You can make your voice heard right now at the Delaware Public Service Commission (PSC) to protect against future electric bill increases.
The PSC is considering a regulation on how to calculate the cost impact on electric bills of Delaware’s requirement that our electric suppliers purchase more expensive and unreliable wind and solar power every year. In 2010 the legislature amended the Renewable Energy Portfolio Standard Act (REPSA) to include a cost cap of 3% on electric bills. The legislature figured there was value in using renewable power, but it didn’t want to overburden ratepayers, many who are living paycheck to paycheck. Thus, it wrote a cap into the law that said electric bills should never go up by more than 3 percent to buy renewables. If the cap was exceeded, the requirement for more renewable power was to be frozen until costs came down. In 2011, the legislature again amended REPSA to allow a portion of the cost of fuel cell generation that Delmarva is forced to buy (and for which ratepayers are forced to pay) to count as renewable energy so Delmarva would not have to buy as much wind and solar power.
Well, that cap was exceeded in 2013. Renewables now add about 9% to electric bills, or $100 a year to residential bills, but there is no freeze! Some industrial customers are paying a job-killing half million to a million dollars a year.
The story of how a freeze was avoided should make your blood boil. The legislature added the 3% cost cap in 2010 and told the PSC to draft a regulation governing the cost cap calculations, with DNREC’s Division of Energy & Climate (Division) performing the actual calculations. Then, the two agencies would consult to determine whether a freeze was called for. This division of labor made sense. The PSC regularly balances the competing objectives of price, reliability, and environmental concerns in approving utility rates. The Division of Energy & Climate advocates for renewable energy, which could potentially bias its approach to a cost cap calculation regulation to avoid a freeze.
The PSC ducked its responsibility, impermissibly delegating the duty for drafting the cost cap regulation to the Division. The Division took its sweet time finalizing the regulation (almost four years), until the end of 2015 — thus avoiding doing a calculation that would have led to a freeze. Moreover, the Division’s final regulation twisted the calculation process to avoid a freeze. First, it flatly ignored the cost of the Bloom Energy fuel cell project. Look at your electric bill: you will see the Renewable Compliance Charge broken into the fuel cell cost (Delaware Qualified Fuel Cell) and the wind and solar cost separately. Divide the charge by your total bill to see what percentage you are paying. Even though the fuel cells are fueled by conventional natural gas, the legislature approved fuel cell generation counting against the RPS requirements at twice the rate of an actual wind farm!
Second, the Division attempted to calculate the value of unpriced externalities, such as the health impacts of less air pollution, and count those externalities as part of the cost of electric supply. In doing so, it used outdated emissions data, outdated health impact values, and counted jobs created in the solar industry, while ignoring jobs lost because of higher electric rates. After exaggerating the benefits, it wanted to allow another 3% price increase!
The REPSA requires that our electric suppliers purchase 25% of their power from renewable sources by 2025; the current year’s target is 14.5%. The idea was to generate renewable power in-state. Instead, we are only generating about 1% of the power we use from in-state solar projects. The rest is coming from landfill gas and biomass projects that were in place before the REPSA became law, natural gas-fired fuel cells, and out-of-state windfarms that raise electric bills but create no Delaware jobs. The point is that for all its cost and effort, the REPSA isn’t even close to doing what it was supposed to – but it is increasing the amount that Delawareans pay for electricity.
The Delaware Public Advocate (DPA), a state agency tasked with advocating the lowest reasonable rates for regulated utility consumers, and CRI petitioned the PSC to do its job and issue regulations. The PSC refused. The DPA appealed the PSC’s order and won!
The PSC has now drafted proposed cost cap regulations. To read them, go to http://regulations.delaware.gov/register/march2017/proposed/20%20DE%20Reg%20713%2003-01-17.htm .
Here’s where you come in.
The PSC did eliminate the use of externalities in the cost cap calculations. However, the wording is not clear enough: the fuel cell costs are excluded from the cost cap calculation.
CRI thinks the cost cap calculations should take into account the cost to buy solar and wind power and the amount going toward Bloom energy fuel cells when calculating the total cost of REPSA compliance.
If you think so too, let the PSC know. Written public comments are due by Monday, April 24, and the PSC will conduct a public hearing at 1 PM, April 6. Written comments may be sent to Joseph DeLosa, Public Service Commission, 861 Silver Lake Blvd., Cannon Building Suite 100, Dover, DE 19904, or by e-mail to firstname.lastname@example.org. The hearing is at the same location.
We are encouraging submission of written comments to the PSC similar to the following with the subject line “Regulation Docket No. 56”: “We support the proposed regulation, but please add clarifying language to ensure that the net cost of Renewable Energy Credits from a Qualified Fuel Cell Provider shall be included in the RPS Cost Cap Calculation.”
The improved regulation will probably result in a freeze to the increasing requirement for wind and solar power. It will keep the cost from rising further. (Interestingly, the price of solar installations has fallen so far it is likely that new solar projects will still be built without the state mandate, as is happening at many locations across America now).
David T. Stevenson
Director, Center for Energy Competitiveness
Caesar Rodney Institute