Bill Would Freeze Renewable Energy Mandate
Sponsors Say Action Would Provide Needed Opportunity for Review
For more information, contact: Joe Fulgham (302) 744-4184
For more information, contact: Joe Fulgham (302) 744-4184
For immediate release: Tuesday, January 10, 2012
A bill to soon be filed in the State House of Representatives seeks to freeze the state’s current renewable electricity mandate, a move that supporters believe will give policy-makers a chance to review the direction of the state’s energy strategy. Under state law, the percentage of electricity that Delmarva Power and the state’s nine municipal electricity utilities are required to supply from renewable resources – like wind and solar energy – must increase each year through 2025 when “green energy” must comprise at least 25 percent of the total. For the compliance year 2011-2012, the regulated utilities must have 7 percent of their load supplied from renewable resources. The measure being sponsored by State House Minority Leader Greg Lavelle (R-Sharpley) would freeze the “renewable portfolio standard” (RPS) at the proportion the utilities had achieved as of January 1, 2012. “Our energy strategy is flawed,” Rep. Lavelle said. “Despite the dynamic nature of the energy market in recent years, our state policy remains on autopilot. Freezing the RPS at current levels would give us a chance to step back and reassess the situation.” Rep. Lavelle said the recent example of Bluewater Wind should serve as a cautionary example of how market conditions can overtake and frustrate the best intentions of policy-makers. Bluewater Wind, an NRG Energy venture to deploy dozens of wind turbines 13 miles off Delaware's Atlantic coast, all but died in late December when NRG was forced to cancel its long-term contract to sell up to 200 MW of the turbines' output to Delmarva Power. Delmarva Power had agreed to the deal in 2008, in part, to meet its state-imposed renewable energy mandate. Unable to sell the project, despite its power purchase agreement with Delmarva Power, NRG chose to terminate the contract rather than make further financial commitments to the wind farm. “NRG did the prudent thing,” Rep. Lavelle said. “They understood that the factors that had made an off-shore wind farm appear workable four years ago had changed and that current conditions didn’t support it,” Rep. Lavelle said. State Rep. Jack Peterman (R-Milford), who is a co-prime sponsor of the bill to freeze the RPS, agrees. Citing Delaware’s participation in the Regional Greenhouse Gas Initiative (RGGI) – a 10-state "cap and trade" compact designed to reduce carbon dioxide emissions from large power plants – Rep. Peterman said unanticipated changes have outpaced the state’s policy goals. He noted that changes at three Delaware power plants in recent years will result in those facilities producing 30 to 40 percent less CO2 by 2014, far surpassing the RGGI target of a 10 percent reduction by 2019. Rep. Peterman noted that this reduction estimate does not include NRG Energy’s recently announced plan to replace a coal-fired generator at its Dover facility with a cleaner and more efficient natural gas turbine by next summer, the installation of which will further decrease statewide CO2 emissions. “When the RGGI was begun three years ago, natural gas prices were on the rise,” Rep. Peterman wrote in a recent opinion column. “Since then, natural gas from a huge reserve in nearby Pennsylvania has come onto the market, dropping prices and increasing its attractiveness as an alternative to coal.” According to one estimate, Rep. Peterman said Delaware’s participation in the cap-and-trade program alone could increase power costs for Delaware residents and businesses by as much as $35 million annually to meet a goal that has already been greatly exceeded. Both Reps. Lavelle and Peterman said the cost of electricity should be a top concern for Delaware officials and is another reason to launch an energy policy review. According to the U.S. Energy Information Agency (EIA), Delaware has the 13th highest residential electricity rate in the nation (13.8 cents per kilowatt hour) and the 13th highest rate for commercial customers (11.36 cents per kwh). Federal data also reveals that when compared to other states, Delawareans have the seventh highest residential average monthly bill ($129.07). “Power costs are one of the top considerations for businesses,” Rep. Peterman said. “Businesses in my district like Sea Watch International, Perdue and North American Cold Storage are all intensive power users and the cost of electricity impacts the welfare of their operations at the most fundamental level.” Rep. Lavelle notes that Delaware has very few economically viable renewable energy resources. Aside from the 10 MW Dover SUN Park that went into operation over the summer, EIA data shows Delaware’s most significant renewable resource used for electricity generation is methane captured from landfills. “The SUN Park, as admirable as it is, would not be sustainable if it were not for state and federal support,” Rep. Lavelle said. “With so little renewable energy available locally, the result of our current energy policy will not only drive up the already high price of electricity in Delaware, it will export an increasing number of jobs and money to other states as our renewable portfolio standard climbs.” Rep. Lavelle and Peterman say the intent of their bill is not to compromise the increased use of renewable energy. “In fact, our bill requires utility companies to inform their customers about how they can increase their use of electricity from renewable sources,” Rep. Peterman said. Both lawmakers say given the rapid changes that have overtaken the energy market since 2008, it is prudent to freeze the renewable portfolio standard so the state’s policies can be adjusted to reflect existing realities; keep power prices as low as possible; and move renewable energy forward in a sustainable way that is supported by consumer demand, not state mandate.
* Delaware Electric Cooperative is not subject to this provision, but must still present a plan for increasing its use of renewable energy.
A bill to soon be filed in the State House of Representatives seeks to freeze the state’s current renewable electricity mandate, a move that supporters believe will give policy-makers a chance to review the direction of the state’s energy strategy. Under state law, the percentage of electricity that Delmarva Power and the state’s nine municipal electricity utilities are required to supply from renewable resources – like wind and solar energy – must increase each year through 2025 when “green energy” must comprise at least 25 percent of the total. For the compliance year 2011-2012, the regulated utilities must have 7 percent of their load supplied from renewable resources. The measure being sponsored by State House Minority Leader Greg Lavelle (R-Sharpley) would freeze the “renewable portfolio standard” (RPS) at the proportion the utilities had achieved as of January 1, 2012. “Our energy strategy is flawed,” Rep. Lavelle said. “Despite the dynamic nature of the energy market in recent years, our state policy remains on autopilot. Freezing the RPS at current levels would give us a chance to step back and reassess the situation.” Rep. Lavelle said the recent example of Bluewater Wind should serve as a cautionary example of how market conditions can overtake and frustrate the best intentions of policy-makers. Bluewater Wind, an NRG Energy venture to deploy dozens of wind turbines 13 miles off Delaware's Atlantic coast, all but died in late December when NRG was forced to cancel its long-term contract to sell up to 200 MW of the turbines' output to Delmarva Power. Delmarva Power had agreed to the deal in 2008, in part, to meet its state-imposed renewable energy mandate. Unable to sell the project, despite its power purchase agreement with Delmarva Power, NRG chose to terminate the contract rather than make further financial commitments to the wind farm. “NRG did the prudent thing,” Rep. Lavelle said. “They understood that the factors that had made an off-shore wind farm appear workable four years ago had changed and that current conditions didn’t support it,” Rep. Lavelle said. State Rep. Jack Peterman (R-Milford), who is a co-prime sponsor of the bill to freeze the RPS, agrees. Citing Delaware’s participation in the Regional Greenhouse Gas Initiative (RGGI) – a 10-state "cap and trade" compact designed to reduce carbon dioxide emissions from large power plants – Rep. Peterman said unanticipated changes have outpaced the state’s policy goals. He noted that changes at three Delaware power plants in recent years will result in those facilities producing 30 to 40 percent less CO2 by 2014, far surpassing the RGGI target of a 10 percent reduction by 2019. Rep. Peterman noted that this reduction estimate does not include NRG Energy’s recently announced plan to replace a coal-fired generator at its Dover facility with a cleaner and more efficient natural gas turbine by next summer, the installation of which will further decrease statewide CO2 emissions. “When the RGGI was begun three years ago, natural gas prices were on the rise,” Rep. Peterman wrote in a recent opinion column. “Since then, natural gas from a huge reserve in nearby Pennsylvania has come onto the market, dropping prices and increasing its attractiveness as an alternative to coal.” According to one estimate, Rep. Peterman said Delaware’s participation in the cap-and-trade program alone could increase power costs for Delaware residents and businesses by as much as $35 million annually to meet a goal that has already been greatly exceeded. Both Reps. Lavelle and Peterman said the cost of electricity should be a top concern for Delaware officials and is another reason to launch an energy policy review. According to the U.S. Energy Information Agency (EIA), Delaware has the 13th highest residential electricity rate in the nation (13.8 cents per kilowatt hour) and the 13th highest rate for commercial customers (11.36 cents per kwh). Federal data also reveals that when compared to other states, Delawareans have the seventh highest residential average monthly bill ($129.07). “Power costs are one of the top considerations for businesses,” Rep. Peterman said. “Businesses in my district like Sea Watch International, Perdue and North American Cold Storage are all intensive power users and the cost of electricity impacts the welfare of their operations at the most fundamental level.” Rep. Lavelle notes that Delaware has very few economically viable renewable energy resources. Aside from the 10 MW Dover SUN Park that went into operation over the summer, EIA data shows Delaware’s most significant renewable resource used for electricity generation is methane captured from landfills. “The SUN Park, as admirable as it is, would not be sustainable if it were not for state and federal support,” Rep. Lavelle said. “With so little renewable energy available locally, the result of our current energy policy will not only drive up the already high price of electricity in Delaware, it will export an increasing number of jobs and money to other states as our renewable portfolio standard climbs.” Rep. Lavelle and Peterman say the intent of their bill is not to compromise the increased use of renewable energy. “In fact, our bill requires utility companies to inform their customers about how they can increase their use of electricity from renewable sources,” Rep. Peterman said. Both lawmakers say given the rapid changes that have overtaken the energy market since 2008, it is prudent to freeze the renewable portfolio standard so the state’s policies can be adjusted to reflect existing realities; keep power prices as low as possible; and move renewable energy forward in a sustainable way that is supported by consumer demand, not state mandate.
* Delaware Electric Cooperative is not subject to this provision, but must still present a plan for increasing its use of renewable energy.
