The PSC Meets Tomorrow to Discuss Delaware's Energy Future

The Public Service Commission (PSC) is scheduled to meet tomorrow, and Delaware’s energy future is on the agenda:

2. IN THE MATTER OF INTEGRATED RESOURCE PLANNING FOR THE PROVISION OF STANDARD OFFER SUPPLY SERVICE BY DELMARVA POWER & LIGHT COMPANY UNDER 26 DEL. C. §1007(c)&(d): REVIEW AND APPROVAL OF THE REQUEST FOR PROPOSALS FOR THE CONSTRUCTION OF NEW GENERATION RESOURCES UNDER 26 DEL. C. § 1007(d) (OPENED JULY 25, 2006) – PSC DOCKET NO. 06-241
The Commission will hear argument and deliberate whether, in its judgment, Delmarva Power & Light Company should pursue a long-term power contract with one or more of the three bidders. The three State agencies (Department of Natural Resources & Environmental Control, Office of Management & Budget, and Controller General) will also have to make a similar decision.

The Washington Post has the story on page A-1:

REHOBOTH BEACH, Del. -- Two hundred towering windmills, each so tall that its blades would loom over the U.S. Capitol Dome, could be built in the Atlantic Ocean near one of Washingtonians' favorite beach retreats, under a plan being considered in Delaware.
The plan, which could create the first wind "farm" in waters along the East Coast, envisions a thicket of turbines offshore of either Rehoboth Beach or Bethany Beach, Del. As the blades are spun by ocean winds, designers say, the wind farm could provide enough power every year for 130,000 homes.
The wind farm is one competitor in an unusual kind of power-plant bake-off: Delaware officials are also considering plants that would burn coal or natural gas as they seek ways to generate more electricity. A preliminary decision could be made tomorrow.

University of Delaware Professor Willett Kempton is circulating a letter he wrote to the PSC with Jonathon Levy of the Harvard School of Public Health, in which they estimate the net public health costs of forgoing wind power in favor of continuing to burn fossil fuels:

Focusing on premature deaths, this approach would yield an estimate of approximately 8 fewer deaths per year due to the Delaware wind park. Using EPA’s standard economic value of statistical life of approximately $6 million, these benefits are on the order of $50 million per year. There would also be proportional improvements in a number of other health outcomes, ranging from respiratory or cardiovascular hospital admissions to asthma attacks to days with restricted activity, as described in the Cape Wind EIS above.
Applying the above scaling factor to the findings reported for Cape Wind yields additional benefits of approximately 9 fewer hospital admissions, 3,500 fewer asthma attacks, and 10,000 days with restricted activities (major or minor), among other outcomes. These outcomes have direct and indirect economic consequences as well; using the values from the Cape Wind analysis with a 0.64 scaling factor yields an additional $6 million in benefits per year.
If we multiply the above health benefits over the 25-year life of the project, it will mean that the project will avoid roughly 200 deaths, with a total societal benefit of over $1 billion, along with numerous other health outcomes with a total societal benefit of approximately $150 million. If the health costs were discounted at a 3% social discount rate, that would be a discounted present value of approximately $1 billion. With the inclusion of other health outcomes and given the factors described above that might imply greater benefits per unit emissions reduction in Delaware, the discounted present value of the health benefits of the proposed wind park likely greatly exceeds $1 billion.
Over the 25-year contract term of the project, the State’s Independent Consultant estimated that Delmarva ratepayers would pay $493 million additional for the wind power. But, as we have shown, rejecting this bid in order to achieve an apparent $493 million savings in electric costs is not cost-effective because it imposes a cost of at least one billion dollars, and likely more than that, on the population and the health system. This cost was not included in the evaluation by either the Delmarva consultant or the Agency Independent Consultant, neither of whom included public health impacts in their analysis.

This analysis, which I urge you to read in its entirety, is based on the full 600 MWs wind proposal, and thus can be roughly scaled to the size of the wind farm being considered. In rough terms, every dollar in excess cost (as estimated by the PSC’s consultants) would translate into two dollars in health savings.
At this point, we all need to be mindful of the ways in which the events of the last week require that we revisit earlier economic estimates. Specifically, the hybrid proposal put forward by the PSC staff and the announcement by the Delaware Municipal Energy Corporation that it plans to buy $200 million to $300 million of electricity from Bluewater Wind over the next 25 years, make earlier assessments of the net cost of wind power even more tenuous.