract negotiations.

University of Delaware professor Jeremy Firestone has filed preliminary legal comments challenging the document.

“The draft McDowell report has manufactured legal arguments, is not well-reasoned, and appears to be an attempt to manufacture legislative history in support of the position it desires,” wrote Firestone of the report. He says it “is based on a cherry-picked set of witnesses that appeared before the committee.”

If the document is approved in its present form, Firestone says it will leave a permanent stain on the state and on the Senate.

The draft report charges the PSC did not follow its normal procedures for exploring facts and disregarded the recommendation of the independent consultant it hired. “Consideration of a long-term contract for new generation within the state has not proceeded as the General Assembly expected or intended,” says the report.

“From the moment House Bill 6 was passed, I don’t think it followed the specific guidelines. That is not a shocker,” said Rep. Joe Booth, R-Georgetown. Booth said the PSC deviated from legal guidelines from the beginning, but he said that has been well known.

Rep. Pete Schwartzkopf, D-Rehoboth Beach, agreed. “We expected the PSC to have hearings, hear testimony and make decisions. And that’s what they did. I’m not sure why Sen. McDowell continues to try to find fault with this process. If he didn’t think it was being done properly, why didn’t he say something before? He didn’t have a problem with it until Bluewater got the nod from the PSC,” Schwartzkopf said.

“To the extent there has been a violation of the law, it has been by the actions of this committee in its attempt to undermine and usurp the authority that was delegated to the executive branch in HB6 (in violation of separation of powers),” wrote Firestone.

In doing so, Firestone said the state could be setting itself up for a lawsuit to the tune of $10 million to $20 million.

“If you engage in actions that cross certain lines, you set yourself up for damage claims. Bluewater has spent $10 million, the other bidders spent lots of money and people in the public have spent lots of money. If this process is unlawfully derailed, the state is putting itself at risk,” said Firestone, although he said he knows of no one who has made a claim against the state.

Sen. George Bunting, D-Bethany Beach, also had not read a copy of the draft but said he saw it as an opinion. “I think the PSC acted appropriately and acted fairly in its hearings,” he said. While he acknowledged the project might result in higher energy prices as the report said it would, Bunting said the project’s benefits lie on the other side of the fence: in jobs created and in tourism and fishing attractions.

Schwartzkopf previously said he has no interest in reading the report. “The person who chaired the meetings has been an outspoken critic of the project from the start. The meetings were slanted and one-sided all the way,” he said.

Schwartzkopf also said he was highly offended that the committee brought in attorney Randall Speck. “In this economy, when we’re looking for money in every nook and cranny, it’s ridiculous to spend $35,000 or $50,000 on a hired gun to cross examine the PSC,” said Schwartzkopf.

University of Delaware policy professor Willett Kempton asked, “Why would a Senate committee hire a lawyer to cross-examine state employees? That is putting the state against its own employees.”

Criticizes PSC process

If the Bluewater Wind bid and bids from two other power producers were evaluated under HB6, the draft report says all three would have been rejected and a rebidding process would have possibly been started.

The draft report says the PSC unilaterally adopted a hybrid approach, which would involve Bluewater Wind’s 150-turbine wind park in the ocean off Rehoboth Beach, backed up by a natural-gas-fueled plant that would address reliability issues when the wind was less strong.

Firestone counters with, “Whatever problem may have been created by the four state agencies in May when they voiced their tentative approval of the hybrid approach was cured by a subsequent December order.” That Dec. 4 order said that on Dec. 18, the PSC, the Department of Natural Resources and Environmental Control, the Office of Management and Budget and the Office of Controller General would vote only on the power purchase agreement proposed between Bluewater Wind and Delmarva Power.

At the Dec. 18 PSC meeting, the vote on the proposed contract was tabled because the controller general said there was concern in the Legislature over the cost of electricity from the wind farm.

The hybrid option was still a possibility, but would be decided on later, after the Bluewater Wind project was approved, if it was, said Firestone.

The draft report says the Bluewater bid was less attractive than other bids submitted for consideration, but Firestone says there was nothing improper in the way the four state agencies Wind selected Bluewater Wind’s bid.

“The Bluewater contract is fully consistent with HB6,” said Firestone. HB6 requires the cost-effectiveness of a project be considered in light of whether it can produce price stability and reduce environmental effects.

But the report says in light of Delmarva Power’s recent request for bids from onshore wind power providers, the committee has an onshore benchmark to use as a price comparison.

“The Speck draft report is a document which I don’t think has the best interests of Delmarva Power ratepayers or Delaware residents at heart,” said Kempton, who recently released a paper criticizing Delmarva Power’s presentation of the cost of onshore wind as misleading.

House Concurrent Resolution 38, directing the controller general to approve the project, passed the House of Representatives on a 25-11 vote. That resolution has gone to the Senate Energy and Transit Committee.

By Leah Hoenen
Cape Gazette staff

Cape Gazette

18 April 2008