Delaware and Maryland Governors Unite to Protest Unfair Fees on Delmarva Ratepayers

by | Jul 5, 2016

Maryland Governor Larry Hogan and Delaware Governor Jack Markell  announced a united effort on June 29 to ensure that the Federal Energy Regulatory Commission (FERC) promptly reverses a proposal by PJM Interconnection (Docket No. ER16-429-000 ) that, they said, “would place an unfair burden” on Delmarva Peninsula ratepayers in both states.

PJM’s proposal would require those customers to pay nearly 90 percent of the costs – or about $350 million – for an Artificial Island energy transmission project that offers little benefit to regional ratepayers, the governors said.

Indeed, in a filing with FERC, the Delaware Public Service Commission (DPSC) claimed that only 10 percent of the project’s benefits would go to Delaware customers. The DPSC predicted the costs would add a few extra dollars per month to residential customers’ bills, but could cause “hundreds of thousands” in additional payments for businesses and other industrial customers.

Costs for the overall, project, including the transmission line, will be added to electricity bills for customers of Delmarva Power & Light, the municipal electric providers and the Delaware Electric Cooperative. Residential customers could see their bills increase by as much as $3 month, but large industrial companies might see increases totaling hundreds of thousands of dollars, according to the news organization Delaware Online.

The power line will stretch across the Delaware River from Artificial Island – home to the Salem and Hope Creek nuclear plants – to a substation near Silver Run, according to a report on Delaware Online. PJM is overseeing the transmission line’s construction.

“Today, I am announcing that our administration is joining together with Governor Markell[‘s] in strong opposition to this ruling, which would disproportionately cost Maryland and Delaware residents hundreds of millions of dollars for power they are not receiving,” said Governor Hogan. “We have expressed our disappointment, frustration, and opposition to the Federal Energy Regulatory Commission this week and we have let the agency know that we are going to use every tool at our disposal to reverse this regrettable and improper decision.”

At a meeting held near the border between Maryland and Delaware, Governor Hogan announced that his administration would join in forcefully opposing the plan by immediately sending a letter to FERC members that echoes arguments made by Markell and the two states’ Public Service Commissions.

The two governors urged FERC to act swiftly. They noted that PJM has argued that the states should be willing to pay because of reliability improvements needed to deal with major increases in energy consumption, but that those increases are not driven by the Delmarva Peninsula.

“It’s imperative that FERC resolve this issue without delay and before the project moves too far along,” said Governor Markell. “Planning for construction is already underway and uncertainty about electricity costs can impact economic development. I thank Governor Hogan for his commitment to join this fight against an unjust and irresponsible cost distribution that will raise electric bills of Delaware and Maryland consumers and businesses, unfairly forcing them to bear a large burden for this project.”

FERC initially approved the cost allocation for a transmission line being built as part of PJM’s Artificial Island project, despite evidence showing that Delmarva energy consumers would bear an overwhelming amount of the cost and receive only about 10 percent of the benefits, the two leaders said.

Last week, FERC granted an appeal to consider a rehearing of the matter as requested by Governor Markell, and the Maryland and Delaware Public Service Commissions. Governor Markell had previously written to the PJM board as well as FERC stating that a cost allocation that results in Delmarva customers bearing almost all of the costs associated with the selected proposal would be inequitable and unreasonable.

To see the letter that Governor Hogan sent to FERC, click here.

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