Why Should Delaware Care?
Delawareans have seen high energy bills due to a growing demand as new supply lags behind. A debate is brewing over whether overturning a decades-old law preventing Delmarva Power from generating electricity could help ease the crunch or make energy more expensive.
Last winter, Delaware Sen. Stephanie Hansen (D-Middletown) noticed that the complaints she received about spiking energy bills came primarily from Delmarva Power customers.
At the time, she asked the other two electricity utilities in the state — Delaware Electric Cooperative and Delaware Municipal Electric Corporation — how they were able to keep prices down during what Delmarva Power described as a surge in energy demand .
Both companies said that generating their own electricity was an important part of the answer to the question. Owning power generation sites also was something the state legislature barred Delmarva from doing, more than two decades ago.
“That’s what originally raised the question in my mind as to whether or not we need to go back and rethink this,” Hansen said.
Now, as chair of the Senate Environment, Energy and Transportation Committee, Hansen said she will begin the discussion this legislative session of whether Delmarva Power should be allowed to own electricity generation sites.
Delmarva representatives also plan to push legislators to overturn the law barring the company from doing so.
But, so far, the idea has already garnered criticism from consumer advocates who fear it would put too much market power into the hands of the private utility company.
Delaware Public Advocate Jameson Tweedie — whose job is to represent the public when utility companies want to raise power rates — said he has a “high degree of skepticism” to Delmarva Power generating its own power.
And Evan Vaughan, Executive Director of the Mid-Atlantic Renewable Energy Coalition, an organization that advocates for renewable energy producers, said the move would “throw money at the problem,” without addressing obstacles to bringing new generation onto the grid.
Hansen said the idea is still “an open question” for her. She said she will hold discussions with her Energy Stakeholders Group, a group of individuals within the energy field that meets biweekly to debate potential legislation.
She said there is a “sense of urgency” because energy prices keep rising at a rapid rate, but she needs time to consider all sides of the debate.
“It’s too big of an issue to rush through,” Hansen said.
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An open question
A generation ago, Delaware lawmakers outlawed Delmarva Power from generating its own electricity due to concerns that owning both generation and distribution infrastructure would create a monopoly that would push up energy prices.
Now, Delmarva Power Regional President Marcus Beal argues that skyrocketing electricity demands from data centers and electric vehicles warrants an “all in approach” to energy production.
“We just don’t feel like the current situation is sustainable,” Beal said, while noting that his company, if allowed, may invest in community solar fields and natural gas facilities.
Energy prices could go lower with Delmarva Power owning generation sites, he said, because the company is regulated by Delaware’s Public Service Commission, which limits its profits to a less than 10% return on investment. Non-utility companies that own generation sits do not have a state-imposed cap on profits.
But Vaughan of the Mid-Atlantic Renewable Energy Coalition said Delmarva’s Power guaranteed return on investment could lead to unnecessary spending, which may be difficult for state agencies to prevent.
And if any project becomes too expensive, ratepayers will have to shoulder the costs rather than private companies, he said.
In an emailed statement, Delmarva spokesman Matthew Ford countered that Delmarva is required to use its profits to invest in the local grid, unlike private companies.
Vaughan said he agrees that Delaware needs more energy supply, but the state legislature instead needs to work to clear obstacles for power getting on the grid.
He said local governments could loosen regulations on community solar, and Delmarva Power could speed up upgrades to the distribution system needed to bring solar plants online.
Tweedie, the Public Advocate, agreed that Delmarva is not doing enough to connect solar plants that are ready to provide energy to the grid.
“We have real skepticism of Delmarva wanting to get back in the generation business while it is not, in our view, doing everything it can to bring online other generators” Tweedie said.
Ford said the company has “implemented significant technical and operational improvements” to the process of connecting solar plants to the grid.
The state legislature has not yet considered any formal proposals for Delmarva to generate its own power.