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DNREC suit claims it must have a say in whether to freeze renewable fuel use under state mandate

Sophia Schmidt
Delaware Public Media

A long-simmering battle between Delaware’s Department of Natural Resources and Environmental Control and the state’s Public Service Commission is flaring up in court. 

The two are at odds over The First State’s Renewable Energy Portfolio Standard and how it’s managed

Contributor Jon Hurdle looks at where the battle lines are drawn.

Delaware environmental officials fired the latest shot in their long-running battle with the Public Service Commission over who should manage a state rule that was designed to boost the use of renewable fuels for power generation.

The Department of Natural Resources and Environmental Control filed suit in Delaware Superior Court last month, arguing that it should be involved in any decision to freeze the proportion of clean energy used by utilities under the state’s Renewable Energy Portfolio Standard. It said the commission has no legal right to unilaterally halt the required annual increase in the use of renewables such as wind and solar, as it has done for the latest year.

A 2005 law that set the standard allows the increase to be frozen if the cost of complying exceeds 1 percent of the total cost of the electricity in the case of solar energy, and 3 percent for all renewable fuels, in one compliance year.

"The PSC's action. if allowed to stand, would economically harm our state's solar industry and stall further reduction of air pollution from electricity generation." - DNREC Secretary Shawn Garvin

 On April 22, the commission ordered a freeze in the increase on the grounds that the cost to electric customers as a result of complying with the state mandate in the compliance year 2018 jumped by 19 percent, well in excess of the 3 percent cost cap, according to the PSC.

DNREC argues that any freeze in the use of renewables is legally required to be invoked by the state energy coordinator – a DNREC official – in consultation with the PSC, and not by the PSC unilaterally.

“Last Wednesday was Earth Day, when we consider what we each can do to preserve the planet for future generations, said DNREC Secretary Shawn Garvin, in a statement on April 27. “And yet the Public Service Commission acted on Earth Day to halt Delaware’s considerable progress in renewable energy. The PSC’s action, if allowed to stand, would economically harm our state’s solar industry and stall further reduction of air pollution from electricity generation.”

DNREC urged the court to strike down the commission’s order, arguing that the utility regulator had acted unlawfully by imposing the freeze.

“The statute does not provide the Commission with authority to unilaterally freeze the RPS requirement,” DNREC said in its 19-page complaint. “As a result, the order cannot be found to be free of error of law and not arbitrary or capricious, and must be reversed.”

The department also asked the court to issue a “Writ of Prohibition” directing the PSC to withdraw its order.

The new court challenge is DNREC’s second attempt to win court backing for its argument that the PSC doesn’t have the right on its own to halt the required increase in renewables for power generation.

In December 2018, the environment department first attempted to pre-empt such an action by the PSC, but the court dismissed the challenge on the grounds that DNREC didn’t have standing to bring it.

The new order marked the first time the PSC enacted the freeze, and the new appeal is DNREC’s first request for a judicial review of the policy, the complaint said.

In a press release, DNREC said the PSC policy had been advocated by outside parties include the Caesar Rodney Institute, a Delaware-based conservative research group that opposes government mandates on energy policy. David Stevenson, an energy analyst at the institute, confirmed he has argued in favor of the PSC’s position on the grounds that the renewable portfolio standard unnecessarily raises costs on electric ratepayers.

Stevenson calculated that RPS requirements will cost ratepayers $1 billion between 2012 and 2032, based on energy contracts that last 20 years.

"They are simply wedded to an RPS mandate that is probably last decade%u2019s solution to supporting renewable energy." -David Stevenson, Caesar Rodney Institute energy analyst

The Renewable Portfolio Standards Act requires utilities to use increasing amounts of renewables until the proportion reaches 25 percent in 2025. Of the 25 percent, 3.5 percentage points must come from solar energy, the law says.

The renewable target would be increased to 40 percent by 2035 under a draft bill introduced – also on Earth Day – by state Senator Harris McDowell, chair of the Senate Energy Committee.   

McDowell, (D-Wilmington North), wants to hit the new target in part by encouraging local governments to set up Community Sustainable Energy Authorities to fund and develop solar arrays. Power generated would create solar energy certificates that could be used to cut residents’ energy costs.

“This is pioneering legislation that brings the sun’s energy directly to the people,” McDowell said in a statement. “There is no need to pass through a corporate conglomerate. The consumer is the producer in this case, making each of them a ‘prosumer’.”

McDowell, a veteran energy and environmental campaigner who is due to retire in November after 44 years in the state legislature, said the proposed increase in mandated renewable use reflects a demand from Delawareans for strong action on climate change and sea-level rise to secure better conditions for future generations.

But he was less confident that the bill would make it through the legislature in the current session because the coronavirus might prevent lawmakers from meeting to vote. “We’ve been hampered by this unfortunate virus, and I’m not sure how much I’m going to be able to get done within that. I’m not even sure when and if the General Assembly is going to be able to meet again,” he said in an interview with Delaware Public Media.

Samantha Hemphill, the PSC Ombudsman, declined to comment on DNREC’s new appeal because it’s in litigation. But she said the long-running fight over how to manage the state’s renewable requirement could be addressed by McDowell’s bill if it becomes law.

“We need a new RPS bill to address these issues. One has not passed yet, and unfortunately due to the pandemic, we don’t know if that will happen this year. We know that legislation is coming to address this but we still have to abide by the law,” she said.

"We know that legislation is coming to address this, but we still have to abide by the law." - PSC Ombudsman Samantha Hemphill

Despite the proposed increase in the state mandate, Caesar Rodney’s Stevenson argued that the market, not the government, is far more effective at increasing the use of renewables for power generation at scale.

Utility-scale wind and solar has come down so much in price that it doesn’t need government mandates to stimulate demand, he said. He cited a national study by the energy consultant Wood Mackenzie that found 80 percent of new wind and solar installations in 2018 was built outside of RPS requirements.

And he forecast Delaware will see four or five times the RPS-required quantity of new solar energy this year because of low costs. “We’re building solar farms left and right without any state credits, no subsidies whatsoever,” he said.

DNREC says that since the law was passed, solar energy capacity in Delaware has grown some 54 times to the current 125 megawatts, with more than 5,400 solar installations. An 18 percent decline in renewable energy prices for Delmarva Power customers last year shows that the law has succeeded in is goal of making clean energy more affordable, the department said.

But Stevenson argued that in view of the volume of utility solar that has been adopted by the market in excess of the state’s requirements, the department is fighting yesterday’s battle.

“They are simply wedded to an RPS mandate that is probably last decade’s solution to supporting renewable energy,” he said.


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