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State looks at buying Bluewater electricity; Municipalities may take more, too  

Delaware officials are exploring whether the state can join in the purchase of power from a proposed Bluewater Wind offshore farm and help coax Bluewater and Delmarva Power closer to a long-term contract.

Delmarva has resisted a 25-year contract endorsed by a state arbitrator that would require it to buy about a quarter of its electricity from Bluewater’s wind farm. Delmarva has said the proposed contract makes its customers buy too much electricity at too high a cost and wants the financial burden spread among more buyers.

So the utility is negotiating with Bluewater, a subsidiary of Babcock and Brown, to reduce the size of its proposed purchase. Bluewater has said it needs a contract of a certain size to make its project cost-effective, warning that as its project shrinks, the price of its electricity would go up.

In private negotiations, Senate Majority Leader Anthony DeLuca, D-Newark, has been pressing for a compromise that would bring in other buyers to help make the project work.

The Delaware Municipal Electric Corporation, which represents nine local government utilities, is considering an increase in the amount of electricity it would buy from Bluewater under a separate contract. A state purchase would add another piece to the puzzle, officials say.

“What really needs to happen here – there has to be a core, there has to be some start to this project,” said Patrick McCullar, the municipal electric corporation’s president. “Once that core begins, then many interested parties are going to come in and start taking pieces and grow the project.”

The state could be one of those customers, said Jennifer Davis, director of the Office of Management and Budget, on Tuesday.

The state buys power from the city of Dover for its buildings in that city. But to cover buildings in the Delmarva service area, Delaware has contracts totaling 213,000 megawatt hours with Pepco Energy Services, Constellation New Energy and Amerada Hess.

The Bluewater project, which would start up about 2014, would supply Delmarva with about 1.1 million megawatt hours per year under the state-arbitrated contract. The two Democratic gubernatorial hopefuls – Lt. Gov. John Carney and Treasurer Jack Markell – both say they support the idea of the state buying Bluewater power after state contracts with suppliers expire in 2010. Rep. Joseph Booth, R-Georgetown, sponsored legislation to that effect that passed the House in April.

Large state-owned buildings that sit in the Delmarva service area include the Carvel building in Wilmington, the New Castle County and Sussex County courthouses, and the Herman Holloway Campus of the Department of Health and Social Services. The state owns or leases numerous smaller buildings.

Bluewater spokesman Jim Lanard said Tuesday that, despite the potential for a smaller Delmarva buy if other parties join in, Bluewater’s goal remains the price set down in the state-arbitrated contract.

“We believe we may be able to achieve that goal. We’re working hard to get there,” Lanard said.

Lanard said it’s unlikely the state’s piece of the project would be settled by the end of this month, generally seen as a deadline for Bluewater and Delmarva to get their deal done. That deal is not dependent on final resolution of additional purchasers of power, including the state government, Lanard said. But he said the state, and other possible buyers, can help influence the Delmarva contract this month.

Delmarva spokeswoman Bridget Shelton declined to comment on the negotiations.

By Aaron Nathans

The News Journal

11 June 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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