Decision on wind project is due today; Agencies will decide whether Delmarva must sign Bluewater contract 

After months of proposals, concessions, public comment and back-and-forth bickering, four state agencies are expected to cast a decisive vote on whether to move forward with a proposed wind farm off the coast of Rehoboth Beach.

The Public Service Commission will first decide whether to order Delmarva to sign a 25-year power purchase agreement with Bluewater Wind, or let the project perish.

A key element of the decision will be whether to spread out the costs to all Delmarva customers, or even to all of the state’s electricity users. Doing so would reduce the premium each user would have to pay.

But representatives of the state’s smaller utilities bristled at the notion they might be roped into the contract. And some observers said that if such efforts require legislative approval, it would be the kiss of death for the wind farm.

The contract as it stands applies only to Delmarva standard offer service customers, who are largely residential and small-business customers.

Bluewater goes into today’s meeting with the powerful backing of the PSC staff, which has recommended approval of the contract, subject to spreading out the costs to all Delmarva customers.

If the agencies want to make Delmarva’s large business customers join in the wind power purchase, it would require a relatively straightforward procedure: the Public Service Commission would hold another hearing and approve a surcharge on all Delmarva customers.

With 297,663 customers in Delaware, Delmarva is the largest utility in the state, and serves as the default provider for most of the state’s customers. But the state has other, smaller utilities.

There’s the Delaware Electric Cooperative, with 68,000 members in Kent and Sussex counties. And nine municipalities, including Newark and Dover, have their own utilities as part of the Delaware Municipal Electric Corporation

Decision-makers are considering whether to make those electricity users buy the wind power as well.

In order to make that happen, the Legislature would have to pass a law. Delmarva officials have said that if the wind power contract goes forward, no contract should be finalized before the Legislature figures out how to spread costs statewide.

But if the agencies made such legislative approval a condition of the wind farm contract, it’s unlikely to advance, said Patrick McCullar, president and CEO of the Delaware Municipal Electric Corporation.

“They believe their opportunity to kill the project, which has been their goal from day one, is greatly enhanced if they get it back in the hands of the Legislature,” McCullar said of Delmarva.

McCullar’s group represents the nine municipal utilities, which also include New Castle, Middletown, Smyrna, Seaford, Lewes, Clayton and Milford. His member utilities “are already a part of this project as of May 2007, so there is no need for the state to mandate our participation.”

To date, the municipalities are the only utility in the state to sign a contract with Bluewater Wind.

“We’re waiting for everyone else to get on board,” said McCullar, who said his organization signed the contract to promote stable prices and environmental stewardship. It was under no obligation to do so.

The municipalities have some of the biggest industrial customers in the state, including DuPont, the University of Delaware, Kraft Foods and Dover Air Force Base, McCullar said.

“We haven’t heard anything negative from them,” McCullar said, referring to his industrial customers.

Nobody has contacted the Delaware Electric Cooperative to discuss the possibility of spreading costs to its members, Bill Andrew, its president and CEO, said Monday.

Andrew urged the agencies to leave his organization out of any solution.

The cooperative has long-term power supply contracts in place, including contracts that provide it with nuclear power through 2028, he said. The co-op has an ownership stake in that power plant, in central Virginia.

“We have processes, contracts, and ownership in place to meet the power supply needs for our members for many years to come,” Andrew said. “We’re a lot different from Delmarva.”

Andrew said his members have consistently paid the lowest rates in the state.

Forcing the cooperative to join in the Delmarva contract risks eliminating its price advantage, Andrew said.

“Our business plan is working for our membership,” Andrew said.

By Aaron Nathans

The News Journal

18 December 2007