Construction of 5MW Turbine/ courtesy of ecotility
Courtesy of Ecotality

Hamermesh has filed the objections listed by Delmarva, with Delaware’s PSC.

Hamermesh begins with this: “I understand that Delmarva will assert that various aspects of the December 10 PPA are inappropriate, and that the December 10 PPA should be rejected by the Agencies.”Briefly stated, the objections are as follows:

1) the pricing provisions represent Bluewater’s proposal, not accepted by Delmarva.

2) the contract output of the proposed offshore wind generation facility of up to 300 MWh … is not acceptable to Delmarva.

3) Delmarva continues to assert that the Project term – with a Guaranteed Initial Delivery Date of June 1, 2014 a Date Certain of November 30, 2015, and a 25-year services term is unduly long.

4) Delmarva asserted during negotiations that the PPA should delay its effective date until enactment of legislation spreading the costs of the Project to all of Delaware’s electricity customers.

5) Delmarva objects the risk of PJM charges that may arise where actual energy output from the Project varies from amounts presented in day-ahead forecasts provided to PJM.

Hemermesh then states that he made not attempt to arbitrate the above discrepancies because they involve those Agencies directly which must make the decision of whether to go forward…….

He did attempt to resolve the following…….

1) The most divisive and time-consuming issue in the negotiations was the treatment of a risk that, by all accounts, is extremely unlikely to arise. That risk involves the possibility that the assets and liabilities associated with the Project will, at some indeterminate point in the future, be required to be consolidated on Delmarva’s financial statements under FASB Interpretation No. 46, or “FIN 46”.

2) I therefore believe that it would be most unfortunate if the treatment of a FIN 46 consolidation event contributed in any way to the Agencies’ overall approval or disapproval of the December 10 PPA.

3) The only solution I considered fair and appropriate was one in which an independent assessment of appropriate measures would be made if and when a FIN 46 consolidation were actually threatened.

4). Bluewater maintains that Delmarva agreed in the Term Sheet dated September 14, 2007 to assume all risks associated with negative LMP. Delmarva counters, however – and I agree – that the Term Sheet was based on delivery at the Bethany substation and did not address the negative LMP risks associated with new intermittent generation. My sense, was that the allocation of such negative LMP charges should depend on the extent to which the new intermittent resources are attributable to Bluewater.
5) From the inception of negotiations earlier this year, Bluewater has expressed concern that litigation by Delmarva or its affiliates would prevent the timely satisfaction of various milestones specified in the PPA. In short, it is extremely unlikely that litigation will continue to a point that it would interfere with decisions to obtain financing and begin construction of the Project. If litigation challenging the PPA continues up to September 30, 2009 – nearly two years from now – the PPA milestone deadlines will not be affected.

6) The parties were unable to agree on the treatment of Delmarva’s lien on Project offshore transmission facilities that are built, owned and maintained by Bluewater.

7) I appreciate Delmarva’s concern on this point, but I concluded that Bluewater’s response was sufficient. Delmarva will at least be assured that the use of the shared facilities to service the Project will not be impaired. I concluded that this assurance adequately protects Delmarva and its customers.

That is the gist of it. There are a couple of additional odds and ends, but primarily it boils down to two choices….

Either Delmarva agrees to the terms that have been hammered out, or….. the regulatory agencies vote to force Delmarva to comply with the regulations as they stand on December 10, 2007……………