From Delaware House of Representatives' E Newsletter
October 18, 2011 - In advance of today's Public Service Commission hearing on electricity rate hikes tied to the deal to bring Bloom Energy to Delaware, three state representatives authored a letter asking the PSC to take the time needed to carefully consider the fate of ratepayers should the company fail...
To Delaware Public Service Commission Chairperson Arnetta McRae:
Tomorrow (Tuesday, 10/18), the Public Service Commission will be reviewing an application by Delmarva Power & Light (PSC Docket No. 11-362). This application requests approval of tariffs on electricity and natural gas relating to an energy project Delmarva plans to enter into with fuel cell manufacturer Bloom Energy.
This proposed project was part of a complicated deal negotiated between Delmarva Power, the State of Delaware and Bloom Energy for the establishment of a new fuel cell manufacturing facility near Newark.
This deal required the enactment of a new law allowing Delmarva Power to use the electricity produced from Bloom Energy fuel cells to be counted towards meeting Delmarva's state-mandated renewable energy obligation. That mandate requires that that by 2025, 25-percent of the electricity delivered to Delmarva customers originate from renewable sources. To secure the Bloom Energy facility, state officials agreed to redefine 30 MW (megawatts) of electricity produced by Bloom's natural-gas powered fuel cells as "renewable."
This legislation was introduced and approved by the General Assembly in nine days at the close of the legislative session. All members of the legislature were briefed (quickly) on the multi-faceted arrangement.
During these whirlwind discussions we were told that using fuel cells to produce electricity would modestly increase electricity rates for Delmarva's residential customers, probably by about a dollar month. While we had trepidations about voting in favor of any arrangement that would lead to a rate hike, even a relatively small one, we ultimately felt the greater good was served by the law since it was a part of a deal to bring 1,500 quality jobs to Delaware (900 at the Bloom facility and 600 at supporting businesses).
However, the nature of the obligation that could be placed on ratepayers if Bloom Energy fails was not made clear at the time this legislation was considered.
Without going into all the contingencies associated with this obligation, it is sufficient to say that there are currently circumstances incorporated into this deal where ratepayers would continue to pay higher rates, even if Bloom Energy fails and the fuel cells stop producing electricity. Under one scenario, ratepayers could be on the hook for at least a dozen years to pay up to 70-percent of the cost of electricity they are not receiving.
While we are eager for our state to attract new, quality employers, Delmarva's customers should not be placed in the position of assuming the risk of these economic development efforts.
The Public Service Commission has the authority to modify this deal to protect ratepayers. Delmarva customers should not be liable for the costs associated with the potential default of Bloom Energy - a private sector company that is not regulated by your commission. Stated succinctly, ratepayers should not be required to pay for something that they are not receiving.
We urge the PSC to delay their ruling on this application by a week or two so that this issue can be more fully considered.
Please add this letter to the record of written testimony on this application.
State Rep. Greg Lavelle
State Rep. Lincoln Willis
& State Rep. Dan Short