Delmarva Power President Gary Stockbridge says his utility has been “playing defense.”
While at times appearing to be dead in the water, the Bluewater Wind offshore wind project off the coast of Sussex County continues to enjoy widespread support. It comes despite Delmarva’s claims that the project could raise utility bills 20 to 50 percent for its rate-payers. Numbers vary, although the utility seems to have settled on a $240 a year figure.
Lt. Gov. John Carney, locked in a tough race with fellow Democrat State Treasurer Jack Markell, recently used a recorded telephone message championing the Bluewater proposal.
Both Delmarva and Bluewater have been engaged in advertising campaigns, as they make their case. That has led to legislation to bar Delmarva from passing along the costs of advertising to ratepayers.
Delmarva has also responded by seeking bids on land-based windpower projects, primarily in Maryland in Pennsylvania, with Delaware Electric Cooperative and other utilities joining in the proposal. Delmarva claims land-based wind is a proven form of power generation.
Final approval for the Bluewater project rests with the Delaware General Assembly, although Delmarva seems certain to take any approval of the project to court. Last month, Stockbridge sat down with Delaware Business Ledger Editor Doug Rainey to discuss the project.
There have been criticisms that this is “virtual wind power” and has no impact on the air we breathe in Delaware. Is that a valid argument?
Stockbridge: Many people believe that if Bluewater is built, Indian River (coal-fired plant in Sussex County) will be closed. That isn’t true. Wind power is not base load generation (typically coal and nuclear power). The one way to shut down Indian River – we’re not advocating closing it – is to bring the Mid-Atlantic Power Pathway to the region. The pathway is a $1 billion power line that would run from the Washington, D.C. area to New Jersey.
Wouldn’t onshore wind farms be built with or without Delmarva buying power. It’s likely but it means that power will go on line a little sooner.
Stockbridge: We’re not against offshore wind. We believe it a technology in its early stages.
Delmarva has continued to claim in advertisements that offshore wind is unproven. Yet, it has been operating off the coast of Denmark for three years. Don’t we have enough of a track record to determine whether it works or not?
(Stockbridge first pulls out articles illustrating the difficulties of offshore wind in Europe. It includes reports of manufacturing and reliability problems that have hit land-based wind projects in Germany, a leader in wind generation technology. The stories also indicate the race to bring wind power to the market and a sharp increase in steel prices have resulted in backlogs of orders and parts shortages).
Stockbridge: Offshore wind is in its infancy and faces major challenges offshore. Existing offshore projects are heavily subsidized and long-term reliability remains uncertain. Generators could wear out before the end of the (Bluewater) contract. Who would absorb that cost? (Bluewater has suggested rates will remain steady throughout the contract).
Would your company be open to a regional approach involving the congressional delegations and governors of nearby states to come up with a way to spread the risk of wind power projects and create and investment and tax environment that would work in their favor?
Stockbridge: The answer is yes. Spreading the costs among a wider range of rate-payers reduces the risks of a technology in its infancy. The reality is utilities are governed by state regulators even though the grid does not stop at the state line. When we looked for partners for the Bluewater Wind project, they (utilities) ran the other way.
Conservation is a promising area. I know you have a smart meter proposal on the table. Is the Delaware Public Service Commission dragging its feet on this issue and others? (The smart meter would allow customers to monitor electricity use and allow the utility to briefly reduce power during peak periods.
It’s a difficult time for all of us. The Public Service Commission has a lot on its plate. A great deal of time has been taken up with offshore wind power.
There is a lot of discussion about clean coal and yet scientists say a breakthough in this area may be the equivalent of a man on the moon program. Given that scenario, doesn’t offshore wind power seem more viable?
We are not opposed to offshore windpower. Again, the more you spread out the costs among more rate-payers, the easier it is to deal with the risk. PJM (the manager of the regional power system) says windpower can account for no more than 20 percent of total power without disrupting the grid. Technology will continue to advance, whether it comes from clean coal or elsewhere.
Do your costs projections for Bluewater Wind include a moderation in the rise in the price for coal and natural gas at some point? If so, is that realistic, given the energy demands of China, India and other developing nations?
Natural gas has actually dropped a little and we have not seen big jumps in power prices. (Delmarva buys power under contracts that expire in different years as a way to avoid major jumps in rates.)
Another possibility is using plug-in hybrid batteries to power the grid at off times (PJM is looking at that). Would that be another area worth exploring?
We are supporting that initiative and others. Storing power in batteries is in its earliest stages of development. Storage is another possibility in regard to windpower. It’s another argument against signing a long contract with Bluewater. In the next couple of decades, storing electricity from wind generation could occur and we would be left with old technology.
$240 a year is a lot of money, but doesn’t the issue of a clean environment go beyond dollars and cents?
Our customers have told us they want wind power and we’re responding in a way that keeps money in the hands of ratepayers.
6 June 2008