Electricity surcharge challenged; Four states, Del. included, say customers overcharged
The News Journal|Aaron Nathans|June 3, 2008
A surcharge on electric bills in Delaware and surrounding states that was designed to increase generating capacity hasn't delivered on its promise, four states are arguing in a complaint filed with the Federal Energy Regulatory Commission. The states of Maryland, Delaware, New Jersey and Pennsylvania filed the complaint late Friday, together with a coalition of electricity buyers and consumer advocates. They say the surcharge will overcharge electricity consumers in the 13-state territory in the PJM Interconnection grid by $12 billion between 2008 and 2011. As a share of that, Delmarva Power ratepayers in Delaware will overpay by about $125 million in "unjust and unreasonable" rates, the states claim.
A surcharge on electric bills in Delaware and surrounding states that was designed to increase generating capacity hasn't delivered on its promise, four states are arguing in a complaint filed with the Federal Energy Regulatory Commission. The states of Maryland, Delaware, New Jersey and Pennsylvania filed the complaint late Friday, together with a coalition of electricity buyers and consumer advocates. They say the surcharge will overcharge electricity consumers in the 13-state territory in the PJM Interconnection grid by $12 billion between 2008 and 2011. As a share of that, Delmarva Power ratepayers in Delaware will overpay by about $125 million in "unjust and unreasonable" rates, the states claim.
A surcharge on electric bills in Delaware and surrounding states that was designed to increase generating capacity hasn't delivered on its promise, four states are arguing in a complaint filed with the Federal Energy Regulatory Commission.
The states of Maryland, Delaware, New Jersey and Pennsylvania filed the complaint late Friday, together with a coalition of electricity buyers and consumer advocates.
They say the surcharge will overcharge electricity consumers in the 13-state territory in the PJM Interconnection grid by $12 billion between 2008 and 2011. As a share of that, Delmarva Power ratepayers in Delaware will overpay by about $125 million in "unjust and unreasonable" rates, the states claim.
"We agree that reliability and …
... more [truncated due to possible copyright]A surcharge on electric bills in Delaware and surrounding states that was designed to increase generating capacity hasn't delivered on its promise, four states are arguing in a complaint filed with the Federal Energy Regulatory Commission.
The states of Maryland, Delaware, New Jersey and Pennsylvania filed the complaint late Friday, together with a coalition of electricity buyers and consumer advocates.
They say the surcharge will overcharge electricity consumers in the 13-state territory in the PJM Interconnection grid by $12 billion between 2008 and 2011. As a share of that, Delmarva Power ratepayers in Delaware will overpay by about $125 million in "unjust and unreasonable" rates, the states claim.
"We agree that reliability and capacity is critical to the region," said Michael Sheehy, deputy director of the Delaware Public Service Commission. "But at what price?"
PJM Interconnection, which manages the regional electricity grid, has since 2006 allowed power plants to charge much higher "capacity" rates, which include a surcharge designed to make sure a power plant can deliver electricity anytime it is needed.
The higher rates were supposed to spur construction of new power plants for the constrained East Coast. But despite the higher rates, power companies have been slow to build the new plants, the complaint alleges.
Capacity charges in the PJM area increased by about 1,200 percent from 2007 to 2008, and now make up 20 percent of a Delmarva customer's bill.
According to PJM, generators are expected to provide 4,238 megawatts of additional electrical capacity by 2012. That includes Conectiv's plans to build a new 545-megawatt natural gas-fired plant near Delta, Pa.
But there are only expected to be 271 megawatts of new capacity online this year. The complaining states say it's unfair to charge ratepayers now for capacity that hasn't yet come online.
Ray Dotter, PJM spokesman, said that before the higher capacity charges were introduced, developers were not investing and building the resources that were needed.
Maryland's Public Service Commission chairman Steven Larsen led off a conference call Monday to discuss the complaint.
"We have to make sure we're doing everything we can to make sure ratepayers in the state are paying fair and reasonable and just rates," Larsen said. "We don't think they are."
Attorney Randall Speck, who is representing the states, said there was a strong incentive for generators of the power in the PJM area to withhold some supply to increase prices. PJM tried to mitigate this, but was unable to do so, he said.
Working for the Senate Energy and Transit Committee in March, Speck took the Delaware PSC to task for its actions leading to the selection of Bluewater Wind to build a wind farm off Rehoboth Beach.