The recalcitrance of Delmarva Power brings up an interesting conclusion. We need a counterbalancing force to maintain balance when one entity leans too far in the wrong direction.
What is a State Power Authority? (No, it’s not a Sen. Adams) New York state has had an active and successful power authority for many years. Proposals are being actively debated in state legislatures in Connecticut, Indiana, Illinois, and Rhode Island.
New York State provides a great example. That state’s Power Authority, was created to build the massive Niagara Falls (Mike, got pictures?) Power station which, would provide cheap, efficient, hydroelectric power for the entire western half of the state.
Like Delaware, it was the initial investment in the infrastructure that provide the major portion of the cost. Like wind, water going over the falls, is free. The state took over its portion of the risk for the right to control prices for its constituents.
With cheap power, came great jobs, as anyone who has driven across Western New York can attest, just from reading the logos of major company headquarters along the route. From Albany to Buffalo, all along the old Erie Canal route, good jobs are available because many companies decided to take advantage of reliable, cheap power.
Other famous power authorities include the Tennessee Valley Authority, and the Bonneville Power Authority. Again many jobs followed cheap power into these previously economic barren areas….
Delaware could benefit from its own Power Authority. Here is how it could work.
A. Delaware’s General Assembly responds to the fact that Delmarva will not comply, and establishes the Delaware Power Authority.
B. The Delaware Power Authority, or DPA, could issue bonds backed by the “full faith and credit of the state.” Currently it would have little difficulty raising the funds necessary to assist in the building of a 600 MW wind-farm off the coast of Sussex County.
C. The State Power Authority could then sell directly to customers, along the lines of the municipal power authorities today, or it could sell at cost to Delmarva Power (or a corporate rival for those who like “market economics”), thereby driving DOWN the price of electrical energy for the benefit of all who choose to reside within this state’s boundaries. The lowest bid would be chosen.
D. The DPA (Delaware Power Authority) could step in and fill reliability needs that could not met by reasonable proposals being dictated by marketing conditions. The New York Power Authority in 2001 built 10 power generators around New York City, which are credited with staving off a major blackout in 2001. The NYPA was able to act quickly because of its emergency siting powers, far faster than a corporate entity could.
E. Using its state authority status, the DPA could empower the state Attorney General to arrest and charge any future Stockbridge-ian type of delay caused by petty intransigence.
Conclusion: A state base power authority can offer its citizens, a cost-based alternative to a single service utility which absence of strong regulation, has strong internal incentives to raise its prices.
Real life American examples:
The federal Tennessee Valley Authority was founded to fund the initial creation and testing of nuclear power
The federal Bonneville Power Administration was founded to fund the series of giant dams up and down the Columbia River.
The state run New York Power Authority was founded to fund the development of the massive Niagra Falls power station.
The Delaware Power Authority should soon be founded to fund the building of America’s first offshore wind farm just east off our southern coast.
Doing so would provide us all with cheap power and a solid economic future.
The Delaware Power Authority: It is a great idea that just needs to happen.
kavips 
7 comments
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July 19, 2007 at 5:32 pm
Alan Coffey
“The recalcitrance of Delmarva Power brings up an interesting conclusion. We need a counterbalancing force to maintain balance when one entity leans too far in the wrong direction.”
Wrong in YOUR opinion?
So use the ultimate power of the State to MAKE them do what YOU want?
Hmmm. That worries me.
Another concern I have is with price. If you think the State can produce energy cheaper than almost ANY private entity, I think you are wrong. They may SELL it cheaper, but watch the costs behind the scenes and you will see.
July 20, 2007 at 7:07 am
kavips
You are correct. Wrong in MY opinion……………..and wrong in the opinion of 94% of the rest of Delawareans!
Some may consider the “state” to be a monolithic organization devoid of moral character. Granted, there are good historical reasons to be skeptical.
But under current rule of law, all the state is actually……….is the projection of the collective will of the people………..
The American way has been to maintain laissez-faire towards most business interests. It is only when a business, through either a monopoly or massive growth, no longer needs to worry about competition, and can wreak havoc on the daily lives of our citizens with its excessive penury charges, that society makes the proper correction, via the instrument known as government.
All of Delaware suffers mightily at the hands of Delmarva……..Only with the building of a wind farm can this pain be alleviated…………….
94% want this deal to go through………if you want to be part of the 6% of the minority, then help make this deal better by pointing to our potential problems before we get too far that expense prevents their correction. You too will have a part to play as Delaware inevitably moves forward………
July 20, 2007 at 11:15 am
kavips
As for price???
My question to you, and this applies to health-care as well as energy, is this:
If my concern as a corporation is how do I maintain a 38% profit margin, then how can any entity that sells at cost, not be cheaper? The costs behind the scenes are someone else’s problem. The cost I pay is my problem………….
All Delawareans want to pay less for energy. Our future economic development demands we pay less for energy. Otherwise we return the economic backwaters of what we experienced before the banks came in……..
July 21, 2007 at 4:13 pm
tommywonk
This is an interesting idea. I have two reactions.
First, the main issue in the negotiations is whether DPL will agree to buy electricity from Bluewater Wind, not whether the wind farm can be financed. An agreement with DPL, taken with the agreement to sell power to the Delaware Municipal Energy Corp., would lock in a long term revenue stream and make financing relatively straighforward.
Second, bonds for a power authority would not need to be backed by the full faith and credit of the state. For instance, the TVA, for instance, issues corporate bonds, which are not tax exempt. Alternately, a power authority could issue tax exempt revenue bonds, backed by the proceeds from selling electricity.
July 21, 2007 at 11:25 pm
kavips
You are correct on the options. Like investment plans, there were even several others that looked promising as well.
However, the main focus of this argument should be that whenever you have a “powerful” utility company that is “uncontrollable,” you need a counter force to insure the people’s needs are not dismissed out of hand.
The residual economic success in each of those areas that have a “power authority’ makes one believe that Delaware could certainly use one as well…..
Politically it is hard to oppose…..were one to do so, (Copeland) they could be truthfully be accused as being anti-cheap energy and anti-new jobs……..truthfully so.
July 23, 2007 at 8:35 pm
Anon II
“…..Otherwise we return the economic backwaters of what we experienced before the banks came in”……..
Those were the days my friend…before we paid banks to come and go, buy their unappraised property and became know as the ‘usuary capital of the nation’ (check your Bible for the moral meaning of usuary).
DPL pulled a fast one, with the help of Gen. Ass. members, on the deregulation ‘deal.’ They give utilities to large businesses at a discount and stick it to the rest of us as best they can (and our electeds allow). How about a rate adjusted for consumers who use utilities during low volumn hours (at night, on weekends)??? Something…..
July 24, 2007 at 2:08 pm
kavips
How about a power authority to serve as an “energy” inspector general to make sure that screwing over consumers did not happen?