Friday, July 04, 2008

Wind Power Costs Were Overstated

The latest report from Public Service Commission's independent consultant admits that previous estimates of the cost of offshore wind were too high. The News Journal story on the consultant's report features this headline:
State: Cost of wind power overstated
Pat Gearity of Citizens for Clean Power writes:
Jeremy Firestone and Tom Noyes are vindicated by yesterday's admission by the PSC's Independent Consultant that his 12/07 $6.46/month estimate for BWW was overblown, in light of 1) projected major natural gas cost increases ignored in the estimate; and 2) the likelihood of future carbon taxes on fossil fuel generation which would reduce the comparative cost for offshore wind. The cost spread for all Delmarva Power customers was included in the IC's December 2007 report, so the fact that those numbers were not widely used is not the real story (see below). Also, DPL's excuse is truly bogus regarding a "miscommunication" with the PSC consultant. They had the informed comments filed by Firestone and Noyes before the PPA was scuttled on 12/18/07. DPL knew all along that Firestone and Noyes were right. Firestone at P. 6, 12/13/07: http://depsc.delaware.gov/electric/irp/firestone121307.pdf; Noyes at P. 15-16, 12/13/07: http://depsc.delaware.gov/electric/irp/pc_121307.pdf.
For the record, here's part of what I submitted to the PSC in December:
Opponents of the wind farm claim that we can't afford it. The simple fact of the matter is that wind power would cost us a little bit more if—and only if—fossil fuel prices remain flat for the next thirty years.
If recent history is any guide, and if the laws of economics are not overturned, we can expect fossil fuel prices to continue to climb over the next thirty years.
And this from the latest consultant's report:
Forecast market energy prices are 21% higher in 2014 and approximately 7% higher on average over the term of the Final PPA than previously projected as a result of higher natural gas and CO allowance cost forecasts...
I plan to spend some time with the consultant's report, and will offer comments on the methodology before the PSC and three other agencies make their final decision on July 31. Sure the deal is done, and obscure points from the public record may not matter so much.
But the debate over wind power in Delaware revolved around cost more than any other issue. If the methods used to evaluate the proposal produced inflated cost estimates, those methods deserve scrutiny before the docket is closed.

7 Comments:

Anonymous Anonymous said...

"Obscure points from the public record may not matter so much."

Tom, how much money and time could have been saved had the IC acknowledged his "mistake" before the December 18 PSC meeting? Or before Thurman Adams handed over Bluewater Wind's fate to the likes of Harris McDowell and his hired guns? Would putting the cost of BWW at a few bucks a month have avoided the advertising war that has cost Delmarva ratepayers so much? Is anybody else bothered by the fact that the Independent Consultant had five months to correct the record, but remained silent? What if the so-called "business-like" negotiations had failed? I hope your analysis will shed light on these questions.

4:18 PM, July 04, 2008  
Blogger TommyWonk said...

These are good questions which I do plan to put before the PSC. I and others spent months trying to make the case that offshore wind power would make economic sense for Delaware. It would have been much easier if the independent consultant had arrived at a net monthly cost of 70 cents instead of $6.46.

8:46 PM, July 04, 2008  
Anonymous Edmund Dohnert said...

It has always amazed me how these cost projects were blessed by the PSC, et al, when they were based on the truly ludicrous assumption that natural gas prices would essentially remain flat for years.

In private industry, I would bet that no one would dare present any sort of a business plan or economic analysis based on future energy costs remaining flat. At best they would be ridiculed, at worst they would be fired.

So, you bet 'those methods deserve scrutiny before the docket is closed'. One does not need to be paranoid to suspect that the deck was being stacked against Bluewater from the very beginning.

11:23 AM, July 05, 2008  
Blogger Nancy Willing said...

As I commented on the Journal online site...WTF Ratledge????

WTF big-ass DC consultants paid for by Tony DeLuca out of Senate slush fund on behalf of McDowell and Copeland?

Why shouldn't we now demand accountablility from these sleazy thinktankers? Especially Ratledge who is a number-fudger primericana.

12:46 PM, July 05, 2008  
Blogger Nancy Willing said...

As I commented on the Journal online site...WTF Ratledge????

WTF big-ass DC consultants paid for by Tony DeLuca out of Senate slush fund on behalf of McDowell and Copeland?

Why shouldn't we now demand accountablility from these sleazy thinktankers? Especially Ratledge who is a number-fudger primericana.

12:47 PM, July 05, 2008  
Anonymous kavips said...

What do you mean they were overstated?

Why didn't anyone say anything?

Where were our watchdogs, those bloggers always searching out real truth?

Shame, Shame on them all! This time they fell down on the job.

(consider the source) :)

8:45 PM, July 05, 2008  
Anonymous Anonymous said...

70 cents?

So after obscene amounts of DP&L's deceptive advertising and Randall Speck's big paycheck for interrogating the PSC for Harris McDowell at McDowell's wasteful BWW Senate hearings, and Gerald Hocker in Bethany telling people it'll cost $60 more a month, and all of the time, energy and effort put in by the citizens of Delaware, and the time and money spent by BWW countering the lies, we find out that it's and extra 70 cents a month?

I'm going to scream.

12:21 PM, July 06, 2008  

Post a Comment

Links to this post:

Create a Link

<< Home