Delmarva Power and the state’s independent consultant released reports last week on three bids to provide a long-term energy supply, agreeing that a Conectiv proposal to build a natural-gas plant north of Wilmington was the most viable.
Delmarva Power recommended denying all of the proposals, though, because predicted costs of energy from the wind, coal and gas proposals would be above current market prices. Cost predictions were roughly consistent throughout both reports, with both ranking Conectiv’s gas proposal the most viable and NRG’s coal proposal the least so.
“Based on our analysis of the bids and the substantial risks inherent in long-term contracts,” Delmarva Power’s Regional President Gary Stockbridge said in a Feb. 21 press release, “we think that rejecting all of the proposals is the best option for our customers and Delaware as a whole.”
The independent consultant’s report did not include a recommendation; one is expected on April 4. A discussion and likely final state decision is expected in Dover on May 8. Bruce Burcat, executive director of the state’s Public Service Commission, one of four state agencies’ reviewing the proposals, addressed Delmarva Power’s suggestion to deny all the bids.
“We don’t feel — as the PSC staff — we can say that without seeing the April 4 report. We’ll just have to see,” Burcat said.
The three proposals were graded in the reports on a point system, taking into account, among other factors: price, price stability, reliability of technology and company experience.
Conectiv’s proposal received 68.9 points with Bluewater’s wind farm proposal following with 57 points; NRG’s “clean coal” plant proposal, graded with and without plans to eliminate some carbon emissions, lagged behind with 24.8 points and 23.8 points, respectively.
As expected, Bluewater’s plan to build energy-producing windmills received the most points when consultants addressed environmental impact. It also received 1.5 out of a total of 2 points in the “reliability of technology category”; Conectiv received the maximum and NRG struggled, receiving only .5 points with a “clean coal” plan that would eliminate some carbon emissions through sequestration in underground formations.
Both NRG and Bluewater also fell to Conectiv in the price category. The state’s consultant group — led by New Energy Opportunities Inc. — predicted the price of energy from Bluewater to be at least $12 per megawatt hour more expensive than market price. NRG’s proposal would produce energy at least $15 more expensive than market value, with Conectiv coming in only about $1 more than market.
Delmarva’s numbers were nearly identical. In its Feb. 21 press release, Delmarva Power officials wrote that accepting the NRG bid would cost customers at least $4 billion more than if the company bought energy on the market and Bluewater’s would cost them $2 billion more.
NRG and Bluewater officials said they plan to contest some of the scoring methods.
“Bluewater is confident that with a further review by the consultants and the PSC, we believe very sincerely we will receive the most points,” said company spokesman Jim Lanard. “We have some questions about the methodology that was applied to the bid evaluation.”
Laurie Newman, a spokeswoman for NRG, was also wary about the scoring techniques and said that company officials plan to contest some findings.
“We do plan to submit comments,” Newman said earlier this week. “We stand behind our proposal 100 percent.”
Burcat said, though, that while the consultant’s report should serve as a “solid foundation” for the decision makers, the point totals will not be used solely in rendering a final decision.
“Just because some company got the most points … doesn’t guarantee that they will get the bid or someone else won’t,” Burcat said. “There’s no guarantee that anyone will get the bid.”
In late December, Conectiv, an affiliate of Delmarva Power; NRG, owner of the Indian River Power Plant; and Bluewater Wind submitted long-term energy supply proposals in response to a Delmarva Power request. The Request from Proposals was mandated a bill approved by the Delaware legislature last year after controversial Delmarva Power rate hikes, which called for long-term, innovative energy-supply solutions. The three bids are vying for the rights to sign a long-term supply conract with Delmarva Power.
Conectiv in December proposed building a 200 megawatt — one megawatt is enough energy to power 1,000 homes — natural gas plant and NRG proposed a 600 megawatt “clean-coal” plant that would remove many of the pollutants currently emitted at Indian River, including potentially CO2 emissions.
Sequestering CO2 is a new, and untested technology, some have said, that would require pipelines to send the gas underground and into a formation. It would also require a larger monetary investment.
Bluewater Wind proposed building 200 wind turbines offshore to generate 600 megawatts energy, which would come with no pollution. But that plan also proved to be costly, according to last week’s reports.