Bloom Box Surcharge Increases 570%, Stunning Delaware Utility Customers

In 2012 the Governor of the State of Delaware, Jack Markel, entered into a long-term contract with Bloom Energy.  The contract obligated Bloom to begin manufacturing their “Bloom Boxes” in the closed Chrysler Assembly plant.  Delaware was obligated to subsidize Bloom to the tune of the difference of the cost of the electricity produced by Bloom Boxes and the cost of open market electricity.  That subsidy rose from $0.67 in October 2012 to $3.83 for September 2013, a 570% increase, where it increases each ratepayers month’s bill. Delaware has mandated a requirement to buy renewable energy produced electricity that grows to 25% of the total energy used in the State by 2025.  The open market electricity price has been dropping due to the increased availability  of  natural gas from fracking operations around the Nation. The natural gas is becoming the major source of energy for producing electricity.   Natural gas is not considered a “renewable” form of energy.  But the State passed an exception to their renewable energy law that allows  Bloom Box energy  to be called “renewable” even though these boxes use natural gas as their energy source.  The irony here is that the electricity  produced using natural gas the standard way, the electricity is much less expensive than electricity produced by Bloom Boxes.   But remember, the State has a law  that demands the use of “renewable” energy produced electricity.

How is the part of the program going, the part where Bloom Energy is supposed to be making Boxes and employing Delawareans?   The following summary is from the Wilmington News Journal:

“As Bloom collects millions from Delmarva Power rate­payers, the California­based company has been slow to hire the promised 900 workers at the Bloom factory in Newark that were at the heart of the Public Service Commission’s approval of the subsidy. Markel initially pledged production would start in mid-2012, but that time­line has lagged. 

Bloom announced that it had started work in the Newark plant in May, making it eligible to tap into more of the millions in Delmarva Power customer surcharge payments. But it’s not clear exactly what the workers are doing there. Bloom has refused to allow The News Journal into the plant to see any work that’s underway. It’s also not clear to what extent Bloom has kept its promise to give Delawareans the first shot at jobs there. While the company announced that about 60 people work at the plant now, a couple of dozen cars parked outside the plant on a typical summer afternoon displayed a good number of license plates from Maryland, Pennsylvania and New Jersey. 

Counting license plates in the parking lot, Bloom Vice President Joshua Richman said, is not a good representation of the workforce there, since there could be contractors, visitors from California and suppliers parked in the lot as well. “We continue to interview and hire qualified, talented Delawareans,” Rich­man said. 
The company has posted 10 Newark jobs on its Web site, including engineering jobs. Richman said Bloom is on track to hire 300 employees by September 2014, 600 by a year later and 900 by a year after that”.

The News Journal says for not meeting this hiring schedule: “Bloom’s penalties under the contract are capped at $11.3 million”.  A lot of money to be sure. But not nearly as much  as the commitment from the Delaware ratepayers.

The Caesar Rodney Institute (CRI),  the only group to publicly challenge the deal  prior to the PSC approval of  the Bloom sur­charge in October 2011, warned the commissioners that the revenue from selling Bloom’s electricity was being overstated, and renewable energy credit forecasts were far too optimistic.      David Stevenson of the CRI said that PSC estimated the surcharge at $142million over the 21-year life of the Delmarva contract.  Stevenson says the true cost will be more like $433 million or more.

Stevenson sums up the damage in the following:

“Delmarva and Bloom admitted electric ratepayers would be stuck paying above market prices for power. They said it would be worth it because of claimed economic development benefit of jobs at a new fuel cell factory, offsetting higher future electric prices for conventional power, the avoided cost of buying renewable energy credits, and environmental benefits. Two years down the road our predictions are coming true:

·         The cost will be at least three times expected and could go to a half billion dollars over the twenty year life of the project

·         Overall economic development potential will be one third expected and the Delaware solar industry has been decimated by the offsets in Solar Renewable Energy Credits

·         Environmental benefits would have been eight to ten times higher if a conventional natural gas power plant had been built and electric rates would have gone down instead of up.”

Stevenson’s comments can be read in full by clicking here.

Well so far, Delaware’s venture into renewable energy has not been too successful.  The first attempt was the $21 million they put out to the now defunct electric car company—Fisker.   That money was to restart the abandon GM assembly plant where Fisker was going to produce cars for sale in the US.   At least, while the State may not ever recover the $21million it does not have any further liability to Fisker. However,  the ongoing payments to Bloom Energy seem to be pretty solidly in place for the next twenty or so years.  Just think what the public reaction will be when if the man-made global warming theory is shown to be vastly overblown and that all of the environmental agony was unnecessary.



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