RESA Asks Delaware PSC to Impose RPS Impact Limits on All Load Serving Entities

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November 2, 2010

The Delaware PSC should revise its regulations to permit the freezing of the minimum cumulative percentage requirements for the RPS and solar RPS carve-out for all electric service providers, not only Commission-regulated utilities, the Retail Energy Supply Association said in comments to the PSC (Regulation Docket 56).

Consistent with recent legislation, proposed RPS Rule 3.2.16 permits the Commission to freeze the minimum cumulative percentage requirements from RPS-eligible resources and solar photovoltaic energy resources for Commission-regulated electric companies when the Delaware Energy Office determines that the cost of complying with the minimum requirements of the RPS exceeds 3% of the retail cost of electricity during the same compliance year, or when the cost of complying with the solar carve-out exceeds 1% of the retail cost of electricity (9/10).

"Proposed RPS Rule 3.2.16 produces an unequal playing field that directly conflicts with the requirement of the Commission to minimize the compliance burdens for retail electricity suppliers in Delaware [26 Del. C. §362(a)]," RESA said.

"If the Commission were to enforce the freeze on regulated electric companies only, unregulated electric suppliers would face a market in which they are significantly disadvantaged," RESA added, since the regulated companies would be able to pass on savings from lower compliance costs to customers.

"Moreover, the Commission would be setting a discouraging precedent if it adopts a rule that permits a freeze on minimum cumulative percentage requirements for regulated electric companies but not for unregulated companies.  Specifically, if the Commission were to adopt this rule, many retail electricity suppliers would view the environment for unregulated retail electricity suppliers as negative in Delaware, choosing to forego opportunities in this state and instead sell electricity elsewhere.  Such decisions would run directly contrary to the purpose behind the new, proposed RPS Rules, discouraging rather than encouraging the development of renewable energy resources in Delaware," RESA said.

Additionally, RESA requested that the Commission use its discretionary power to exempt existing contracts from the new minimum RPS requirements that would otherwise apply starting in 2010.

While suppliers may have the contractual ability to pass-on the cost of new, higher RPS requirements (under change in law clauses), customers who have entered into fixed price contracts for price certainty would be negatively impacted by such pass-throughs, and the impact would discourage future fixed-price contracting, RESA said.

"A perceived inability to rely on existing plan requirements for contracts that are already executed will tend to limit offers by suppliers to shorter-term propositions, and retail suppliers in Delaware would face the increased cost of procuring renewable energy supply on the spot market and likely pass these costs onto customers," RESA said.

   
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