The often-confrontational process that led to the nation’s first contract for offshore wind power could cost Delmarva Power customers $4.3 million.
It is one part of Delmarva’s long-running $24.2 million rate case that is expected to be resolved next month at the Public Service Commission.
From 2006 to 2008, Delmarva answered a state mandate to search for new, in-state sources of electrical generation to promote reliability and stabilize prices.
The bidders included NRG Energy, which proposed a coal gasification plant; Conectiv Energy, which wanted to build a natural gas plant; and Bluewater Wind, a new company that floated the then-novel idea of an offshore wind farm.
Ultimately, Bluewater came out on top, and Delmarva signed a long-term power purchase contract with the company in 2008 before it was purchased by NRG last year. NRG-Bluewater hopes to build the wind farm off the Delaware coast in several years.
But the road to get to a contract was long, with Delmarva initially opposed to such a long-term purchase. The rate request pending before the Public Service Commission would allow Delmarva to recoup the money it spent on lawyers, consultants and other related costs.
“There were a lot of studies,” said Bridget Shelton, Delmarva spokeswoman.
The request excludes any direct advertising Delmarva conducted, including radio and newspaper ads that argued against the proposed wind-farm contract as it stood at the time, Shelton said.
The original proposal for the wind farm was twice the size of the project that Delmarva eventually agreed to, under pressure from lawmakers and the public.
Under Delmarva’s rate-case proposal, the costs would be spread out over 10 years and would be added to the distribution side of the customer’s bill.
It is unclear how much each customer would have to pay if Delmarva receives its full request. That is because the PSC would have to rule whether only residential customers or all customers, including businesses, would share in the costs. And the PSC would need to rule on whether the costs would be the same from customer to customer.
If the costs were divided evenly and charged only to residential customers, those customers would pay 13 cents more per month for the next 10 years.
The PSC staff and the Division of the Public Advocate announced last week they had reached a settlement in principle with Delmarva over the entire rate case, but the details have not been made public.
PSC ombudsman David L. Bonar declined to comment on the merits of the request.
Jeremy Firestone, an associate professor at the University of Delaware who argued in favor of the Bluewater contract, said the PSC should weigh the added value of Delmarva’s reports in deciding how much ratepayers should fund.
But, he said, ratepayers do hold some financial responsibility, as they would under any of Delmarva’s bidding processes. “It was something that was ordered by the Legislature,” Firestone said.
“In the big picture, it’s not that much,” Firestone said. “And to a certain extent, we should be looking forward.”
Delmarva is seeking another $3.6 million for other state-mandated long-term energy planning costs.
Other issues in the rate case have been more controversial. Delmarva wants ratepayers to replenish its pension fund after it took a hit on the stock market.
Delmarva is seeking a higher rate of return during economically challenging times.
And the utility got behind a controversial plan called “decoupling,” that would restructure bills to insulate Delmarva from revenue drops that could come with energy conservation.
|Wind Watch relies entirely
on User Funding