providing some 'relief' for Delmarva Power customers
from the impending 59% rate increase and requiring
the utility company to plan long-term for acquiring
sufficient electricity to "meet its customers needs
at a minimal cost" was approved by a wide margin in
the state House of Representatives although
supporters agreed it was not all they would like to
have been able to do to address the crisis.
"No one holds this out to be
a panacea," said William Oberle. "It's imperfect, but the
best we can do today."
Dennis Williams, however,
said the payment-deferral plan the measure provides "will
come back and slap us in the face again" when residents have
to settle up with the company beginning in 2008. James
Johnson described the plan as "something like a pay-day
Williams, Johnson, Helene
Keeley and Hazel Plant, who have Wilmington constituencies,
were the only ones to vote against the measure. Joseph
DiPinto, who also represents a city district, and 33 other
representatives voted in favor. There was one abstention and
two members were absent.
Robert Valihura, primary
sponsor of the measure and chairman of the House energy
committee, acknowledged that there will be an
end-of-the-term balloon payment for customers who do not
elect to 'opt-out' of the deferral plan by Apr. 28. "Make no
mistake about it -- there is a cost to this plan," he said.
The company will be permitted
to charge 5% annual-rate interest on deferred amounts, which
Valihura said will amount to $25.20 for a 'typical'
customer. Oberle pointed out that the eventual rate increase
for customers not 'opting out' will most likely exceed 59%.
Here's how deferral plan will
work: Beginning May 1, customers will pay at 15% higher than
the present rate. Starting Jan. 1, 2007, they will pay 25%
higher. From Jun. 1, 2007, their rate will be 19% higher. Between Jan. 1, 2008, and Jun. 1, 2009, they will
pay all deferred amounts plus the interest, in equal monthly
installments, as well as having to pay full rate for
electricity being used at that time. The legislation refers
to that as having to "true-up" to the rate level those
who do not defer as paying.
Delmarva will be allowed to
calculate the amount of deferrals as the average of all
customers in a rate category rather than by individual
"If you can afford it, you're
better off taking [the full rate increase] up front," Oberle
A last-minute amendment
drafted just before the House took up the legislation may
have paved the way for bringing direct competition into
Delaware's residential electricity market.
During a committee hearing
earlier in the day, Harry Warren, president of Washington
Gas Energy Services, a natural gas and electricity supplier
in the Washington, D.C., metropolitan area, said his company
would be interested in selling at retail in Delaware if it
were able to bid on a long-term contract to be a wholesale
supplier to Delmarva Power.
He asked that measure's
requirement that Delmarva Power enter into long-term
contracts to meet 30% of its customers' electricity needs
specify that the contracts have to run for at least 10
years. That, Warren said, would justify his company's
rebuilding the electricity generation plant at Indian River
in Sussex County, which has severe environmental problems,
to employ up-to-date coal-gasification technology. He
referred to that as a $2.4 billion investment.
When Valihura asked him if
complying with his request would assure his company's
presence, Warren replied, "If the legislation is enacted,
you will see us [here] very shortly."
Washington Gas Energy
Services bought the Indian River plant from Delmarva Power
when it got out of the generating business. The companies
are not affiliated.
House passage of the deferral
and planning legislation along with companion measures
authorizing state agencies, including public school
districts, to aggregate their energy purchases in the hope
of making their business more attractive to alternate
supplies that would then charge more favorable rates, and
convening an 'energy summit' in June to deal with
energy-saving technology virtually assures quick enactment
of key components of a proposal by Governor Ruth Ann
Minner's energy taskforce.
The Senate is expected to
concur with the House-passed measures and the House is
poised to agree to three pieces of legislation previously
passed by the Senate dealing with financing energy
assistance for low-income households and providing
incentives for selected energy conservation steps.
During more than an hour of
discussion in the House on Apr. 4, there was a consensus
that the General Assembly may not have completed its work on
the issue for this session and beyond. "This is a good
start," said speaker of the House Terry Spence. "It is a
good way to lay out a path forward."
"I do believe this is just a
starting point," Oberle said.
Keeley said the Assembly is
going to have to come to grips in its present session --
which ends Jun. 30 -- with the problem of how low- and
moderate-income households and persons on fixed incomes are
going to bear the cost of heat, cooling and light along with
other necessities. "They're going to need help," she said.
"We're going to have to work with Delmarva [Power] not to
turn their electricity off."
Without going into any
detail, Joseph Miro said he would like to see establishment
of "energy districts" as a mechanism for residents of given
areas to aggregate their purchases to obtain lower rates.
During the committee hearing,
Valihura got Thomas Shaw, executive vice president of Pepco
Holdings, Delmarva Power's parent company, to disclose that
Delmarva Power has contracted to purchase 38% of its
electricity supply from Conectiv Energy, which also is a
wholly owned subsidiary of Pepso Holdings. Since 1999, he
said, Conectiv Energy had all of that business.
Delmarva Power has refused to
publicly identify its other suppliers and their respective
shares of the business on the grounds that is proprietary
information. Shaw did say that none of the others are
affiliated companies and that all the contracts were awarded
on the basis of competitive bidding. Bruce Burcat, executive
director of the Public Service Commission, which observed
the opening of bids, corroborated that.
Donna Stone said during the
House session that legislators and the public should not
loose sight of the fact that during seven years of
Delmarva Power's charging fixed rates, its Delaware
customers "saved in excess of $1 billion" and the company is
not seeking to recover that money. "After the [May 1]
increase, Delmarva [Power] will be right in the middle of
the pack" of regional and municipal utilities as regards
electricity rates, she said.
Wayne Smith, leader of the
Republican majority in the House, praised Valihura and
members of the energy committee for a bipartisan effort to
craft complex legislation which apparently won support from
both sides of the rate-increase controversy. He said
Delmarva Power and Delaware Electric Cooperative made "good
faith efforts" to cooperate with the committee and officials
of the Minner administration.
"You have only to look at our
neighbor to the west (Maryland) and the process they're
going through. It isn't pretty," Smith said. "We did it the