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Cornered utility looks for an exit -- Offshore project squeezed

In the ongoing saga of whether or not an offshore wind plant should be built off the US east coast state of Delaware comes news that the major electric utility in the region may have a stronger case for buying power from onshore wind projects.

Delmarva Power is bound by a law passed last year to sign a long term power purchase contract with a new and clean source of power. A proposal from Bluewater Wind for an up to 300 MW offshore wind farm became the top choice of legislators, but the utility has been against it. In seeking another option, Delmarva Power has teamed up with Old Dominion Electric Cooperative, representing 12 electric cooperatives, and put out a request for proposals to contract for power with developers of wind projects on land.

Delmarva says it has selected the winning bidders for guaranteed prices for 15 to 20 year contracts for both energy and renewable energy credits. The names of the winners have not yet been revealed. "The results are in -- we now have long-term commitments with guaranteed prices for land-based wind power that cost significantly less than our customers would otherwise pay for wind if built in the ocean," says Gary Stockbridge, president of Delmarva Power Region.

Supportive staff

The utility needs approval from state regulators to sign the contracts. A filing, including a comparison with the Bluewater Wind offshore proposal, will be submitted to the Delaware Public Service Commission (PSC) sometime this month. Staff at the PSC and other state agencies have generally been supportive of the Bluewater plan. And it is not certain the on-shore bids are such a great alternative -- particularly because Delaware is far away from good wind resources.

"As an analyst, my own reaction is that the limited price figures that have been released do not include transmission costs," says Professor Willett Kempton from the University of Delaware. "Neither do the numbers adjust for the fact that inland wind in this area blows more at night, when the electricity is worth only half as much. Offshore wind here blows equally during night and day."

Not just the cost

Furthermore, he says, the decision by the state also considers employment and industry development factors, not only what is the best bargain price. There is an effort at the local Delaware level to make the Bluewater project happen partly to get the wheel rolling on offshore wind in the region. In September the American Wind Energy Association is holding an offshore wind power workshop in the state and there is local buzz about the jobs the industry could create.

"Although distant inland wind may be still a little cheaper, Delaware decision-makers, as well as the majority of consumers who speak out on the matter, seem to judge that a slight savings does not justify exporting a new high-growth industry -- and 500 construction jobs -- out of state," says Kempton.

The other 12 utilities buying power in this process, including the Delaware Electric Cooperative, will not have to seek approval from the Public Service Commission for their final contracts, says Delmarva Power.

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