Energy Updates

Customer Cost Cap Protection is being Threatened

Delaware SB 265 is disastrous for ratepayers & should not pass


By David T. Stevenson

Center for Energy & Environmental Policy

May 14, 2024



In 2008, the Delaware legislature passed a requirement that 25% of our electricity should come from renewable sources like wind and solar power by 2025. Legislators back then were wise enough to protect electric consumers with a 3% cost cap on their electric bills.


Delmarva Power displays the costs of wind & solar as a line item on its electric bills. This acts as a report card on the impacts of legislation passed in Delaware. A March 2024 Delmarva Power residential bill revealed that the average premium cost was $10 per month or 6%, double the cost cap.


Additionally, another calculation performed on the "proposed offshore wind procurement" bill (SB 265) reveals that these premium costs could increase to $27 per month or 14%.



What happened to the cost cap protection promised by Delaware legislators?


First, DNREC Secretary Collin O'Mara promoted a "deal" with Bloom Energy to have Delmarva Power customers pay a huge premium for a small fuel cell power plant in exchange for a fuel cell manufacturing plant in Newark, which, ironically, doesn't buy electricity from Delmarva Power. It was called renewable because, in theory, it could be fueled by landfill or biogas. In reality, it is fueled by conventional natural gas and actually uses more gas than a typical natural gas-fired power plant. Over the twenty-year contract for the fuel cell power plant, Delmarva Power customers will pay about a billion dollars in electric premiums. The "deal" was approved by the legislature.


Two years ago, the legislature raised the goal to 40% by 2035. The cost cap was in the way, so it was replaced with a price cap on RECs. If the market price for Renewable Energy Credits (REC) exceeds $25, Delmarva Power can simply pay $25 for each equivalent Alternative Compliance Payment (ACP) to the state. That means we wouldn't be buying renewable power. Over the last three years, the average price of RECs has been $21, which is close to the price cap. 



Senate Bill 265 requires Delmarva Power to obtain bids from only offshore wind developers for twenty-year contracts.


This bill ignores the 2018 recommendation from the Governor's Working Group on Offshore Wind that offshore wind was too expensive. Any future bidding system should include competitive bids from onshore wind and solar developers. 


Some legislators, fed by poor information from the University of Delaware and DNREC, want to require the purchase of long-term offshore wind power and want to get around the new cost cap on REC prices. Below are some issues surrounding this poor information:








SB 265 is a bad deal for Delaware and should not pass the legislature.


The majority of Delawareans do not want to pay $200 more a year for offshore wind energy. Any procurement program should be a competitive process that includes solar, onshore wind, natural gas with carbon capture, and nuclear power. Better yet, let markets work and don't lock in potentially high electric rates in twenty-year contracts.