Thursday, June 21, 2007

Energy Negotiations Unlikely to Show Progress in Sixty Days

It has been nearly a month since the Public Service Commission (PSC) and three other state agencies directed Delmarva Power to begin negotiations with Bluewater Wind to supply wind generated electric power for Delaware.
The PSC, in Order No. 7199, expressed its intent that negotiations proceed on a relatively fast track:
We suggest conclusion of negotiations within a 30 to 60 day time frame maximum; however, to the extent that there is continuing progress we can accept some extension in that process.
I don’t see much hope for finding success in the sixty days. Conectiv Energy and Delmarva Power are separately challenging the decision as contrary to the language and intent of the Electric Utility Retail customer Supply Act of 2006 (EURCSA).
As noted here last week, Conectiv Energy filed this petition with the PSC to reconsider its decision, maintaining the agencies “drastically departed from EURSCA’s mandate to select the power generation proposal that results in the greatest long-term system benefits in the most cost-effective manner.
Yesterday, it was Delmarva Power’s turn to challenge the PSC’s decision, by filing an appeal in Superior Court. (The News Journal has the story.) In the appeal, Delmarva Power asserts that Order 7199 “violates the plain language and legislative intent of EURCSA.” Delmarva argues that the PSC is “requiring Delmarva Power to negotiate for power contracts…that may not result in the provision of stable, reliable and cost-effective power to Delmarva Power’s customers, as required by EURCSA…”
Earlier this week, I asked some of the parties involved in the negotiations how things were proceeding, understanding that talks are closed to the public. I received perfunctory replies from some of the participants, including this brief email from Matt Likovich at Delmarva Power:
Negotiations are confidential. Delmarva Power continues to negotiate in good faith and the discussions are moving forward at this time.
Bruce Burcat, executive director of the PSC, while understandibly reticent to say too much, was more forthcoming:
I can say that pursuant to the order of the four state agencies the Commission Staff retained a mediator to monitor and mediate when necessary the negotiations between Delmarva and the three bidders. My understanding is that the negotiations are proceeding on three separate tracks at this time. The PSC is not involved in the negotiations, because it will be a decision-maker after negotiations have ended. The PSC Staff has been providing the mediator with some technical assistance when necessary, but it has not been directly involved in the negotiations. The Staff will insert itself in the process on a very limited basis, if necessary. I can not say whether the parties are expecting to reach agreement within 60 days, but I can say that the mediator has been retained to move the negotiations to agreement as quickly as possible. There is always a possibility that the parties will be unable to reach agreement. The four state agencies will reconvene around the 60 day point to determine the status of the negotiations and what steps may be needed at that point.
Given that Conectiv Energy and Delmarva Power are both fighting the decision, I see almost no hope that we will see any progress in the negotiations, which means that the state will have soon be facing the decision of how to proceed with in the face of these legal challenges.


Anonymous Anonymous said...

Bluewater Wind should be licensed to proceed with construction. With many eastern states mandating power from renewable/green sources, they should find a ready market for all the power they will produce. Delmarva can be constrained by law to not charge its customers for purchased power at any rate higher than that being charged by Bluewater. The only problem might be the capacity of high voltage transmission lines in this area.

2:05 PM, June 22, 2007  
Blogger Tom Noyes said...

It should be remebered that in May the Delaware Municipal Energy Corporation (DEMEC) announced a deal to purchase $200 million to $300 million of electricity from Bluewater Wind over a 25 year period. That should change the cost dynamics for Delmarva, though I don't know if they have run the numbers.

2:19 PM, June 22, 2007  

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