Friday, December 14, 2007

PSC Staff Report Recommends Adopting the Bluewater Deal

The Public Service commission staff has released its report on the Power Purchase Agreement. Let's go right to the punchline:
After an informed and deliberative review of the proposed PPA, Staff recommends that the State Agencies approve the PPA with the condition precedent that the Commission enter an order approving a non-bypassable charge, pursuant to 26 Del. C. § 1010(c), that spreads the cost associated with the PPA to Delmarva’s entire customer base.
The report reviews the ups and downs of the negotiations and identifies the ways in which the PPA meets the requirements of the Electric Utility Retail Customer Supply Act of 2006 (EURCSA):
Bluewater’s PPA proposal presents a number of long-term system benefits provided for under the EURCSA. First and foremost, price stability – the primary goal of the EURCSA – is a principal attribute of the Bluewater-Delmarva PPA. The Bluewater-Delmarva PPA establishes new, innovative generation that promotes fuel diversity in Delaware. The delivered cost of fuel to power plants throughout PJM is the single largest determinant of electric energy prices. Natural gas is the primary fuel of critical relevance in setting energy prices in the PJM market. The long-term outlook for natural gas prices reflects robust demand and increased reliance on imported natural gas supplies from the Middle East, the Former Soviet Union, and Africa for which the U.S. must compete with Asia and Europe. Accordingly, over the long-term, natural gas prices are expected to remain high by historic standards and also extremely volatile. Moreover, as electricity consumers across the nation have painfully learned, the thin margin between the U.S. supply and demand can have disastrous effects on price in the event of natural disasters or pipeline disturbances. The Bluewater-Delmarva PPA would reduce Delaware’s reliance on wholesale market prices dictated by natural gas prices, and accordingly, would dampen SOS ratepayers’ exposure to price volatility. Delaware’s captivity to the volatility of the PJM market and its RPM rules is the precise ground for Staff’s May 3, 2007 recommendation that Delaware take control of its energy future through a diverse energy supply portfolio.
This report should carry considerable weight, considering that the staff previously recommended against the terms on the table at the end of October.


Anonymous Anonymous said...

What a boon!
We have got to call our politicians before Tuesday, everybody!

9:57 AM, December 15, 2007  
Anonymous Anonymous said...

I wonder what made the PSC change their mind?

4:27 AM, December 16, 2007  
Blogger Tom Noyes said...

I think it's fairly simple: the PSC staff was looking at different numbers, and responded accordingly.

12:18 PM, December 16, 2007  
Anonymous Anonymous said...

PSC Staff recommends no contract unless there is a surcharge. Unsound approach. If the PPA is approved without preconditions or contingencies, Delaware will become the national leader in offshore wind development. If there are any preconditions or contingencies to the contract, that means THERE IS NO CONTRACT until and unless those issues are resolved. The $6.46 MWHr cost per month per customer is a great deal for SOS customers. In 2014, if the wind farm comes on line as proposed, the monthly charge for 25% wind will be a bargain.

The Agencies should resolve the issue of the gas plant backup before we will actually know how much the whole deal will cost (BTW, do we really want a 10-20 year locked-in contract for natural gas, unless it is absolutely necessary? Maybe we should get more data before we decide). The Agencies need to end the uncertainty for Bluewater Wind - up or down on the wind contract tomorrow, no strings attached. Then the PSC and Agencies will have plenty of time to address a surcharge or other measures to help DPL SOS customers. Hey, what’s wrong with a DPL fund that will help out people keep their lights on if they can’t afford to pay? Other states do it. I’ll add my $20!

5:21 PM, December 17, 2007  

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