Power plans on the agenda for Thursday; State agencies will meet to OK Bluewater, discuss backup plant 

A new Delaware power plant burning natural gas is still worth pursuing, but it should be handled as part of Delmarva Power’s long-term planning process for acquiring electricity, the Public Service Commission staff has recommended.

The staff, whose counsel the PSC usually follows, also recommended giving final approval to the compromise between Bluewater Wind and Delmarva for a wind farm project off Rehoboth Beach. The recommendation was signed by James Geddes, PSC staff counsel.

Four state agencies are scheduled to meet Thursday to vote on whether to give their blessing to the electric power purchase agreement between Bluewater and Delmarva, forged in June after the state threatened to order Delmarva to buy Bluewater’s electricity.

In 2006, lawmakers empowered the four state agencies to order Delmarva to sign contracts for in-state sources of electricity to stabilize prices and increase reliability. This came after major price increases to Delmarva customers.

In May 2007, the PSC staff recommended those sources be Bluewater’s offshore wind farm and a natural gas-fired plant in Sussex County to provide a stable backup at times when the wind farm was not producing at its peak. The recommendation gave the Bluewater project, which had already captured the public’s imagination, political momentum.

On Thursday, the four agencies are also scheduled to give some direction to the natural-gas plant proposal, which has been less popular politically.

The PSC staff originally recommended the backup plant in large part because it would provide electricity when the wind isn’t blowing as hard. But the contract compromise will result in Delmarva’s buying less electricity from Bluewater, which means there won’t be as much locally generated wind power to back up.

In its filing Friday, the PSC staff said there was a second reason it suggested the backup plant: reliability. A new power plant on the Delmarva Peninsula would help the state become less dependent on transmission lines and the price volatility of the transmission market, the staff wrote.

Delmarva Power’s parent company, Pepco Holdings, plans to build a new transmission line through Delaware, but it’s unclear how that project will develop, the staff wrote.

Skeptics, including Delmarva and environmental advocates, have increasingly spoken out against the natural-gas plant as fuel prices have increased.

Unlike the Bluewater Wind process, the staff suggested using the Integrated Resource Planning process, in which Delmarva would create a long-term plan to acquire electricity. The IRP is a fully litigated procedure conducted by the PSC with sworn testimony, discovery and cross-examination.

In its filing on Friday, Delmarva attorney Todd Goodman agreed with the long-term planning approach, saying it would be a fuller analysis of whether the state needs new generation and, if so, where it should be located, what fuel should be used and how costs should be allocated among Delmarva Power’s customers.

Controller General Russ Larson said lawmakers wanted more than the PSC involved in making the major decisions regarding new power generation.

“The biggest part of the decision is likely going to be made Thursday,” Larson said. But he said the discussion over the backup plant is getting increasingly technical, which is the PSC’s area of expertise. “This is what they do.”

By Aaron Nathans

The News Journal

29 July 2008