Tuesday, April 29, 2008

Delmarva Power Truth Squad, Revisited

I've heard so many radio spots from Delmarva Power and Bluewater Wind that I've mostly stopped listening. But yesterday, as I was barely paying attention, the startling claim that the Bluewater offshore wind farm would cost me 30 percent more on my electric bill caught my attention.
30 percent! Who would want to pay that? I listened more closely to try to find the basis for this assertion. But it being a 30 second spot, there was no time for references and footnotes. So I decided to go back through the public record to try to understand Delmarva's claim.
The Public Service Commission (PSC) staff report of December 14, 2007 projects that the Bluewater Wind power purchase agreement would cost the average residential customer $6.46 a month. This would about ten percent for me (my bill last month was $65.55) and less for an average family.
But as I have pointed out many times in this blog and before the Senate and House committees, that estimate is based on the unlikely assumption that natural gas prices will go down instead of up, which is what they are doing. We can think of that $6.46 as the worst case scenario for residential customers.
Once again we see that Delmarva's scary estimate of the cost of wind power is not related to the PSC staff findings, or to any rational guess of where future energy prices are going. Now I understand that there is room for disagreement on this matter, which deserves the most vigorous debate. But I don't think anyone should be allowed to simply make stuff up.
Delmarva Power has shown remarkable ingenuity for coming up with numbers at variance with the PSC findings. The cost of the wind farm has been reviewed, analyzed, and subject to the closest scrutiny by the PSC and independent analysts. The numbers in Delmarva's radio spot have not. The company should have decent respect for the public and our representatives in the General Assembly and stop pulling numbers out of thin air to scare us into killing offshore wind in Delaware.


Anonymous Anonymous said...

Tom -

I'm glad to see that you're still hammering at this extremely dodgy assumption on the part of Delmarva, et al, that natural gas prices will, over the short term, go down rather than up.

Almost any 25-year cost projection is inherently a work of fiction, as we don't know what the price of natural gas will be next heating season much less 25 years hence.

As I never read any of the relevant documents surrounding this whole wind power issue, I don't know the origin of this assumption that natural gas prices will go down. If it is from some DOE projection, than it should be totally ignored, as the DOE has an incredibly poor track record of predicting anything. (I believe about 5 years ago they said that oil could conceivably hit $45/bbl by now.)

But one thing we do know for sure: the fuel cost for Bluewater's proposed wind farm will be the same the 25th year of operation as it will be the first year of operation, i.e., essentially zero.

Edmund Dohnert

11:04 AM, April 29, 2008  
Blogger Tom Noyes said...

The source is the Energy Information Agency (EIA). Here's an excerpt of my presentation to the Senate Energy & Transit Committee in February:

First, the EIA has missed the mark in previous projections. In 1997, the agency predicted that natural gas prices would remain essentially flat over the next ten years. Instead, natural gas prices tripled.
Second, natural gas futures prices traded on New York Mercantile Exchange (NYMEX) are going up, not down. The price of delivery for 10,000 million British thermal units in February, 2009 was running 14.9 percent higher than the current price as of the close of yesterday’s session.

For more, go to http://tommywonk.blogspot.com/2008/02/my-comments-to-senate-energy-transit.html

11:14 AM, April 29, 2008  
Anonymous Anonymous said...

I too was puzzled by the 30% number, which upon my analysis seemed to appear to be a mis- fabrication of the fact that Bluewater Wind will cost more than the initial bids supposedly coming from onshore power.

Just to show all how far we have come in this battle, barely a year ago, Delmarva was arguing that "wind power" on its own was way too expensive. (Which makes silly their claim that they didn't get a chance to bid on a wind farm too, because they were bashing the whole concept of using wind at all, this time last year.)

We beat them on that argument, so now they have fallen back on stating that Bluewater Wind is too expensive compared to onshore wind.

We are currently making headway against that argument as well.

Having windpower in our own backyard brings low cost economical benefits just as planting a garden in one's backyard would help hedge against paying outrageous food prices........

Common sense, as usual, when given a chance.....will prevail.....

2:47 PM, April 29, 2008  
Anonymous Anonymous said...

The 30% is obviously based on the average Delawarean's power bill, $21.54 a month.

3:53 PM, April 29, 2008  
Blogger Unknown said...


John kowalko

Take a long hard pull on the intoxicating verbiage on page B-6 of the News Journal and I’ll be anticipating a response to my (and Tommywonks and Kavips) “We told you so” in reference to “market/fossil fuel” prices heading to the stratosphere. I will reiterate my previous statements that the BWW price will be cheaper than the “market price” for energy (fossil or land-based wind generated) kwh in the year 2014 when the offshore project is scheduled to come on line. Get outta the way boys, your standing in the way of progress and a stable cheap price.

There’s “coal” in them there hills and that’s where it should stay at those prices.
John Kowalko

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5:33 PM, April 29, 2008  
Anonymous Anonymous said...

I checked the onshore price of wind energy offered by WGES this morning - 5% wind 13.8 cents/kwh; 25% wind 14.4 cents/kwh. A spread of $6/month for 20% wind & the 1000 kwh user. That puts the cost of SB-19 at $8.05/month 2014-2038. (At $5 spead $6.70.) The tipping point for the BWW PPA to be a BIG TIME cost savings is here already.
The 100% wind price from WGES has risin from 13.9 cents/kwh to 16.2 cents/kwh since Dec, 2008.

7:24 AM, April 30, 2008  
Anonymous Anonymous said...

Is anyone in the Delaware Senate reading the most intelligent, honest, informed commentary on this topic in the state? Thurman, Tony, Charlie, anybody in there? Does Thurman even read email?

10:13 AM, April 30, 2008  
Anonymous Anonymous said...

I was wondering how the hell they came up with that number....crooks man

4:40 PM, April 30, 2008  
Anonymous Anonymous said...

I think we are talking about some very powerful people here with a certain agenda that leans towards the bottom line when it comes to using a natural renewing resource that makes a lot of sense. Most of the people that I have talked to agree that we need to stop trying to find something wrong with wind power and get on with the plans to make it happen.

9:57 PM, May 01, 2008  

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