Blog of the Year?

In a sign of how blogging has progressed (if you consider this progress), it is now possible to win awards for typing deep thoughts into your computer and posting them online.
DelawareLiberal is running a poll for blog of the year. Head on over and vote for the blog of your choice.

Head for the Hills

We're not used to homes being destroyed or rendered inhabitable by environmental disasters. That's what happens in Bangladesh, or New Orleans. But it happens closer to home as well, as the News Journal reports:

Now, most of Glenville is gone, bought out in a $34 million project to get residents out of harm's way. The state tore down 167 of the 194 homes -- with one more to go -- and fenced off the lowest-lying areas, which soon will be excavated as part of a 52-acre wetlands "bank" that can be used to offset future highway projects.

It has been more than four years since Tropical Storm Henri flooded the Red Clay watershed. But could it happen again, elsewhere in the watershed? Was this just a fluke, one of the many storms of the century as it were?
The concept of the storm of the century is captured in the concept of the 100-year flood, and mapped by federal, state and local planners.

Revisions to flood-plain maps are common and reflect new development and other factors that affect the way water flows. The maps show where the water is likely to reach flood stage in a 100-year flood (a storm with a 1 percent chance of occurring in a year) and a 500-year flood (a storm with a 0.2 percent chance of occurring in a year).
FEMA's most recent maps use flow data that is 22 years old, according to Mike Powell of the state Division of Soil and Water Conservation. The new maps will include data from the 2003 Red Clay flood, which was considered a 500-year flood, as well as 100-year floods in 1999 and 2004.
The potential affect of those changes is alarming to some property owners.
"They may put 1,000 homes into the flood plain that are not in the flood plain now," said Ed Boisvert, vice president of the Glenville Civic Association, who has represented the community in meetings with government officials. "If that happens, all those people have to buy flood insurance, property values deteriorate and there is a lot of politics."

We've become accustomed to building what we want, where we want. When government proposes limits on development, we hear cries of property rights being taken away. But Mother Nature is less amenable to pressure from developers.
Thousands of homes have been built upstream since the 2003 deluge, increasing the amount of water than runs directly into streams in a hard rain. Realtors and developers may not like to see maps with expanded flood plains, but the increased risk of flood is determined by the laws of nature, not the calculations of mapmakers.

EPA Agrees to Preserve Records on Blocking California Rules

Given the secrecy the White House has spun around the activities of our national government over the last seven years, it is encouraging to see a federal agency acknowledge its responsibility to preserve a record of its work.
This is what the EPA did yesterday in response to a request for documents relating to the EPA's blocking of California air quality standards:

WASHINGTON (AP) — The Environmental Protection Agency signaled Thursday that it was prepared to comply with a Congressional request for all documents, including communications with the White House, concerning its decision to block California from imposing limits on heat-trapping gases.
The agency’s general counsel directed employees in a memorandum to preserve and produce all documents related to the decision, including any opposing views and communications between senior agency officials and the White House.

All well and good. But why should employees of public agencies need to be told to preserve the records of regulatory decisions? Public Employees for Environmental Responsibility (PEER) has posted the email ordering that documents be retained. According to PEER, the way in which EPA administrator Stephen Johnson announced the decision raises questions about the agency's deliberations:

Although Johnson’s decision on the request by California and other states to regulate greenhouse gases from automobiles was supposed to have been the product of months of legal and scientific deliberation, Johnson hastily called a press conference at 6:30 pm to cite the energy bill signed just that morning as the principal basis for his veto of state action. Senator Boxer in her letter characterized Johnson’s "two-page letter denying the waiver [as] devoid of any legal or technical analysis."

The email from EPA's general counsel brings back memories of Enron and Arthur Andersen:

EPA has received a second request for documents relating to the California waiver request. Please immediately take appropriate steps to preserve any such documents. You will also need to produce the documents.

Not all of the administration's penchant for secrecy has to do with national security issues. It is worth remembering that the first fight over opening up BushCo's records involved Dick Cheney's secretive energy task force.

Wind Power: the Year's Defining Story in Delaware

What makes wind power in Delaware the defining story of 2007?
First, the proposal to build an offshore wind farm is big: 150 turbines generating enough electricity to meet 29 percent of the needs of Delmarva Power's Standard Offer Service (retail) customers.
It would be new: the first offshore wind project in the country.
It was unexpected. A year ago, few would have predicted that wind power would have been chosen through the bidding process.
It connects global concerns with a local perspective. Delaware would be particularly vulnerable to rising sea levels brought on by global warming.
Most significantly, the wind power story presents a sharp contrast between the new and the old.
New is something Delaware doesn't do very well. As the News Journal editorial board put it, last week's lack of decision on wind power was "another victory for mediocrity."
The wind power proposal requires new thinking. The conventional wisdom is that environmental benefits come at a price. But if fossil fuel costs continue to rise, the wind farm would bring a measure of price stability to Delaware's energy portfolio.
It heralds the creation of what the News Journal calls a new "grass-roots environmental movement in Delaware." I had not heard of or met most of the activists a year ago. They have brought a new sophistication to discussions about environmental issues in areas including health, epidemiology and economics. As Nick DiPasquale said to the Cape Gazette, "This isn’t just the yogurt and granola crowd."
I won't predict whether the wind power proposal will get the green light or not in 2008. But either way, the story will continue to highlight the ways Delaware is, or is not, changing.

The Marx Brothers and Christmas

Chico Marx, a conscientious objector in the War on Christmas:
From the movie, A Night at the Opera:

CHICO: Hey, wait, wait. What does this say here, this thing here?
GROUCHO: Oh, that? Oh, that's the usual clause, that's in every contract. That just says, uh, it says, uh, if any of the parties participating in this contract are shown not to be in their right mind, the entire agreement is automatically nullified.
CHICO: Well, I don't know...
GROUCHO: It's all right. That's, that's in every contract. That's, that's what they call a sanity clause.
CHICO: Ha-ha-ha-ha-ha! You can't fool me. There ain't no Sanity Clause!

YouTube has the scene.
Merry Christmas.

Santa Ops

When I was a kid, geeky meant Erector sets, a chemistry lab and of course Lego. Some things don't change. Wired took note of this Lego Christmas tree from GeekTieGuy:
As for how all those toys show up under all those trees, Wired has done an operational analysis:

Here's our theory: There is, in fact, a nonsupernatural Santa. It's a transnational corporation with one mission-critical fulfillment goal: Every kid who celebrates the holiday gets a toy on Christmas eve.

It's a logistical challenge deserving of a business school case study: 2.7 million people distributing 34 million gifts in one short night (that's 3,148 gifts per second) at an annual cost of $27.5 billion.

The Christmas Stick

Claymont has its Christmas Weed. Now my neighborhood has started a new holiday tradition with the Christmas Stick.
Even decked with the requisite blinking, colored lights, the stick would make Charlie Brown's sad tree look positively vibrant by comparison. Though I suppose that even the most humble, even lifeless, piece of wood can be pressed into service in the War on Christmas.
Neighbors and their dogs stop by to admire the sight and read this sign explaining the origins of this odd species of street tree:

Genus: Holdenescus
Species: Stickitana uprightus
This rare tree, found mainly in the cities of North America, grows and reproduces through osmosis, using no leaves or flowers. At sapling stage it is pruned dramatically. This unique adaptation keeps birds from roosting and allows insects access to the tree's core. The Stickitana uprightus is often found in urban areas where under observant gardeners reside.
Heartfelt thanks to the Delaware Center for Horticulture for making it possible to observe this rare species in its native habitat.

Attentive readers may dimly remember the loss of the beloved pear tree outside my window back in September, 2005. Through a unfortunate series of events, including the planting of one tree that proved to be dead on arrival, this spot in an otherwise lovely neighborhood has remained untroubled by leaves or any sign of plant life for the last two years and three months.

The Solstice

Things are going to get brighter around here. The winter solstice occured this morning at 6:08 UTC, or 1:08 AM here on the east coast.
What is UTC, you ask? The familiar old Greenwich Mean Time has been replaced by the bureaucratically named Coordinated Universal Time or UTC. Apparently the earth wasn't rotating precisely enough. (Not that I had noticed).
UTC is one variation of Universal Time. Others include UT0 (which according to Wikipedia, is "not, strictly speaking, Universal"), UT1 (which varies up to 3 milliseconds a day), UT1R, UT2, UT2R, UTC-SLS (for Smoothed Leap Seconds) and UTS (Smoothed Universal Time).
The spring equinox is March 20 at 5:48 AM UTC, which means 1:48 AM our time. That's 89 days from today.

Business as Usual for Pepco Holdings, Inc.

Here's an interesting item from the Dow Jones Newswire that was brought to my attention a few days ago.

Constellation Energy Group Inc. (CEG) Friday said it will pay an undisclosed sum to buy 545 megawatts of electric power to be produced between 2011 and 2017 at a new combined cycle natural gas plant to be built by Pepco Holdings Inc. (POM) Conectiv unit in York County, Pa.
Constellation Energy will supply natural gas to the facility and provide payments over the delivery term to acquire the output of the facility, which is to be built in Peach Bottom Township, Pa., near Maryland.

You may be aware that Delmarva Power is saying it can buy onshore, out of state wind power cheaper than the proposed offshore wind project. But when it comes to investing in new power generation, it's business as usual for Pepco Holdings, which you might recall, owns Delmarva Power as well as Conectiv Energy.
By the way, the power is being sold to Constellation Energy via a Power Purchase Agreement (PPA), something Delmarva doesn't want to sign with Bluewater Wind.
Delmarva Power's position seems to be we're in favor of wind power, just not here, not now. Not here means don't build it in Delaware as called for in HB 6. Not now means don't do it as part of the process mandated by HB 6, but later when we get around to it. And now Delmarva's parent company seems to be saying not even wind; we'd rather build another natural gas plant, and get a utility to sign a PPA to buy the power and sell it to its customers for a 15 year period.
There is one difference between this PPA and the Bluewater PPA that Delmarva finds so distasteful: The one between Conectiv and Constellation is unlikely to protect customers from rising natural gas prices.

Yard Waste: Keep Piling It Higher and Deeper

The News Journal reports that legislators are once again planning to try to block the pending yard waste ban. Gregory F. Lavelle, a Republican who represents a district north of Wilmington was the only lawmaker mentioned. (Lavelle has also been on the radio this week tossing out spurious reasons for killing the windpower deal.)
The proposal would force DNREC to issue a permit that would raise the height limit on the Cherry Island landfill, based on the mistaken belief that landfill space is free:

"Putting lawn clippings in a highly engineered, secure land disposal just does not make any sense," said Nicholas A. DiPasquale, a former DNREC secretary and current conservation chairman for Delaware Audubon Society.
"It's really not necessary or appropriate," DiPasquale said. "We're basically throwing away a resource, and landfill space is going to increasingly become a premium. I think we need to reserve it for those things that we can't otherwise reuse."

Landfill space is not a renewable resource. The DSWA spent roughly $86 million to increase the height limit on Cherry Island by 23 feet. That's about $3.7 million per foot. That's a lot of money for the privilege of piling grass clippings.
In 2005, the DSWA estimated the cost of a new landfill to be $106 million, a figure that is almost certainly low. It makes economic sense to divert waste that doesn't need to be landfilled. Yard waste is the single largest and most easily diverted component of the household waste stream.

Facts, Law and Public Sentiment

Returning to the end of the News Journal story this morning:

Tom Noyes, whose Tommywonk blog is widely read among Delaware environmentalists, expressed optimism the issues could be worked out.
"We've got the facts on our side, we've got the law on our side, we've got public sentiment on our side. Now we just have to get talking to our legislators," Noyes said.

What did I mean?
We've got the facts on our side...
But don't take my word for it; read the findings of the PSC staff report released last Friday:

The Bluewater-Delmarva PPA establishes new, innovative generation that promotes fuel diversity in Delaware. The delivered cost of fuel to power plants throughout PJM is the single largest determinant of electric energy prices.
...
The Bluewater-Delmarva PPA would reduce Delaware’s reliance on wholesale market prices dictated by natural gas prices, and accordingly, would dampen SOS ratepayers’ exposure to price volatility.

It can hardly be said that the PSC staff is skewing the facts, given the staff's recommendations in October to kill what looked like a much less attractive proposal.
We've got the law on our side...
According to the PSC staff, the PPA on the table meets the requirements of EURCSA or HB 6, the law governing the entire process:

Bluewater’s PPA proposal presents a number of long-term system benefits provided for under the EURCSA. First and foremost, price stability – the primary goal of the EURCSA – is a principal attribute of the Bluewater-Delmarva PPA.

The News Journal editorial board made the point that the process is proceeding according to the law:

If they [legislators] want to kill the law they created, they should vote to kill it -- on the record.

We've got public sentiment on our side...
The thousands of public comments to the PSC have run roughly 20 to 1 in favor of wind power. But again, don't take my word for it. Spend some time reviewing the public record.
What we don't have at the moment is the political will in the General Assembly. But, as Al Gore recently noted, "political will is a renewable resource." Which leads to the last phrase in the quote:
Now we just have to get talking to our legislators.
By we, dear readers, I mean you.

"Another victory for mediocrity"

According to the News Journal, the issue of spreading the costs was the biggest stumbling block that led to the tabling of the wind power deal. Russ Larson, who as controller general represents the General Assembly, was given instructions to spread the cost (and benefits) to all Delmarva customers. The other three agencies could not agree.
The customer base was not the only issue that led to yesterday's non-decision. The proposal has some determined opponents. The paper's editorial board was quick to identify culprits:

Delaware's old-boy network in government apparently has scored another victory for mediocrity. This time a proposed offshore wind farm has been tabled indefinitely.

The editorial rightly points out wind power proposal has progressed thanks to an open process and shouldn't be killed behind closed doors:

The backhandedness of the action sends a big signal to other businesses considering settling in Delaware:
Don't do it because the state government doesn't play by the rules it sets.
If legislators oppose the process, they should come out and say so -- on the record.
If they have questions about the proposal, they should air them -- on the record.
If they want to kill the law they created, they should vote to kill it -- on the record.
The voters should know where they stand.

The news article ends on an upbeat note:

The yearlong discussion about the wind farm has given rise to a grass-roots environmental movement in Delaware. And after the meeting, those activists converged in private to determine their next steps.
Tom Noyes, whose Tommywonk blog is widely read among Delaware environmentalists, expressed optimism the issues could be worked out.
"We've got the facts on our side, we've got the law on our side, we've got public sentiment on our side. Now we just have to get talking to our legislators," Noyes said.

Stay tuned.

Short Circuit

The decision we have all been eagerly awaiting didn't happen today.
People in the auditorium at Wesley College had barely gotten out of their coats when Public Service Commission chair Arnetta McRae brought up the first agenda item: the Power Purchase Agreement to build an offshore wind farm in Delaware.
OMB director J.J. Davis moved to table the matter, noting that the four agencies had not come to a consensus. Russell Larson, the controller general, quoted the Lloyd Bridges character in the movie Airplane, "I picked a bad day to give up smoking." (I don't know whether Larson smokes or not.) He went on to explain that he represents 62 members of the General Assembly. (Not that he has discussed this with all 62 members; he has met with the legislative leadership.) DNREC secretary John Hughes made it clear that he supports the wind project as "sound public and environmental policy."
The vote to table was unanimous. We were in our seats no more than ten minutes.
I will be on with Allan Loudell of WDEL, 1150 AM, at about 4:24 this afternoon to offer a quick assessment. Allan plans to talk to some other players in the drama this evening.

Wind Power: Who Pays and Who Benefits?

Who should bear the costs and the benefits of wind power? The Public Service Commission (PSC) staff report offered this recommendation:

After an informed and deliberative review of the proposed PPA, Staff recommends that the State Agencies approve the PPA with the condition precedent that the Commission enter an order approving a non-bypassable charge, pursuant to 26 Del. C. § 1010(c), that spreads the cost associated with the PPA to Delmarva’s entire customer base.

I have been hearing of a great deal of interest in expanding the customer base. In and of itself, it's a reasonable question. However, making adoption of the PPA contingent is problematic
First the law governing this process, EURCSA, specifies Standard Offer Service (SOS) or retail customers, and does not allow for a change in the customer base as part of the decision on the outcome of negotiations.
Second, sending the issue to the General Assembly to act on this particular issue raises the risk of having legislators try to open the PPA on a host of other issues.
Pat Gearity addresses the legal issues in her letter to the PSC:

It is definitely possible to address the “fairness” issue (cost-sharing across DPL or state-wide) but I believe it must be done in a logical sequence, or the wind farm proposal could be destroyed in a Gordian knot of competing interests, through no fault of its own. I believe EURCSA, 29 Del. Code §1010c provides the answer (my bold below):

§ 1010. Electric distribution companies' obligation to serve customers.

(c) After hearing and a determination that it is in the public interest, the Commission is authorized to restrict retail competition and/or add a nonbypassable charge to protect the customers of the electric distribution company receiving standard offer service. The General Assembly recognizes that electric distribution companies are now required to provide standard offer service to many customers who may not have the opportunity to choose their own electric supplier. Consequently, it is necessary to protect these customers from substantial migration away from standard offer service, whereupon they may be forced to share too great a share of the cost of the fixed assets that are necessary to serve them as required by the Electric Utility Retail Customer Supply Act of 2006, 75 Del. Laws, c. 242. (72 Del. Laws, c. 10, § 3; 74 Del. Laws, c. 73, §§ 4, 5; 75 Del. Laws, c. 242, § 8.)

Section 1010c above states the purpose of the nonbypassable charge is to “protect” the customers from “substantial migration” as the result of a increased rates which could compel others to leave Delmarva Power for another supplier of power. There is no language in the statute to allows the Commission to condition approval of a contract on a surcharge hearing.

Marc Weiss and Nancy Sedmak-Weiss and Professors Firestone and Kempton offer similar arguments in their submissions, which can be read along with Pat's letter here.
If the PPA is approved tomorrow, it is likely to include some proviso on expanding the customer base. How the resolution is worded could determine whether the deal is concluded in a timely manner or the entire matter gets bogged down in the General Assembly.

Wind Power: What Should Be Done

On Tuesday, the Public Service Commission (PSC), the Office of Management & Budget (OMB), the Department of Natural Resources & Environmental Control (DNREC) and the Controller General will meet to consider, and possibly decide, the Power Purchase Agreement (PPA) between Bluewater Wind and Delmarva Power. The PSC staff report issued Friday offers a sound argument for adopting the PPA, and recommends that the agencies do so with one proviso:

After an informed and deliberative review of the proposed PPA, Staff recommends that the State Agencies approve the PPA with the condition precedent that the Commission enter an order approving a non-bypassable charge, pursuant to 26 Del. C. § 1010(c), that spreads the cost associated with the PPA to Delmarva’s entire customer base.

There has been considerable discussion, and plausible arguments offered, for spreading the costs beyond Standard Offer Service (SOS) customers. However, such a decision lies beyond the matter on the table before the PSC on Tuesday.
As I wrote to the PSC on Thursday, approval of the PPA should not be conditioned on any legislative change to EURCSA, the law governing the process:

If the PSC and other state agencies believe that it would be appropriate to extend the customer base, it should be presented to the General Assembly in the context of an approved PPA. We have all gained an appreciation of the complexity of this process, and should not want the possible need for action on one point—extraneous to the PPA itself—to provide an opening to revisit the entire range of issues reflected in the PPA.

In other words, action on the PPA should be governed by the current law, and not delayed by any possible revisions now being contemplated. The wind power deal on the table would be good for Delaware for reasons cited in the PSC staff report, and merits approval now as provided for under EURCSA.

Wind Power: What Next?

For those wondering what should and will happen on Tuesday, all I can say is I'm thinking. Stay tuned.

PSC Staff Report Recommends Adopting the Bluewater Deal

The Public Service commission staff has released its report on the Power Purchase Agreement. Let's go right to the punchline:

After an informed and deliberative review of the proposed PPA, Staff recommends that the State Agencies approve the PPA with the condition precedent that the Commission enter an order approving a non-bypassable charge, pursuant to 26 Del. C. § 1010(c), that spreads the cost associated with the PPA to Delmarva’s entire customer base.

The report reviews the ups and downs of the negotiations and identifies the ways in which the PPA meets the requirements of the Electric Utility Retail Customer Supply Act of 2006 (EURCSA):

Bluewater’s PPA proposal presents a number of long-term system benefits provided for under the EURCSA. First and foremost, price stability – the primary goal of the EURCSA – is a principal attribute of the Bluewater-Delmarva PPA. The Bluewater-Delmarva PPA establishes new, innovative generation that promotes fuel diversity in Delaware. The delivered cost of fuel to power plants throughout PJM is the single largest determinant of electric energy prices. Natural gas is the primary fuel of critical relevance in setting energy prices in the PJM market. The long-term outlook for natural gas prices reflects robust demand and increased reliance on imported natural gas supplies from the Middle East, the Former Soviet Union, and Africa for which the U.S. must compete with Asia and Europe. Accordingly, over the long-term, natural gas prices are expected to remain high by historic standards and also extremely volatile. Moreover, as electricity consumers across the nation have painfully learned, the thin margin between the U.S. supply and demand can have disastrous effects on price in the event of natural disasters or pipeline disturbances. The Bluewater-Delmarva PPA would reduce Delaware’s reliance on wholesale market prices dictated by natural gas prices, and accordingly, would dampen SOS ratepayers’ exposure to price volatility. Delaware’s captivity to the volatility of the PJM market and its RPM rules is the precise ground for Staff’s May 3, 2007 recommendation that Delaware take control of its energy future through a diverse energy supply portfolio.

This report should carry considerable weight, considering that the staff previously recommended against the terms on the table at the end of October.

My Letter to the PSC

December 12, 2007

Ms. Arnetta McRae, Chair
Delaware Public Service Commission
861 Silver Lake Boulevard
Cannon Building, Suite 100
Dover, DE 19904

Re: PSC Docket No. 06-241

Dear Ms. McRae:

After months of difficult negotiations, careful analysis and thousands of public comments, the time has come to direct Delmarva Power to execute the Power Purchase Agreement with Bluewater Wind.
There are four compelling reasons for completing a Power Purchase Agreement (PPA) with Bluewater Wind: First, we in Delaware are particularly vulnerable to the potential effects of climate change and rising sea levels. Second, our citizens need relief from continuing toxic emissions from burning fossil fuels. Third, and most crucial in my view, we need the long-term price stability that a wind farm could provide as part of our energy portfolio. Fourth, the PPA now before meets the requirements of EURCSA, and the citizens deserve to have our state government act decisively to secure and protect our long-term interests.
Given the cut in the rate to $98.93 per MWh, the argument that customers can’t afford wind power is losing credibility. In the face of likely increases in fossil fuel prices over the life of the PPA, the wind farm will accomplish one of the chief objectives of EURCSA and provide price stability in a way that no other power source or market mechanism now available can.
Opponents of the wind farm claim that we can't afford it. The simple fact of the matter is that wind power would cost us a little bit more if—and only if—fossil fuel prices remain flat for the next thirty years.
If recent history is any guide, and if the laws of economics are not overturned, we can expect fossil fuel prices to continue to climb over the next thirty years. The PPA now before you offers a unique mechanism to protect us from the cost of these coming price increases.
This is highly unlikely. Natural gas prices have triple over the last ten years. The International Energy Agency (IEA), in its most recent World Energy Outlook, projects that overall energy demand, including natural gas, will increase by 55 percent by the year 2030. [1] The IEA projects that demand for coal power will increase 73 percent by 2030.
At the same time, the need for carbon emission controls will increase the cost of coal power by at least 20 percent, according to an MIT study. [2] Taken together, increased demand, limited supply and the need for further emission controls can only mean sharply higher prices. The proposed wind farm would provide a measure of price stability (one of the objectives of EURCSA) as part of our energy portfolio.
There has been considerable discussion of whether the costs (and benefits) of wind power should be restricted to SOS customers or should be extended to all of Delmarva’s customers. This is a point that can only be decided by the General Assembly. However, this question is not on the table and should not hold up approval of the PPA.
If the PSC and other state agencies believe that it would be appropriate to extend the customer base, it should be presented to the General Assembly in the context of an approved PPA. We have all gained an appreciation of the complexity of this process, and should not want the possible need for action on one point—extraneous to the PPA itself—to provide an opening to revisit the entire range of issues reflected in the PPA.
I wish to voice my appreciation of the extraordinary work of the Commission, the other state agencies, and most especially the Commission staff. I should also note that the PPA now on the table vindicates your decision to direct that negotiations continue and give Professor Hamermesh a more active role. His leadership in resolving the many difficult issues presented in these negotiations has resulted in a deal that will provide long-term economic benefits for ratepayers.
Through the hard work of many, we now an opportunity to accomplish something scarcely imagined a year ago. I urge you exercise your authority under EURCSA and adopt the PPA now before you.

Sincerely,
Thomas Noyes

[1] http://www.worldenergyoutlook.org/
[2] http://web.mit.edu/coal/

Delaware, Appalachian State and Wind Power

Professor John Whitehead of Appalachian State University (the same ASU the University of Delaware plays tomorrow for the NCAA 1-AA football championship) takes note of Delaware's wind power debate and the upcoming game in the blog, Environmental Economics:

A mighty wind: part XIX
On the eve of the big Mountaineers vs Chickens I-AA championship game, Delaware is considering the country's first offshore wind farm. Keep up to date on the wind issues over at Tommywonk and the football game at Gameday Central.
I don't know anything about the issue but it appears that there is little resistance and it might actually happen. This likely means that:
a) there are no rich people in Delaware that own massive beach cottages (e.g., DuPont)
b) the rich people in Delaware that own massive beach cottages aren't as bratty as the rich people that own massive beach cottages in Massachusetts (ahem, ASU beat UMass for the 206 I-AA national championship)
c) Rehoboth Beach sucks anyway
d) all of the above
Here is the official FCS website.

I posted this response:

You are right that there is little popular resistance to the proposed wind farm. As for why, it is not because Rehoboth Beach sucks--it's a beautiful place. One possible factor is that the wind turbines would be located 11.5 miles off the coast, much farther away than the proposed Cape Wind project.
If you're looking for a good guys vs. bad guys narrative, the local utility, Delmarva Power, is fighting it every step of the way.
Perhaps the fact that Delaware's residents aren't so bratty will be a factor in our favor in the game. FYI, we're called the Blue Hens, not the Chickens.

The professor replied, asking:

Isn't a hen a chicken, much like a mountaineer is a hillbilly?

It seems that some matters take precedence over using sound economic analysis to save the planet.

The Arbitrator's Report

Lawarence Hamermesh, a professor at Widner Law School, was appointed to mediate the negotiations between Delmarva Power and Bluewater Wind. His role was upgraded to arbitrator last month.
Professor Hamermesh's report on the negotiations reveals just how active he has been as arbitrator. It specifies the disagreements between the parties, describes which issues he chose to arbitrate and identifies one important point that would require action by the General Assembly.
We have known that Delmarva continues to balk at the Power Purchase Agreement (PPA). Now we know the sticking points. For instance the proposed pricing and the overall output of 300 MWh are Bluewater's proposal, and have not been accepted by Delmarva.
Even more fundamental is Delmarva's refusal to accept the length of the PPA, 25 years. The company buys power year to year and has not accepted the basic premise of a long term PPA to provide price stability. The term and the pricing are the two most important issues in the negotiations.
Professor Hamermesh writes of the surreal argument over the treatment of an obscure accounting standard, FIN 46:

FIN 46 (Section 12.4)
6. The most divisive and time-consuming issue in the negotiations was the treatment of a risk that, by all accounts, is extremely unlikely to arise. That risk involves the possibility that the assets and liabilities associated with the Project will, at some indeterminate point in the future, be required to be consolidated on Delmarva’s financial statements under FASB Interpretation No. 46, or “FIN 46”. The particular risk addressed by the parties that might bring about this consolidation is the possibility of amendments to FIN 46.
7. Neither of the parties contends that such financial consolidation would be required under current accounting rules. Notably, confirmation of that proposition is a condition precedent to the effectiveness of the December 10 PPA (Section 5.1(a)(iii)). Likewise, both parties seem to acknowledge that even if pertinent accounting rules did change in a manner that would otherwise call for consolidation of the Project on Delmarva’s financial statements, it is most likely that the original accounting treatment of the Project and the December 10 PPA would be “grandfathered,” in which case such original treatment would continue to apply. I therefore believe that it would be most unfortunate if the disposition of an issue as speculatively problematic as the treatment of a FIN 46 consolidation event contributed in any material way to the Agencies’ overall approval or disapproval of the December 10 PPA.
8. Because it perceives that the adverse effects of consolidation would be severe, however, Delmarva has vigorously asserted that it should be absolutely protected from FIN 46 consolidation risk. In particular, it has sought the absolute right to terminate the PPA if a FIN 46 consolidation were required, and could not be cured promptly by Bluewater. On the other hand, Bluewater has expressed grave concern that an event not of its own making (an accounting rules change) could permit Delmarva to abandon the PPA, leaving Bluewater unable to recoup its substantial investment in the Project without any protection under the terms of the PPA.

After considering the pitfalls and potential remedies, Hamermesh offered this proposal on how to handle the issue:

12. Accordingly, the only solution I considered fair and appropriate was one in which an independent assessment of appropriate measures would be made if and when a FIN 46 consolidation were actually threatened, and the potential effects of such a consolidation and measures that might avoid it could be evaluated in a concrete context. Section 12.4 thus establishes a process in which, following notice of a threatened FIN 46 consolidation, an independent evaluator would initially recommend potential means to remedy the circumstances creating the FIN 46 determination. The independent evaluator would give preference to remedies that would avoid consolidation pursuant to FIN 46, avoid termination of the PPA, and, to the extent practicable, minimize adverse impacts – including impairment of the benefits of the PPA – on the parties and on Delmarva’s customers.

The issue of whether to spread the cost (and the benefits) to all of Delmarva's customers, not just SOS (Standard Service Offer) customers cannot be resolved in the negotiations. Since the original bill (EURCSA) specifies SOS customers, only the General Assembly can change the customer base that would be served by the wind farm. Delmarva is insisting that the General Assembly act on this change before the PPA's effective date.
Professor Hamermesh continues with discussion of some other points of contention. Overall, his report points out the considerable disagreement and technical issues that need to be resolved in order for the PPA can be executed. It seems clear to me that the negotiations would not have progressed this far without his taking an active hand.

An Open Letter to the Legislative Leaders of Delaware

Nine of Delaware's leading environmental organizations have sent the following letter to the leaders of the General Assembly:

Citizens for a Better Sussex
Citizens for Clean Power
Clean Air Council
Coalition for Climate Change Study and Action
Delaware Audubon
Delaware Chapter of the Sierra Club
Delaware Nature Society
Green Delaware
League of Women Voters of Delaware

December 12, 2007

Representative Terry R. Spence
Speaker of the House
Senator Thurman Adams
President Pro Tempore of the Senate
Representative Richard C. Cathcart
Majority Leader
Senator Anthony J. DeLuca
Majority Leader
Representative Clifford G. “Biff” Lee
Majority Whip
Senator Patricia M. Blevins
Majority Whip
Representative Robert F. Gilligan
Minority Leader
Senator Charles L. Copeland
Minority Leader
Representative Helene M. Keeley
Minority Whip
Senator Liane M. Sorenson
Minority Whip

An Open Letter to the Legislative Leaders of Delaware:

For a number of months, representatives of the organizations listed above have worked to raise the level of public awareness about the health and environmental impacts associated with fossil fuel power production. Over this same period, we have witnessed the release of the Fourth Assessment of the International Panel on Climate Change (IPCC), which offers a dire picture of our future if we fail to undertake immediate and
aggressive measures to reduce carbon emissions, the major cause of global warming. Coal-fired power plants, which now produce more than half of the nation’s electrical power, are the largest source of carbon and toxic air emissions in Delaware and throughout the country.
We support the aggressive adoption of energy efficiency and conservation measures. However, we recognize that new power production from renewable energy sources also will be required. We have been evaluating the benefits of offshore wind energy as a clean, non-carbon emitting alternative energy source. Our members have spent countless hours reviewing documents and getting educated on the complexities of utility regulations and economics.
Most of our organizations are comprised of volunteers who have no other interest than ensuring the best possible outcome for the citizens of Delaware. We believe the Public Service Commission and other decision-making agencies should direct Delmarva Power to enter into a long-term Power Purchase Agreement to construct the proposed offshore wind energy project.
We are convinced that, while this project may initially cost a little more than fossil fuel-based energy, in the long run there will be an overall cost savings, not only in terms of reduced rates and stable prices, but in healthcare and environmental costs as well.
While both land-based and offshore wind energy are far superior to fossil-fuel energy sources, land-based wind energy alone will not be able to satisfy increasing requirements for renewable energy by states and the federal government. Delaware’s land-based wind energy resource is extremely limited. However, nearly 80% of the nation’s high-quality, near-shore (less than 30m depth) wind energy resource is located in the Mid-Atlantic coastal region. This geographic advantage represents a huge economic development potential for Delaware that would help diversify our economy, provide a new source of high-skilled, well-paid jobs, and offer a new revenue stream to the state from power exports.
This issue will go before the Public Service Commission on December 18th. It is critical that Commission members and the other decision-making agency representatives support the offshore wind energy project. We urge you to instruct Controller General Larson, as your representative to these proceedings, to vote in favor of the Power Purchase Agreement currently before them.
Difficult decisions require strong leadership. We must take control of our energy future.

Nicholas A. DiPasquale

Nick is conservation chair of Delaware Audubon. He previously served as Delaware's secretary of Natural Resources and Environmental Control.

It's Time to Do the Deal

We seem to have a pretty good deal on the table. But it's still not good enough for Delmarva Power, as arbitrator Lawrence Hamermesh pointed out in the transmittal letter that accompanied the agreement:

Enclosed for filing is the form of Power Purchase Agreement (PPA) prepared in accordance with the agencies’ December 4, 2007 Order. While it is labeled an “agreement,” and Bluewater has indicated that it is prepared to enter into that agreement, I wish to make clear that there are important aspects of it which Delmarva opposes, and there is therefore no mutually acceptable PPA at this point. I will submit by the end of the day on Wednesday a summary of the several issues on which it was necessary for me to specify a resolution to be embodied in the agreement, and my rationales for resolving them as I did.

Even though the price has come down, the News Journal reports that Delmarva Power is still balking at the deal, quoting spokesman Bill Yingling:

Yingling said Delmarva continues to have concerns that offshore wind power would cost customers too much. Other forms of renewable energy, such as onshore wind, could be purchased from out of state, he said. The onshore option is not currently on the table, however, as the agencies are following a legislative directive to seek new Delaware-based power generation options.
Yingling said Delmarva continues to be concerned that residents and small businesses, which buy 28 percent of Delmarva Power's electricity, will pay for the extra costs of the wind power. Industrial customers would receive the wind power, but not have to pay more for it.
Yingling said Delmarva was not refusing to sign a contract.
"At this point, we have not been asked to sign a contract yet. So it would be premature
to say we weren't willing. We look forward to seeing how the state agencies address these significant issues in this proposal," Yingling said.

These issues aren't really addressed in the PPA itself. When Yingling and other Delmarva execs talk about seeking other, out of state, sources of renewable energy, what they really mean is that Delmarva wants to scrap the current negotiations and go shopping for energy on the market, just as the company does now. It's a direct challenge to the authority of the PSC and the other state agencies under the law governing the current negotiations.
The second issue, whether standard offer service (SOS) customers take on the burden (and the benefits) of the wind power, is a more subtle matter. If fossil fuel prices don't rise, SOS customers will pay a little more. But if fossil fuel prices continue to climb, these customers will realize savings for 25 years. The question is whether to spread the costs—and the benefits—to all of Delmarva's customers.
But the heart of the matter is that Delmarva Power doesn't want to do a deal, period, end of sentence. The PPA now before us is a good deal. The time has come for the PSC and other state agencies to exercise their authority under the law and direct Delmarva Power to sign the agreement.

Agreement between Delmarva Power and Bluewater Wind Presented to the PSC

The Public Service Commission (PSC) has posted the Proposed Power Purchase Agreement (PPA) between Delmarva Power and Bluewater Wind, and the numbers look good. The PSC staff prepared this summary of the terms:

Summary of Terms of Proposed Power Purchase Agreement Between Delmarva Power & Light and Bluewater Wind LLC

This proposed contract contains hundreds of provisions that define the responsibilities of the parties including, but not limited to, the obligations, rights, operating conditions, timing and damages associated with performance or failure to perform. This summary does not, in any way purport to identify how, when or where those provisions affect the contract obligations. It is an overview of the main structure of the proposed contract. Proposed project consists of 150 wind turbines with a total nameplate capacity of 450 MWs with an anticipated full Commercial Operation Date of between June 30, 2014 but no later than November 30, 2016 with a term of 25 years from Commercial Operation Date.
The wind farm would be located approximately 11.5 miles east of Rehoboth Beach making landfall near or at Bethany Beach. The main interconnection point with the electric grid will be at the Indian River Interconnection Point.
DP&L has an obligation to purchase up to 300 MWs of energy in any given hour with a maximum cap of 1,357,402 MWhs annually.
Each MWh of energy will include the associated environmental attribute (e.g. Renewable Energy Credits).
The pricing below for the project products will be escalated at 2.5% per year after 2007:
* Base Capacity Payment Rate = $70.23 per kW-year
* Base Energy Rate = $98.93 per MWh
* Base Renewable Energy Credits Rate = $19.75 per REC

The News Journal is reporting that Delmarva still doesn't want to do the deal.
The PPA itself is 119 pages long. I'll have to get back to you.

TommyWonk Talking Wind Power on WDEL, 1150 AM

Listen up. Allan Loudell has invited me back on WDEL, 1150 AM, to discuss the latest on wind power, including recent news from Europe on the question of how much wind power makes sense. WDEL also posts podcasts of recent interviews for your listening pleasure.
Update: Wouldn't you know it, while I was preparing to talk with Allan, the PSC posted the new PPA. Delawareliberal got to it first.

Wind Power: How Much Is Too Much?

How much wind power is too much? The answer depends on two other questions: First, how much have you got? We'll take it. The demand for clean power is that great.
The Sunday Times (as in the London Times) reports that Great Britain is thinking big:

John Hutton, the energy secretary, will this week announce plans to build enough turbines to generate nearly half Britain’s current electricity consumption. He will open the whole of Britain’s continental shelf to development, apart from areas vital for shipping and fishing.

The opinion that Bluewater Wind should build 200 turbines instead of 150 currently being negotiated seems rather modest by comparison. Which brings us to the next question: How much can the grid manage?
Because wind power is intermittent, the grid needs to be able to smooth out the overall supply to match the load. The Public Service Commission and other state agencies ordered Delmarva Power to negotiate a backup natural gas power plant to deliver electricity to the grid when the wind isn't blowing.
The proposed wind farm is intended to provide a Delaware-based source of electricity that can keep our rates stable for 25 years. But the wind farm will be connected to a grid that is much bigger than Delaware. The PJM grid serves 13 states and the District of Columbia. Some observers, including Willett Kempton and Jeremy Firestone, think the backup facility isn't needed, and that existing power plants can pick up the slack when the winds die down. A recent study in Europe looked at this question and concluded that dedicated backup power isn't needed:

The production of wind power varies and is harder to forecast than the fluctuations in electricity demand. Adding large quantities of wind power to power systems is therefore challenging. The power system impacts of wind power were studied in international collaboration coordinated by VTT Technical Research Centre of Finland. The results indicate that the frequently stated claim of wind power requiring an equal amount of reserve power for back-up is not correct. A substantial adjustment tolerance is already built in to our power network, and the impacts of wind power fluctuations can be
further balanced through a variety of measures.

The English version of the VTT working paper can be found here.
Other sources of electricity create variability. Power plants of all sorts go online and offline all the time. The North American power grid is designed to manage power fluctuations and match supply to demand in real time. Given a large enough grid, the variability of wind power can be accommodated. Slack winds on the Great Lakes can be offset by strong winds on the Atlantic Coast. According to the VTT, a well managed grid can should be able to efficiently handle much more wind power than is currently being produced:

With wind power penetrations amounting to 10—20% of the gross electricity demand, the additional costs (per MWh of wind power) arising from the balancing of wind power fluctuations are estimated to range between 1—4 EUR/MWh. This is less than 10% of the long-term market value of electricity.

This by the way is far less than Delmarva Power's estimate of the cost of backup power. Professors Kempton and Firestone argue that a backup power source is not needed, and that the PSC and other agencies could decide to go ahead with wind power while giving the backup power issue more study.
I don't know how Great Britain might manage with half of its electricity coming from wind power. It's never been done. The British Isles may be able to balance its loads given a grid management system of sufficient sophistication. It certainly is an ambitious goal.

Carbon Controls: Coming Soon to a Region Near You

One of the fundamental arguments for the proposed wind power project is that the eventual imposition of carbon emission controls would make electricity from fossil fuels more expensive. Well, as the News Journal reports, eventual may come sooner than we imagined:

Seven Northeast states signed an agreement in 2005 to cap, then reduce, anticipated pollution from all large power plants by 2019. Three others have since signed on to the effort, aimed at cutting carbon dioxide emissions linked to rising global temperatures.
All of the states, including Delaware, plan to require producers to buy pollution rights by the ton starting next year. Companies are expected to add those costs to their prices, although most Delaware plants are "merchant" generators that sell their output into a regional supply grid.

A program that imposes additional costs on carbon emissions would tip the scales in favor of wind power before the wind farm is even built. The Regional Greenhouse Gas Initiative meets again on January 7, and could forward a proposal to the General Assembly early in the year. Stay tuned.

Not Particularly Transparent: Part 3

Last week, Delmarva Power spokesman Bill Yingling made a startling admission in a letter to the News Journal:

Delmarva Power recently discussed in the media an estimated figure of more than $20 billion in relation to the cost of a proposed offshore wind farm and backup power generation facility in Delaware (The News Journal Sunday Perspective, Nov. 18).
This figure did not accurately explain the costs. We at Delmarva Power believe it is important to step forward and correctly clarify this figure on an important public issue.
Correctly stated, this figure represents the potential total cost of power supply for all Delmarva Power standard offer service in Delaware for 25 years -- rather than the total cost to customers for just the wind farm and a backup provider.
Of this total amount, Delmarva Power estimates that about $5 billion would go to Bluewater Wind to cover the cost of electricity from the wind farm. Another estimated $4 billion to $5 billion would pay for backup power supply for the times when wind is not sufficient to generate electricity.
The balance would cover the cost of electricity that Delmarva Power must buy through other arrangements to meet the rest of the power supply needs for standard offer service customers, because the wind farm and backup provider would only meet a portion of our customers' needs.
The projected monthly per-customer impact that Delmarva Power has cited in this matter still apply and remain unchanged.
Delmarva Power recognizes this mistake and appreciates the opportunity to clear up any confusion this may have caused.
William R. Yingling, Director of communications, Delmarva Power, Newark

In response, I emailed Mr. Yingling:

I appreciate your willingness to publicly acknowledge a mistake in Delmarva's projected cost of wind power. The blizzard of numbers flying around has made it difficult for even the best informed observers to evaluate the costs and benefits of the proposed wind farm.
I have two questions about the numbers cited in your letter:
First, as to the $5 billion you cite as the cost of electricity from the wind farm, can you tell me the cost per MWh (or KWh) used to estimate that overall cost?
Second, as to the $4 to 5 billion for backup power, is this the total cost of backup power or the difference between the cost of backup power and the cost of electricity if Delmarva continued to buy power as it currently does?
I was struck by the comments at the PSC meeting last week in seeking apples to apples numbers. Your openness in being willing to acknowledge an error should help us better understand the decision before us.

After an initial reply in which he said he would look into my question, I got this response five days later:

Dear Mr. Noyes,
In response to your inquiry, I recommend that to get a full understand our position around our estimated cost of this proposed project to consumers you should refer you to the Delmarva Power website, http://www.delmarva.com/.
Under the section "Reports of Interest" you'll find reports from Pace Global Energy Services and ICF International analyzing the proposal.
I appreciate your interest in the subject and I thank you for your inquiry.
Sincerely,
--- Bill Yingling

The Pace report is the one described by Jeremy Firestone as "not particularly transparent." (See my posts on the report, Part 1 and Part 2.) I consider myself better informed than most on this topic, and still have trouble making sense of Delmarva's numbers. Professor Firestone offered this simple way of understanding the numbers:

Multiply 22.5 by .24 (the proportion of load served by the project); you should get about the 5 billion.

That was easy. The $5 billion is the total spent on wind power over the 25 years of the project, not the extra cost to ratepayers Delmarva Power likes to talk about.
Last month, the Public Service Commission and other state agencies asked the PSC staff to try to come up with a common set of numbers (including assumptions) to make it easier to compare the claims and counterclaims of the parties to the talks.
As for the proposed backup facility, there is some question as to whether it is really needed. Stay tuned.

The Environmental Benefits of Family Values

The family values crowd may conclude that there's something to this environmental stuff after all. A study published in the Proceedings of the National Academies of Science concludes that married households are more environmentally efficient than divorced households. First, divorce mean more households:

We found that average household size (number of people in a household) in divorced households (households with divorced heads) was 27–41% smaller than married households (households with married heads) in 12 countries across the world around the year 2000 (between 1998 and 2002). If divorced households had combined to have the same average household size as married households, there could have been 7.4 million fewer households in these countries.

Further, divorced households are less energy efficient:

In the United States (U.S.) in 2005, divorced households spent 46% and 56% more on electricity and water per person than married households. Divorced households in the U.S. could have saved more than 38 million rooms, 73 billion kilowatt-hours of electricity, and 627 billion gallons of water in 2005 alone if their resource-use efficiency had been comparable to married households.
Furthermore, U.S. households that experienced divorce used 42–61% more resources per person than before their dissolution.

If you're divorced and want to reduce your environmental impact, try a second marriage:

Remarriage of divorced household heads increased household size and reduced resource use to levels similar to those of married households. The results suggest that mitigating the impacts of resource-inefficient lifestyles such as divorce helps to achieve global environmental sustainability and saves money for households.

Does Mother Nature really care if you acquire a new mother in law? According to the L. A. Times, the study's lead author points out that living together in any circumstances can produce the same environmental benefits:

"Turning on the light uses the same energy whether there are two people or four people in the room," said lead author Jianguo Liu, an ecologist at Michigan State University.
The extra electricity generation spews more carbon dioxide into the air, exacerbating global warming.
"If you don't want to get remarried, maybe move in with somebody you like," said Liu, who just celebrated his 20th wedding anniversary.
Other potential solutions include polygamy, communal living or roommates.
"I'm just a scientist trying to present the facts," Liu said. "I'm not promoting one way or another."

No Nukes

World War III, IV or Whatever has been cancelled. As the New York Times and nearly every other news organization has reported the rationale for bombing Iran has evaporated:

WASHINGTON, Dec. 3 — Rarely, if ever, has a single intelligence report so completely, so suddenly, and so surprisingly altered a foreign policy debate here.
An administration that had cited Iran’s pursuit of nuclear weapons as the rationale for an aggressive foreign policy — as an attempt to head off World War III, as President Bush himself put it only weeks ago — now has in its hands a classified document that undercuts much of the foundation for that approach.

Not that there aren't some still beating the war drums:

There are still hawks in the administration, Vice President Dick Cheney chief among them, who view Iran with deep suspicion. But for now at least, the main argument for a military conflict with Iran — widely rumored and feared, judging by antiwar protesters that often greet Mr. Bush during his travels — is off the table for the foreseeable future.
As Senator Chuck Hagel, Republican of Nebraska, put it, the intelligence finding removes, “if nothing else, the urgency that we have to attack Iran, or knock out facilities.” He added: “I don’t think you can overstate the importance of this.”

Perhaps a long overdue sense of realism is sinking in:

After all, the first two wars on Mr. Bush’s watch remain unresolved at best.

My Christian Name

Are some names more Christian than others? An anonymous commenter thinks so:

It is clear that Obama purposefully wants to preserve ambiguity about his religious preferences. If he wanted to clearly indicate that he is a Christian, he would have adopted a *CHRISTIAN* name instead of the overtly *MUSLIM* "Barack Hussein". There is a long biblically sanctioned tradition of heathens changing their names upon becoming followers of Christ (particularly if their original names are offensive), for example Simon->Peter, Saul->Paul. So there is a lot of legitimacy in questioning Obama's religious proclivities.

Does the Christian faith require new members to change their name upon becoming members? Most churches do not.
My Christian name is Thomas. It was given to me when I was baptized. But how Christian is the name Thomas? We read of an Apostle Thomas, so that should settle it right?
Not so fast. Thomas is an English version of a much older name. (Keep in mind that the English language arose centuries after New Testament times.) The name Thomas in Greek, the language in which the Gospels were written, is Didymus. Thomas in Aramaic, the language spoken by Jesus and his disciples, is Te'oma.
So is Te'oma a more Christian name than Thomas? Is my baptism into the church less legitimate because of the way I spell and pronounce my name? I don't think so. The assertion that a western European name is more Christian than a Middle Eastern name is not supported by the historical record of the growth of the Christian church.
There are many reasons why a citizen may like or dislike a particular candidate. A citizen is free to vote against a candidate based on the sound of his or her name. But a look at the history and breadth of Christianity over the last two millennia does not support the assertion that a person with a non western name can't be considered a legitimate Christian.