Delmarva Power Region President Gary Stockbridge welcomes a thorough look at the company’s $42 million rate case.
Delmarva has proposed the increase as it spends heavily to improve the reliability of its system. The Delaware Public Service Commission plans to investigate whether the added investment is necessary. Stockbridge says the job of the PSC is to determine whether the investment is justified. In response to criticism that Delmarva is going to the well too often in seeking rate hikes, Stockbridge says the utility is entitled to seek rate relief to meet returns set by regulators.
In the past, Delmarva was able to avoid rate requests through growth in the number of customers. That has changed, with a tough economy resulted in slow growth, Stockbridge says.
The Delmarva President says the company has worked hard to improve reliability since problems in the 1990s led to a public outcry over its performance. Delmarva also underwent an expansion, a name change to Conectiv, a successful effort to deregulate electric power, an acquisition by Washington, D.C.-based Pepco and the name reverting back to Delmarva.
Along the way, Delmarva has seen its customer satisfaction steadily improve “ from the 50s to the 80s,” with a dip when the big rate increase went into effect.
He notes that one reason reliability is not a big issue involves the state largely avoiding the problems of its neighbors in dealing with Hurricane Sandy. That would change if a devastating storm hits the state.
The proposed rate increase has drawn criticism from both political parties, with some Democrats highlighting the impact of a rate hike on the poor, while criticizing the cost of smart meters. Stockbridge says in the long term, smart meters reduce costs by eliminating onsite meter reading and offering more options for customers to monitor and control energy use.
Some Republicans are taking aim at the state’s alternative energy mandates that are not directly related to the rate request. The mandates for higher-priced energy affect the electrical supply side of your electric bill, with the latest Delmarva proposal affecting the delivery side.
Stockbridge says the energy mandate affects bills, but does not advocate dropping the requirements or increasing the 25% in the mandate. “We like a balance,” he says. At the same, Stockbridge does not see an immediate need for a massive offshore wind project, like the now dormant Bluewater Wind proposal off the coast of Rehoboth Beach.
Wind and solar power does require effective management of the grid when the sun is not shining and the wind fails to blow. That task falls to PJM, the manager of the grid in the region.
“That’s what we like about Bloom,” Stockbridge says of perhaps the most controversial alternative energy source, the Bloom fuel cell servers that will be built at the University of Delaware STAR campus in Newark. The use of power from Bloom servers under a deal with the State of Delaware led to a lawsuit, but Stockbridge notes that the cells offer and advantage by operating around the clock and do not require a balancing of the grid to account for the ups and downs of wind and solar.
So far, the fuel cells that are installed at Delmarva sites, have been highly reliable and operated without interruption during Superstorm Sandy.
The region is seeing a major shift in generation to natural gas as prices for that fuel decline and clean air standards lead to the closing of coal-fired plants and construction of more gas-fired sites.
The effect of the changes has been relative stability of prices as higher rates for power delivery have been offset by lower power costs.
Regional grid operator PJM estimates the equivalent of the generation needed to power homes in the state of Indiana has been retired in recent years as coal-fired plants have been shut down.
The issue that remains is the cost of alternative energy versus the benefits of cleaner air.
Stockbridge says is difficult to quantify the benefits of a healthier environment and that will lead to a continued argument over costs versus benefits.
While on the topic of natural gas, Stockbridge notes that demand for residential and small business hook-ups to natural gas is increasing.
Service requests in many cases, are coming from those with oil-fired furnaces, Stockbridge said. Improvements in efficiency of heat pumps makes that form of heating and cooling more competitive with natural gas, he added.
Delmarva has put a proposal before the Public Service Commission that would allow more property owners near existing natural gas lines to hook up with large upfront costs. Stockbridge says the proposal is similar to the guidelines for the state’s other natural gas supplier, Chesapeake Utilities.
Chesapeake serves natural customers south of the C&D Canal, with Delmarva operating mainly north of the canal.
