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Public Service Commission issues report on Bluewater windpower proposal

This week's Public Service Commission staff report on future electric power supply has raised renewed debate - not only among energy suppliers but also among academics, politicians, advocacy groups and citizens. ...Bluewater was disappointed but hopeful and Delmarva Power, hesitant from the beginning to negotiate with Bluewater, commended the report, saying, "So far, our analysis also confirms that the price risks associated with Bluewater Wind's proposal are too high. We support the conclusion that the Bluewater Wind proposal is not in the best financial interests of our customers." ...Sen. Charlie Copeland, R-Wilmington, said, "The report confirms the concern I've had all along that the cost to the consumer is ill-defined. While we all want the wind farm to go ahead, we shouldn't make 25 percent of consumers handle the cost when we don't even know what it is."

This week's Public Service Commission staff report on future electric power supply has raised renewed debate - not only among energy suppliers but also among academics, politicians, advocacy groups and citizens.

The report, released Monday, Oct. 29, shot down the Bluewater Wind proposal for an offshore 150-turbine wind farm that the commission had previously recommended as the best option for long-term power supply to Delmarva Power. Under a hybrid plan, if accepted, backup power to the wind farm would be generated by a natural gas plant run by either NRG Energy or Conectiv.

Term sheets, the results of negotiations between Delmarva Power and each of the three bidders, were submitted to the Public Service Commission (PSC) in September.

The staff report was the result of analysis of the term sheets by commission staff and an independent consultant.

The primary concerns listed by the staff were related to rising costs.

The report found "the new Bluewater proposal has little relationship to its prior bid." In May, when the commission selected Bluewater's bid, it requested the size of the wind farm be reduced from 200 to 150 turbines.

Jim Lanard, Bluewater spokesman, said, "We are... more [truncated due to possible copyright]  

This week's Public Service Commission staff report on future electric power supply has raised renewed debate - not only among energy suppliers but also among academics, politicians, advocacy groups and citizens.

The report, released Monday, Oct. 29, shot down the Bluewater Wind proposal for an offshore 150-turbine wind farm that the commission had previously recommended as the best option for long-term power supply to Delmarva Power. Under a hybrid plan, if accepted, backup power to the wind farm would be generated by a natural gas plant run by either NRG Energy or Conectiv.

Term sheets, the results of negotiations between Delmarva Power and each of the three bidders, were submitted to the Public Service Commission (PSC) in September.

The staff report was the result of analysis of the term sheets by commission staff and an independent consultant.

The primary concerns listed by the staff were related to rising costs.

The report found "the new Bluewater proposal has little relationship to its prior bid." In May, when the commission selected Bluewater's bid, it requested the size of the wind farm be reduced from 200 to 150 turbines.

Jim Lanard, Bluewater spokesman, said, "We are disappointed with the outcome but we very much appreciate the PSC staff's offer to continue a dialogue with Bluewater. We're confident that through working with the PSC and its independent consultant, we can find a solution that protects the ratepayers and protects the environment."

Bluewater was disappointed but hopeful and Delmarva Power, hesitant from the beginning to negotiate with Bluewater, commended the report, saying, "So far, our analysis also confirms that the price risks associated with Bluewater Wind's proposal are too high. We support the conclusion that the Bluewater Wind proposal is not in the best financial interests of our customers."

Criteria questioned

University of Delaware Professor Jeremy Firestone, active on the issue of an offshore wind park for Delaware since Bluewater first proposed its plans, has his own concerns about the PSC report.

Firestone expected price to be an issue as a result of the contract's price escalators, which are seen as a source of ratepayer risk. Still, he said he was surprised that the staff report did not anticipate a price increase. In the May 8 PSC meeting, Bluewater Wind President Peter Mandelstam and University of Delaware professor Willett Kempton both pointed out to the commission that decreasing the size of the wind farm would increase the price of power it produced - and the commission accepted that point.

Firestone also said the report judges proposals for wind and natural gas on different criteria.

The natural gas price estimates given by the consultant rely on federal Energy Information Agency forecasts, but projections for currency fluctuations and commodity costs related to wind were largely ignored.

Firestone said the consultant instead relied on data from the last three years in which commodity prices and the cost of turbines increased while the value of the dollar fell sharply.

This inconsistency, said Firestone, puts wind at a disadvantage in the report.
He said that the parties can still reach a favorable agreement, but he is also concerned about price escalators in the contract. He continues to promote the idea of a price cap on the contract.

State Treasurer Jack Markell also questioned the disparity in comparison. "If we look at the worst-case scenario for steel, we should look at an apples-to-apples comparison with other fuels - coal, oil, and natural gas."

Still, Markell cautioned that the cost of wind power is a serious issue. "The value to working families of price stability is why we started down this path in the first place," he said.

More input called for Green Delaware, an environmental advocacy group, said in a press release, "To put it mildly, we are disappointed in this report. It offers some valid concerns about the Bluewater proposal as it now stands, but in many ways it seems more a ‘hatchet job' than a fair and balanced evaluation." Green Delaware would like to see more emphasis put on the environmental and health benefits the state would experience by cutting emissions and plant pollution. The group emphasized the importance of public input and participation.

Sen. Charlie Copeland, R-Wilmington, said, "The report confirms the concern I've had all along that the cost to the consumer is ill-defined. While we all want the wind farm to go ahead, we shouldn't make 25 percent of consumers handle the cost when we don't even know what it is."

Delaware Lt. Gov. John Carney commented, "I don't think it is time to throw in the towel. There are several steps left in the process and we should continue to push forward to find a workable solution for the offshore wind project...Our overall goal should be to keep offshore wind a viable potential option."

Carney raised the issue of the benefits of a national energy policy aimed at combating global climate change. With tax incentives for clean energy and taxes on carbon emissions, the pricing for a project like Bluewater's would be much different, he said.

Consultant Walter Bryan of Lewes called wind-generated electricity the wave of the future. He expressed his frustration with the long process of examination and approval. "As in any democratic political process there are so many hurdles and issues to deal with it becomes prohibitive sometimes. I just hope that the supporters of wind power have the perseverance to endure the process."

Republican gubernatorial candidate Mike Protack said, "The concern displayed by some legislators over the costs of the proposed wind farm is a valid concern. However, the ‘nail in the coffin' statement on the wind farm proposal is very shortsighted. The only nail in the coffin is a nail in the future of the state of Delaware if we do not act now for the future of Delaware."

Gov. Ruth Ann Minner's office did not return calls for comment on the report.

Written comments on the report can be filed by Monday, Nov. 12.

In response to the findings of the Public Service Commission staff report, anyone may file written comments with the commission by Nov. 12.
They will be added to the record of information related to the Bluewater Wind proposal.

Comments will be considered along with the PSC staff report, term sheets, and all other relevant information by the Public Service Commission, the Office of Management and Budget, the Office of the Controller General and DNREC.

The PSC has scheduled a Tuesday, Nov. 20 meeting at the House Chambers at Legislative Hall.

During that meeting, discussion and presentations will be permitted. The format and length of discussions will be determined by the commission chair.


Bruce Burcat of the PSC wrote, "A decision [on the proposal] could be reached at that meeting, but it is possible that further consideration or the decision could be deferred until a later time." The decision depends on unanimity, said Burcat. "

Those who wish to file comments regarding the PSC staff report or the wind proposal in general can email them to karen.nickerson @state.de.us or post them to Karen Nickerson, Secretary, Delaware Public Service Commission, 861Silver Lake Blvd., Suite 100, Cannon Bldg., Dover, DE 19904.

Contact Leah Hoenen at leah@capegazette.com


Source: http://www.capegazette.com/...

NOV 2 2007
http://www.windaction.org/posts/11729-public-service-commission-issues-report-on-bluewater-windpower-proposal
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