Friday, December 07, 2007

Not Particularly Transparent: Part 3

Last week, Delmarva Power spokesman Bill Yingling made a startling admission in a letter to the News Journal:
Delmarva Power recently discussed in the media an estimated figure of more than $20 billion in relation to the cost of a proposed offshore wind farm and backup power generation facility in Delaware (The News Journal Sunday Perspective, Nov. 18).
This figure did not accurately explain the costs. We at Delmarva Power believe it is important to step forward and correctly clarify this figure on an important public issue.
Correctly stated, this figure represents the potential total cost of power supply for all Delmarva Power standard offer service in Delaware for 25 years -- rather than the total cost to customers for just the wind farm and a backup provider.
Of this total amount, Delmarva Power estimates that about $5 billion would go to Bluewater Wind to cover the cost of electricity from the wind farm. Another estimated $4 billion to $5 billion would pay for backup power supply for the times when wind is not sufficient to generate electricity.
The balance would cover the cost of electricity that Delmarva Power must buy through other arrangements to meet the rest of the power supply needs for standard offer service customers, because the wind farm and backup provider would only meet a portion of our customers' needs.
The projected monthly per-customer impact that Delmarva Power has cited in this matter still apply and remain unchanged.
Delmarva Power recognizes this mistake and appreciates the opportunity to clear up any confusion this may have caused.
William R. Yingling, Director of communications, Delmarva Power, Newark
In response, I emailed Mr. Yingling:
I appreciate your willingness to publicly acknowledge a mistake in Delmarva's projected cost of wind power. The blizzard of numbers flying around has made it difficult for even the best informed observers to evaluate the costs and benefits of the proposed wind farm.
I have two questions about the numbers cited in your letter:
First, as to the $5 billion you cite as the cost of electricity from the wind farm, can you tell me the cost per MWh (or KWh) used to estimate that overall cost?
Second, as to the $4 to 5 billion for backup power, is this the total cost of backup power or the difference between the cost of backup power and the cost of electricity if Delmarva continued to buy power as it currently does?
I was struck by the comments at the PSC meeting last week in seeking apples to apples numbers. Your openness in being willing to acknowledge an error should help us better understand the decision before us.
After an initial reply in which he said he would look into my question, I got this response five days later:
Dear Mr. Noyes,
In response to your inquiry, I recommend that to get a full understand our position around our estimated cost of this proposed project to consumers you should refer you to the Delmarva Power website,
http://www.delmarva.com/.
Under the section "Reports of Interest" you'll find reports from Pace Global Energy Services and ICF International analyzing the proposal.
I appreciate your interest in the subject and I thank you for your inquiry.
Sincerely,
--- Bill Yingling
The Pace report is the one described by Jeremy Firestone as "not particularly transparent." (See my posts on the report, Part 1 and Part 2.) I consider myself better informed than most on this topic, and still have trouble making sense of Delmarva's numbers. Professor Firestone offered this simple way of understanding the numbers:
Multiply 22.5 by .24 (the proportion of load served by the project); you should get about the 5 billion.
That was easy. The $5 billion is the total spent on wind power over the 25 years of the project, not the extra cost to ratepayers Delmarva Power likes to talk about.
Last month, the Public Service Commission and other state agencies asked the PSC staff to try to come up with a common set of numbers (including assumptions) to make it easier to compare the claims and counterclaims of the parties to the talks.
As for the proposed backup facility, there is some question as to whether it is really needed. Stay tuned.

5 Comments:

Anonymous TomaHawk said...

From the actions of Delmarva I've reached the conclusion that they actually want to maintain the Pepco monopoly in Delaware. The State wants an in-state source of additional power. Pepco is determined that one of its affiliates will be that source.

2:16 PM, December 07, 2007  
Anonymous LiberalGeek said...

Good work on this Tommy. You are so right about it being difficult to follow, but I think I speak for most of us when I say thank god you are on the case.

11:20 PM, December 07, 2007  
Anonymous kavips said...

Instead of a backup, Delawareans would be better served if Bluewater built a 600MW wind farm and sold the excess to PJM. This would apply downward pressure on the market price of energy, out of which Delmarva could buy off the grid, which they want to buy 100% off of anyway........

A gas turbine would apply upward pressure to the rates, as gas begins to skyrocket like gasoline did at the start of the Bush administration.

5:43 AM, December 08, 2007  
Anonymous Nancy Willing said...

Instead of a backup, Delawareans would be better served if Bluewater built a 600MW wind farm and sold the excess
*
this gets back to the plan that sold me in the first place - that this would be a money maker for the state if we positioned ourselves correctly accruement of some of the sea-floor leasing? etc.

12:31 PM, December 08, 2007  
Anonymous TomaHawk said...

kavips and nancy are spot on. A win for the state, a win for Bluewater and a win for us, the consumers.

5:05 PM, December 08, 2007  

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