Library from Delaware
The topsy-turvy world of Delaware energy politics has taken another turn as the staff of the Public Service Commission pronounced an offshore wind proposal is too expensive. The PSC staff said Bluewater Wind's proposal to pass along the costs of commodities, such as steel for the turbine towers, was potentially too expensive for electricity customers. ...But the solution to that problem is to put a cap on costs. If the costs go above the cap, let Bluewater Wind absorb costs or -- if it's wildly expensive -- end the project.
A plan to make Delaware the site of the country's first offshore wind-powered electric generator could get scrapped. Delaware's Public Service Commission and the independent consultant it hired released reports Monday saying the project would be too expensive for customers and therefore recommended against a contract between wind energy company Bluewater Wind and electric utility Delmarva Power. It also recommended against a plan for a backup natural gas power plant. ..."Instead of ‘sharpening its pencil,' Bluewater has used the negotiations to dramatically escalate the potential cost of the project to Delmarva Power and its standard offer service ratepayers," the PSC report said. The PSC said that Bluewater's contract terms also shift all risk associated with the new price escalators and that a one-year delay further increases the ratepayers' risk for higher prices.
A proposed offshore wind farm off the coast of Rehoboth Beach was dealt a serious setback Monday, after the Public Service Commission staff released a report criticizing the plans as too financially risky to ratepayers. The project, in its current form, could add as much as $55 to Delmarva ratepayers' monthly bills, the 91-page staff report said. The Delaware PSC staff lauded Bluewater for offering to add a significant amount of pollution-free electricity to the grid, but contended that the 150-turbine proposal is far different from the 200-turbine version Bluewater submitted last year. ...the staff calculated the new proposal results in a premium of $11.71 per megawatt hour. That's a conservative estimate, the staff suggested. If commodities continue to increase in price as they have in recent years, coupled with a delay in construction, that could push the additional price per megawatt hour above $55, the report said.
Delaware's Public Service Commission today is set to release its analysis of proposed contract terms between three energy companies for the country's first offshore wind-powered electrical generators. ..."Bluewater still believes that over the 25-year life of the project, a wind-hybrid project will save Delaware (electric) rate payers money because the market model for gas or other base load providers will cost more because of the carbon taxes related to climate change, global warming and sea level rise," Mr. Lanard said.
A proposal to build a wind farm off the Delaware coast would be too expensive for ratepayers, and is not in the public interest in its current form, the Public Service Commission staff said in a report released today. ...The report suggested that negotiations between Bluewater and Delmarva led to dramatically higher prices. Ratepayers would bear those added costs, the staff wrote. The proposal as it stands is far different from the one Bluewater first submitted, the staff wrote. The staff criticized Bluewater's proposal to pass along to Delmarva increases in the cost of commodities like steel and fuel, noting that the terms allow the price to Delmarva to increase, but not decrease. ..."Although staff would like to be part of the effort to pioneer offshore wind power to take control of Delaware's energy future, such a recommendation is - at this time - not in the public interest and is not consistent with the underlying principles of the Electric Utility Retail Customer Supply Act of 2006."
The manufacturer picked to supply a proposed Delaware wind farm has halted production of its offshore turbine because of a faulty component. ...Of Vestas' 96 V-90 turbines installed off the coast of Europe, between 10 and 15 are idle as workers fix the gears, said Anders Soe-Jensen, president of Vestas Offshore. All of the gearboxes will eventually have to be replaced, if they haven't been already. ...Delmarva Power spokesman Bill Yingling said his company is disappointed Bluewater Wind didn't alert Delmarva to the mechanical problem during negotiations for a power purchase agreement. ..."It [offshore wind] will grow far bigger, but we do not believe, in the foreseeable future, it will become as big as people believe. Media coverage for offshore far exceeds reality," Kruse said. There are about 15,000 megawatts of wind power available globally, but only about 198 of those megawatts come from offshore production, he noted.
... a Long Island man who has crunched offshore wind farm numbers says it's unclear from Bluewater's financial documents how it intends to accomplish that and remain financially viable. ...But Delmarva is a reluctant participant, having been forced by four state agencies to negotiate with Bluewater. Delmarva officials have fretted about the cost of wind power to their ratepayers, pointing out that the Long Island project is on the brink of being canceled because it cost too much. Bluewater spokesman Jim Lanard said his company will be able to build wind projects "considerably cheaper" by paying less for the same types of components. Lanard said Bluewater can beat Long Island wind farm developer FPL Energy's price on turbines, labor, ship rentals and installation costs. ...The Bluewater contract includes "escalators" for increases in the price of commodities such as steel, copper, aluminum and lead, to cover increases during the two-year period between the time the contract is signed and executed. ...A more important hedge would be to account for increases in the cost of finished turbines, but that's missing from the term sheet, Dale said.
A multibillion-dollar proposal to supply Delaware with electrical power from offshore windmills would actually increase air pollution within the state, critics say. Because winds don't always blow strongly enough to generate power, windmills would require backup electricity supplies to meet anticipated demand. The pending offshore wind proposal includes a backup natural gas power plant that could also produce power for sale in other states. ...The added pollution and extra cost have led some to question both the wind and the gas plant project. Delmarva and others called last year for conservation and better reliance on regional power supplies to meet future demands, instead of a massive new investment.
An upcoming decision by the Sussex County Board of Adjustment will chart a course for the future of a new county business, and it could also set a precedent for the fate of a readily available alternative energy source. NextGen Energy Inc., an alternative energy company in Millsboro, wants to get into the wind turbine business but has run into a major stumbling block. Under current county regulations, windmills for residential or commercial use on lots of fewer than five acres are not permitted.
"There are a number of us who are concerned about how to put this thing in the proper context, as opposed to just plowing forward with one proposal from one company to do one thing," Keifer said. Too few groups are asking questions about Bluewater's plans, and too many are accepting the company's predictions on faith, he said. "There's a place for wind power, but it's not a question of religion,"...
NRG Energy and Conectiv Energy traded accusations that the other's proposal to back up a wind farm is impractical. The companies are vying to build a natural gas plant to back up Bluewater Wind's proposed offshore wind farm when the wind isn't blowing as hard. The two plants would provide electrical power on a long-term basis to Delmarva Power.
A process has been unfolding to find a new state energy source for more than a year. In a few months, the end of that process will mean that an offshore wind farm will have won the state government's approval or it didn't. ...The process, created by the General Assembly, is too far along to tinker with now. Let it continue without interference or the appearance of meddling.
Some lawmakers remain concerned about the price of offshore wind energy, which has not yet been used in this country. Copeland said he was concerned the deal would lock ratepayers into higher bills than if electricity suppliers competed on a regular basis to fill Delmarva's required renewable-energy purchases. He said the public should be able to have its voice heard through their elected representatives. "We ought to let private investors compete against one another to get us the best price point and price stability. I think the marketplace would do that better than some regulatory regime," Copeland said. He said he wants to make sure low-income residents can afford wind power.
Word of the ownership change arrived as the Public Service Commission was slogging through Bluewater's proposal for a more than $1.6 billion, 450-megawatt project that would supply Delmarva Power under a long-term contract.
An Australia-based, global energy and investment company has purchased a controlling interest in Bluewater Wind LLC, the company now seeking permission to build 150 wind turbines east of Rehoboth Beach.
Delmarva Power said a proposed 150-turbine wind farm poses extra costs and risks for its customers, setting the stage for a potentially contentious review by state officials who had hoped to move quickly toward a final contract. Although its numbers were similar to those Bluewater Wind released on Thursday, Delmarva said there were many areas where the two companies had not reached agreement, including the start date, as well as the amount of energy provided in any given hour. The terms were included in a document Delmarva released Friday.
Friday is the deadline for Delmarva Power to release details of agreements with three power companies to provide stable-priced electricity for the next 25 years. Homeowners, environmentalists and state officials are awaiting data to see if the wind farm will offer a competitive price, as well as whether the wind farm will be big enough to make a sizable contribution to the state's electricity supply. ...
Bluewater Wind will build 150 energy-producing turbines off the coast of Rehoboth Beach by about 2014 at an estimated cost of $1.6 billion, according to a statement released this afternoon by Bluewater. ...Bluewater spokesman Jim Lanard put it more bluntly: "Our biggest concern is that Delmarva has a secret black box they may use to try to blow up the process." Delmarva would pay 10.59 cents per kilowatt hour for the wind energy, McGonigle wrote. That's 1.05 cents higher than Bluewater's original bid.
... Delmarva, unhappy it is being forced to buy power in the first place, hopes to minimize the amount of energy its buys on a long-term basis. The power company is concerned about the cost of wind power and has long contended it wants to protect its customers from having to pay for excess energy. In May, the Public Service Commission and three other state agencies ordered Delmarva to negotiate with Bluewater Wind for a 200-300 megawatt offshore wind farm.
Critics have said the wind farm plan would include heavy up-front costs for building the turbines and installing them at sea. But Jim Lanard, spokesman for Bluewater Wind, said wind power will end up being less expensive than traditional fossil fuels once the government begins taxing emissions.