Delmarva Power & Light (DP&L) last Wednesday filed a notice of appeal of a decision of the Delaware Public Service Commission (PSC) and other state agencies which directed DP&L to negotiate a wind power purchase agreement with BlueWater Wind, and to negotiate backup agreements with NRG and Conectiv Energy for gas-fired generation in Sussex County, DE.

A DP&L spokesman said the company will continue to participate in negotiations with BlueWater Wind, NRG and Conectiv Energy, which were requested by the PSC, and it “hopes to achieve a favorable result for its customers.”

Kirk J. Emge, DP&L’s general counsel, said the company felt it necessary to file the appeal in order to preserve its right to challenge in court any future decision that may force its customers to pay for unneeded and costly purchased power on a long-term basis.

“The intent of the legislation enacted by the General Assembly last year which resulted in these negotiations was to lower, not increase customer bills,” Emge said.

In 2006 DP&L, which had been off rate caps since July 2004, raised rates 59% for residential customers and 118% for industrial customers. The company, a public utility owned by Pepco Holdings, said it had been forced to pay high prices for gas in a market squeezed tight in the aftermath of Hurricanes Katrina and Rita. Delaware’s General Assembly, prompted by the skyrocketing rates, passed the Electric Utility Retail Customer Supply Act of 2006, mandating that more locally produced power, purchased through long-term contracts, be included in DP&L’s mix, and directed DP&L to solicit proposals for the construction of new generation resource(s) in Delaware.

BlueWater Wind, NRG and Conectiv Energy, a DP&L affiliate, each responded with proposals. In May PSC staff recommended combining three submitted bids into a “hybrid” plan of both a wind farm and a natural gas plant, to balance reliability with clean renewable power sources (see NGI, May 7). On May 22 the PSC directed DP&L to begin negotiations with Bluewater for the offshore wind farm, to be located in Sussex County, and asked DP&L to begin negotiating with Connectiv and NRG Energy for gas turbine backup generation. The wind proposal would involve construction of 200 large windmills seven-to-nine miles offshore of the Atlantic beach resorts of Rehoboth Beach or Bethany Beach, DE.

Delaware state consultants last month also recommended partial reregulation and the establishment of a state-regulated energy authority tasked with building new power generation facilities (see NGI, May 14).

“Delaware cannot simply turn the clock back to pre-1999 and try to reinstate regulation,” said Nancy Brockway of NBrockway & Associates in a report commissioned by Delaware’s legislature in response to the crisis in power rates for DP&L customers. “Rather, new institutions are needed to identify the public’s ‘risk preferences’ and to implement them, consistent with the public’s determinations.”

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