Monday, September 17, 2007

Delaware's Energy Future: Who Determines the Public Interest?

When it comes to Delaware’s energy future, who determines the public interest?
When the Public Service Commission (PSC) and other state agencies directed Delmarva Power to open negotiations to bring wind power to Delaware, the company filed an appeal of the decision in court. That suit was put on hold pending the outcome of negotiations.
Friday, Delmarva filed the term sheets as required by the PSC, without actually agreeing to the terms. Just as it did when it filed suit to block the PSC’s decision, Delmarva is citing the interests of its customers as the primary reason for its recalcitrance:
As discussed further below, Delmarva cannot agree on certain key terms because the best offers proposed by the bidders pose unacceptable costs and risks on Delmarva’s electric customers.
In short, it is the position of Delmarva that the PSC and other state agencies made the wrong decision, and that agreeing to the negotiated terms based on that decision is not in the public interest.
Bluewater Wind and Matt Denn have publicly asked that Delmarva provide the methodology it used to reach this conclusion. Certainly, it would be useful to allow a public review of the methods and criteria used by Delmarva Power to claim that its conclusions about the negotiated terms are correct and that the other parties should acquiesce to the company’s views on the wisdom and even the legitimacy of the RFP process as directed under state law.
Delmarva Power is not the only informed party to the process. The PSC, Office of Management & Budget and the Department of Natural Resources & Environmental Controls have a legal, legitimate claim to represent the public interest under state law. Delmarva Power, on the other hand, has a legitimate responsibility to represent the interests of Pepco Holdings, Inc. and its shareholders.
Further, Delmarva Power is not the only knowledgeable private sector party to the process. Bluewater Wind, NRG and Delmarva’s sister company Conectiv have all negotiated terms that have been submitted to the PSC. In doing so, they have presumably acted in the interests of their investors. While these companies may offer arguments as to why their proposals would be in the public interest, they have not sued the state to prevent the process from going forward. Delmarva’s suit hinges on one crucial argument: that it understands the public interest better than any other party to the process.
When the PSC meets tomorrow, it will take up a proposed order to set November 30 as the deadline for filing a formal Purchase Power Agreement based on the term sheets delivered on Friday. From what I have learned, the PSC, which exists to protect the public interest, intends to move ahead with the timetable.


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