That $5 surcharge for Bloom Energy on your Delmarva Power bill will stick around a while

Delaware utility regulators on Tuesday refused a request to review a deal under which Delmarva Power customers are forced to pay tens of millions of dollars to a California-based fuel cell manufacturer.

The state Public Service Commission voted unanimously to reject the request after commission staff and Delaware's public advocate, who represents consumer interests in utility cases, said regulators had no authority to change the tariff deal between Delmarva Power and Bloom Energy.

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State officials offered Bloom millions of dollars in job-creation incentives in 2011 to build fuel cells in Delaware to generate electricity and help Delmarva meet its renewable energy requirements. They also guaranteed a revenue stream to Bloom through a "renewable energy" surcharge on Delmarva Power customers, even though Bloom's fuel cells are powered by nonrenewable natural gas.

The surcharge has cost Delmarva customers more than $200 million. It lasts for another 15 years. According to one estimate, it could cost Delmarva Power customers $700 million or more by 2033.

Initial estimates were that the surcharge would cost Delmarva ratepayers between $1 and $1.43 a month, although skeptics predicted it would be much higher. They were right. The surcharge is expected to top $5 next month.

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"It's time to look at the Bloom tariff," said Middletown resident John Nichols, a longtime critic of the deal. Nichols acknowledged that the commission itself does not have the authority to change the tariff agreement between Bloom and Delmarva, but that a review of the issue could be a "valuable learning opportunity."

"My hope is that a review will lead the two parties to review the terms of the tariff and perhaps offer relief from the cost of paying for this very expensive electricity," he said.
State Sen. David Lawson, R-Marydel, supported Nichols' request, saying Bloom has failed to meet its obligations under the deal, and that Delmarva customers are being ripped off.

"I think we were sold a bill of goods," Lawson said.

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James Geddes, a lawyer for commission staff, said that with the benefit of seven years of hindsight, state officials might have made different decisions. But he said the law gave the commission no discretion in 2011 to change the terms of the tariff, and it has no such discretion now.

"There are no 'do overs' in this legislative construct," according to the tariff order approved by the commission in 2011.

"You are in a straitjacket. You don't have any discretion here," Geddes told commissioners. It is what it is."

Geddes also noted that Bloom Energy is not a regulated utility.
"How does the commission ask Bloom question that they don't want to answer?" he asked.

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Drew Slater, the public advocate, noted that even if officials were somehow able to terminate the Bloom tariff, Delmarva ratepayers would still be on the hook for roughly $500 million in payments to Bloom, which would be due immediately. Each residential ratepayer would be hit with a bill of about $700. Commercial and industrial customers would pay significantly more.

"Make no mistake, this was a horrible deal for Delmarva ratepayers," said Slater.
He nevertheless acknowledged that the commission's hands are tied because of the way in which former Gov. Jack Markell and state lawmakers structured the deal to persuade Bloom Energy to set up shop in Delaware.

Bloom Energy, which raised about $270 million in an initial public offering in July, reported a net loss of $281.2 million for 2017, following a net loss of $336.3 million in 2016. Since its founding in 2001, the company had lost about $2.3 billion as of March of this year.

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