Delmarva Power announced this week that it plans to pursue bids for land-based wind power in conjunction with two other regional suppliers: Delaware Electric Cooperative and Old Dominion Electric Cooperative.
Delmarva Power and Light (DP) announced on Jan. 22 that it planned to undertake its own studies and competitive bidding process on land-based wind-power alternatives, declaring the company’s concerns that the off-shore wind farm proposed by Bluewater Wind would provide power at a premium price for its customers of a staff-estimated 45 to 55 percent.
DP President Gary Stockbridge said in January that the company would aim to find alternatives that would offer the same environmental benefits as off-shore wind with less risk, and to bring those options to the table as the goals for renewable energy in the state continue to be evaluated under legislation passed in 2006 and 2007.
Providers would have to meet state standards of being within or able to deliver to the established delivery region of PJM, the area’s regional controller for wholesale electricity, serving Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.
Stockbridge said he was aiming to have a breakdown of the information on land-based alternatives by mid-March and ideally in time to provide that information before or during planned state senate hearings on mandates for renewable energy sources.
State staff reports favored Conectiv’s natural gas-based electricity and Bluewater Wind’s offshore wind-farm proposal over NRG’s “clean coal” plant in making recommendations to the state, and further recommended a combination of scaled-down proposals from the two companies be pursued.
But with the mid-March point for their alternative bidding process having arrived, DP announced Tuesday, March 25, that Delaware Electric Cooperative and Old Dominion Electric Cooperative had joined Delmarva Power’s competitive bidding process to acquire land-based wind energy to supply their customers.
Delmarva Power received more than 35 price bids from land-based wind developers from across the region during the last few months, the company noted.
DP: Bids project substantial savings for onshore wind
According to DP, “Early indications from the bids are that buying land-based wind power through this competitive process could save customers an estimated 50 percent compared to Bluewater Wind’s current proposal to Delmarva Power for a 25-year contract.”
Final bids from wind providers are due at the end of March, DP officials said, at which time the utilities will conduct an analysis of the bids that is expected to be complete by the end of April.
DP officials said that, in addition to a lower price, most of the onshore bids have no built-in price escalators. The Bluewater Wind proposal, by comparison, automatically increases the price to customers by 2.5 percent each year, starting in January 2008.
“Onshore wind energy provides consumers with the same environmental benefits as offshore wind energy but at significantly less cost, in part because of the many costs associated with building and maintaining power generation and transmission equipment in the ocean’s harsh and corrosive environment,” DP officials said.
Three power companies pursue ‘green’ power
“We are pleased to join with the Delaware Electric Cooperative and the entire family of Old Dominion Electric Cooperatives in this groundbreaking process to bring clean, affordable renewable energy to the region up to five years ahead of any offshore proposal,” Stockbridge said Tuesday.
“Together we can achieve considerable savings for our customers, establish a long-term source of renewable energy for both Delaware and the region, while doing what’s right to help protect the environment,” he continued.
“The addition of the family of Old Dominion Cooperatives to Delmarva’s ongoing wind power bidding process should expand the growth of wind energy throughout the entire Delmarva Peninsula and the Commonwealth of Virginia. This is an exciting day for the development of renewable energy in the region,” Stockbridge said.
J. William Andrew, president and CEO of the Delaware Electric Cooperative, said the cooperative is pleased to join with Delmarva Power on this issue.
“This agreement demonstrates that Delaware’s largest electric utilities are acting responsibly and aggressively in obtaining renewable energy for customers at a time when issues of climate change and energy sustainability are at the forefront of the public agenda,” he said. “We see this as a great opportunity to bring renewable energy to our members and maintain the low rates our customers expect from us.”
Jackson E. Reasor, president and CEO of the Old Dominion Electric Cooperative, also said his cooperative is pleased to join this process and expand the opportunities to the region and the more than 500,000 members of the cooperatives they serve.
“Wind power will play a strong role in moving us all toward cost-effective renewable energy for our future, and we are excited to get in early on this rapidly growing technology,” Reasor said.
Stockbridge said the benefits of any potential agreement will be spread to more than 90 percent of the electric ratepayers on the Delmarva Peninsula and an additional 400,000 on the Virginia mainland.
Bluewater calls bids ‘bait-and-switch’
Bluewater Wind representatives were skeptical about the announcement by the three energy suppliers on Tuesday.
“We don’t really understand it,” said Jim Lanard, communications director for Bluewater Wind. “Delmarva (Power) has always resisted the offshore wind project. And we don’t understand what this tactic has to do with this job-creating, emission-free power project off the coast of Delaware.”
Lanard said the key difference between the two ways of obtaining wind-based power is in how — and where — the power is generated.
“Out-of-state may be good for Delmarva, but it’s not good for Delaware,” Lanard asserted.
He said additional costs can be anticipated from the out-of-state on-shore wind farms that have bid on providing power to Delmarva Power and the two cooperatives.
“We looked at what these bidders were asked. We looked at the draft power purchase agreement and the RFP (Request for Proposals). And the standards that Bluewater Wind are being held to and what the out-of-state suppliers are being held to are very different,” he emphasized.
“We’re being asked to pay congestion fees and capacity fees — two components not even included in the out-of-state RFP,” Lanard said. “In addition, we have to pay termination fees if we don’t go forward. We have to pay liquidated damages. They have no termination fees and no liquidated damages.”
Lanard said it appeared Delmarva Power had tailored the bid documents for its onshore wind-power suppliers to favor them when the two sets of cost are compared.
“What they’ve done is give a clean pass here to the out-of-state bidders,” he said.
“What’s going to happen is going to be a bait-and-switch,” Lanard predicted. “Costs are going to have to be added to the costs the out-of-state bidders will have to pay.”
The end result, according to Lanard, could be similar costs for electricity customers, without the benefit of the dozens of jobs predicted to be brought to the state by the Bluewater Wind proposal for a wind farm about 11 miles off Rehoboth Beach.