HOUSE OF REPRESENTATIVES
144th GENERAL ASSEMBLY

HOUSE CONCURRENT RESOLUTION NO. 41

RECOMMENDING THAT THE DELAWARE PUBLIC SERVICE COMMISSION APPROVE THE PRICE FOR ALL POWER PURCHASED BY DELMARVA , IRREGARDLESS OF SOURCE, TO BE PEGGED FOR THE NEXT TWENTY FIVE YEARS AT 9.89 CENTS PER KILOWATT/HOUR SHOULD THE GENERAL ASSEMBLY NOT INSTRUCT RUSS LARSON TO CAST AN “AYE” VOTE FOR BLUEWATER WIND’S OFFSHORE WIND FARM. THIS IS THE SAME PRICE WHICH WOULD HAVE BEEN GUARANTEED PER KILOWATT FOR THE ENTIRE SPAN OF TWENTY FIVE YEARS, HAD BLUEWATER WIND BEEN ALLOWED TO BUILD 11.5 MILES OFF REHOBOTH BEACH, DELAWARE AND BEGUN OPERATIONS IN 2014 SUPPLYING ELECTRICITY TO DELMARVA’S SOS CUSTOMERS. DELMARVA IS CONFIDENT THEY WILL CONSISTENTLY PROVIDE A PRICE MUCH LOWER THAN 9.89 CENTS PER KILOWATT/ HOUR. THIS GUARANTEE TO CUSTOMERS OF DELMARVA, WHO PERHAPS MIGHT OTHERWISE PAY HIGHER ENERGY PRICES OFF THE PJM GRID, IS NECESSARY BECAUSE DELMARVA IS WORRIED ABOUT THE HIGH COST ITS CUSTOMERS MIGHT PAY WITH BLUEWATER WIND’S POWER. THE RECOMMENDATION TO THE COMMISSION IS THAT ALL FUTURE INCREASED COSTS OVER 9.89 CENTS PER KILOWATT/HOUR SHOULD BE BOURNE BY AND AMONG DELMARVA ITSELF. EFFECTIVE AFTER 12/31/2008 UPON PASSAGE OF THIS RECOMMENDATION, AND ITS SUBSEQUENT APPROVAL BY THE PUBLIC SERVICE COMMISSION, ALL STANDARD OPERATING SERVICE CUSTOMERS OF DELMARVA WILL BE GUARANTEED A STABLE PRICE OF 9.89 CENTS TIMES A PROFIT OF 4%, BRINGING THE BILLABLE AMOUNT ON EVERY CUSTOMERS BILL TO 10.286 CENTS PER KILOWATT/ HOUR IRREGARDLESS OF ENERGY PRICES ON THE GRID.. UNDER NO CIRCUMSTANCES WILL DELMARVA BE ALLOWED TO CHARGE ANY SOS CUSTOMER BY MORE THAN THAT AMOUNT WHICH WOULD HAVE BEEN GUARANTEED THROUGH AN CONTRACT WITH BLUEWATER WIND.

WHEREAS, House Bill 6 of the 143rd General Assembly (the Electric Utility Retail Customer Supply Act of 2006), signed into law by the Governor on April 6, 2006, establishes a process for procuring a new energy source based in Delaware; and

WHEREAS, House Bill 6 set forth the criteria for selecting a new energy generating source, including the cost-effectiveness of the project in producing energy price stability, reduced environmental impact, the benefits of adopting new and emerging technology, siting feasibility and the terms and conditions concerning the sale of energy output from such facilities; and

WHEREAS, the Public Service Commission, the Director of the Office of Management and Budget, the Energy Office and the Controller General were given authority under House Bill 6 to select a bidder; and

WHEREAS, the Request for Proposal issued under House Bill 6 established a competitive process in which three proposals for power were submitted, an IGCC coal power facility, a new natural gas facility and an offshore wind power facility, all of which were reviewed and evaluated; and

WHEREAS, on May 22, 2007, the Public Service Commission, the Director of the Office of Management and Budget, the Energy Office and the Controller General directed that Delmarva Power enter into negotiations with Bluewater Wind to build an offshore wind power facility in Delaware, and to submit a term sheet outlining the major provisions of an agreement; and

WHEREAS, on November 20, 2007, the Public Service Commission, Office of Management and Budget, the Energy Office and the Office of the Controller General held a hearing on the Bluewater Wind term sheet and directed Delmarva Power and Bluewater Wind to submit a Power Purchase Agreement for consideration on December 18, 2007; and

WHEREAS, the negotiations that were held between November 20, 2007, and December 10, 2007, resulted in a more favorable agreement from the perspective of Delmarva residential ratepayers than was embodied in the term sheet; and

WHEREAS, the negotiations have produced a Power Purchase Agreement to build and operate in Delaware the nation’s first offshore wind power facility; and

WHEREAS, the Public Service Commission staff report finds that the Power Purchase Agreement meets the criteria established by House Bill 6, including price stability, reduced environmental impact, and the use of new technology; and

WHEREAS, operation of the proposed offshore wind farm would provide jobs for Delawareans and make Delaware a leader in a new industry at a time when manufacturing jobs are disappearing; and

WHEREAS, construction of the proposed offshore wind power facility would make a significant contribution to a reduction in greenhouse gas and toxic pollution emissions; and

WHEREAS, citizens of Delaware have offered thousands of comments and letters in favor of the proposed wind power facility; and


WHEREAS, the Public Service Commission, the Director of the Office of Management and Budget, the Energy Office and the Controller General did not act on the Power Purchase Agreement because of the lack of a consensus among the four entities; and

WHEREAS, approval of the Power Purchase Agreement would endow Delmarva Power’s customers with protection against future price increases and price volatility due to the rising cost of electricity produced from fossil fuels and international political uncertainties.

NOW THEREFORE:
BE IT RESOLVED by the House of Representatives of the 144th General Assembly of the State of Delaware, the Senate concurring therein, that it is the recommendation of the General Assembly that the Public Service Commission freeze Delmarva Power’s rate to 10.286 cents per kilowatt hour for the duration of twenty five years that the Bluewater contract would have covered. and any cost from power purchased over 9.89 cents per kilowatt hour, would not be passed on to Delmarva’s SOS customers, but absorbed by Delmarva itself and its parent company Pepco Holdings. Those currently purchasing Delmarva’s power will never pay more than 10.286 per kilowatt hour. Even though the proposed wind power facility met the criteria established by House Bill 6 of the 143rd General Assembly and was deemed to be in the best interest of the citizens of this State; the PSC will regulate Delmarva’s pricing to remain in line with what Delmarva customers would have saved with an active windfarm.

BE IT FURTHER RESOLVED that the Public Service Commission is hereby requested to determine if it is in the public interest to freeze Delmarva’s price to 9.89 cents per kilowatt hour.over the remaining span of twenty five years concurrent with Bluewater Wind’s contract. Since Delmarva is confident that even with a national shortage of natural gas, coupled with a shortage of coal, excessive Carbon Taxes, stronger and expensive enforcements of Clean Air mandates, and the high price caused by excessive demand for renewable credits, they will still be capable of providing energy cheaper than that contracted by Bluewater Wind, they should be happy to set the billable price at 10.286 cents per kilowatt hours as constant over the next twenty five years. This is within the authority set forth in House Bill 6 of the 143rd General Assembly.

SYNOPSIS
This Concurrent Resolution recommends that should the Controller General fail to vote to approve the Agreement between Bluewater Wind and Delmarva Power; because, in the opinion of the majority of the General Assembly, the proposed Bluewater Wind Agreement meets the criteria set forth in House Bill 6 of the 143rd General Assembly and is in the best interests of the citizens of this State, that the Public Service Commission will set Delmarva’s price at 10.286. cents per kilowatt hour. This Concurrent Resolution further requests that any power purchased over 9.89 cents per kilowatt, be absorbed by Delmarva and its parent, Pepco Holdings; under no circumstances, market or otherwise, can the billable price to any Delmarva SOS customer ever rise above 10.286 cents per kilowatt hour until twenty-five years have passed.

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