The Senate Environment, Energy and Transportation Committee held a special hearing Friday to get to the bottom of reports of skyrocketing Delmarva Power energy bills.
Delmarva Power customers across the state — of which there are more than 400,000 within the Delaware Peninsula — begin reporting substantial increases in their electricity and gas costs in December 2024, but matters only seemed to get worse for the January 2025 bill cycle.
Colder temperatures and higher usage at the forefront
Delmarva Power’s Vice President of External Affairs Phil Vavala says it's the unusually cold winter temperatures that have had a "tremendous impact on the Delmarva Power service area."
"This was a time where we experienced a peak in our winter electric [load]. For this first time since the polar vortex of 2014 and 2015, we hit a new all-time winter peak during that period of time, in the period between Jan. 20 and Jan. 23. I will also point out at the same time, coincidentally with that, we experienced peak load days for our gas system as well in New Castle County. Three days we exceeded the top send out of gas distribution for our system that we haven't seen in 25 years," Vavala explained. "Those two facts, when they're combined with looking at the customer bill itself, up to and including mine, have a profound impact that the most and the vast majority of what we've seen is directly related to winter load."
Vavala also says type of heating, heat pump efficiency and not changing your thermostat may all contribute to bill increases.
Delmarva Power also implemented its winter rate structure in October, which generally increases customers' rates by around 3%.
Rate increases approved by the Public Service Commission
But legislators continued to prod to see if there is more to the story. State Sen. Eric Buckson (R-Camden) noted Delmarva was awarded a rate increase in April 2024 and energy supply charges went up in June 2024.
When asked if these price increases could be a contributing factor to higher bills in conjunction with the colder temperatures, Vavala responded: "I think the energy costs went up but not at the period of time we're talking about here where customers noticed a sharp increase in their bill."
Sen. Buckson later asked Energize Delaware Executive Director Drew Slater, who was Delaware's Public Advocate at the time Delmarva Power initially requested the rate increase, if that hike was particularly large.
“This was one of the largest distribution rate increases that we've ever seen when Delmarva filed it on Dec. 15 [2022], and I said, and I quote, ‘No customer should have to choose between paying for the utility service or paying for other essential needs. It's long past time we rein in costs as customers are trying to do,'" Slater told the committee.
Delmarva Power initially filed an application to increase its electric distribution rates by $72.3 million, which would have ultimately been an 8.35% rate hike on customers.
The April 2024 settlement agreement for Delmarva Power's electric rate filing resulted in a $4.00 increase, or 3.47%, on the total bill and a profit margin of up to 9.6%.
When requesting a rate increase, Delmarva Power goes through an adjudication process with the Public Service Commission.
Matt Hartigan, Executive Director of the Public Service Commission, also testified in front of the committee, explaining the commission's burden of proof threshold to deny a rate increase is higher than the majority of other states.
"The commission makes a decision based on something called the business judgment rule, which is the standard in Delaware for how costs are recovered in a rate case. Most other states use something called the prudent standard, which, as it sounds, would have to imply that the costs the utility are incurring are prudently incurred," Hartigan explained. "Under the business judgment rule, in order to disallow a cost, a party would have to prove waste, fraud or abuse of discretion, which is a very high legal standard. So it's very difficult for the commission to disallow costs in a rate case."
Some legislators and members of the public also noted the energy customers of Delaware Municipal Electric Corporation (DEMEC) and Delaware Electric Cooperative (DEC) did not see the same rate increases for December and January 2025.
DEMEC and DEC are not-for-profit utilities while Delmarva Power is investor owned.
The impact of renewable energy initiatives
The committee also had lengthy discussions on if Delaware's participation in the Regional Greenhouse Gas Initiative (RGGI) or Delaware’s Renewable Energy Portfolio Standards (RPS) are a potential source of higher bills.
RPS legislatively established a market in Delaware for electricity from renewable sources and intends to lower the cost of renewable energy to consumers. The act allows utilities to meet their portfolio standards by buying renewable energy credits (RECs) and solar renewable energy credits (SRECs) from wind, solar and other renewable sources.
When asked directly by Committee Chair and State Sen. Stephanie Hansen (D-Middletown) what effect Delaware's RPS has had on bill prices, Vavala responded: "The Renewable Energy Portfolio is part of every bill, that's for every customer. Those prices are — they vary based on the customer's usage, but the vast majority of the increase that we're seeing here has been directly related to the usage itself."
Vavala added the portfolio being the primary driver behind the increases as opposed to more power and gas usage is "not a narrative that Delmarva Power is putting out there."
Sen. Buckson asked Delmarva Power Director of Energy Acquisition Mario Giovannini if decommissioning nonrenewable energy sources, like coal power plants, and setting "timelines that can't be met" for transitioning to renewable energy sources like solar and wind have an impact on ratepayers.
"If there are retirements on the system at PJM, and they're not replaced timely with acceptable generation or dispatchable generation for PJM, yes — that would be imputed into a capacity charge that we purchase from wholesale suppliers," Giovannini said.
PJM Interconnection operates the electric transmission system or “grid” for all or part of 13 states and the District of Columbia.
"Renewables are costing more because there's not enough there. As government bodies, we are creating a supply and demand imbalance. We are increasing the demand for it without that already being there. We are tipping the scales of natural economic law by saying, 'you must increase the renewable parts of generation,'" Sen. Minority Whip Brian Pettyjohn (R-Georgetown) added.
But Sen. Hansen argued Delaware has had multiple opportunities to expand its renewable energy portfolio, but opposition is causing those efforts to flounder.
"We have stopped the development of that supply in renewable energy by doing things like not approving offshore wind — not approving the conditional use. That's stopped offshore wind. So we can't say, 'Woe is me because we don't have enough supply. So we've got to open up the coal fire plant.' Why don't we say yes to the wind power? Why don't we say yes to the utility-scale solar in Kent County, where it is a moratorium — that's solar on a grand scale," Hansen said. "We're all on the same page about getting electricity into the grid. So we don't have a dispute on the fact that we need more electricity in the grid. Our dispute is, what kind of electricity do we want in the grid, and what public policy stop signs and roadblocks are we putting up?"
Twenty minutes into the hearing, the Republican Caucus sent out a release that they will be filing Senate Bill 64 — sponsored by Sen. Minority Leader Gerald Hocker (R-Ocean View) and State Rep. Bryan Shupe (R-Milford) — that would redirect RGGI revenues back to ratepayers.
RGGI is a multi-state carbon dioxide cap-and-trade program. Money raised through the initiative is returned to participating states to invest in energy efficiency, renewable energy and other consumer benefit programs.
According to the Delaware Department of Natural Resources and Environmental Control, in 2019, $217 million in RGGI proceeds were invested in programs including energy efficiency, clean and renewable energy, greenhouse gas abatement, and direct bill assistance. Over their lifetime, those 2019 investments are projected to provide participating households and businesses with $1.3 billion in energy bill savings and avoid the emission of 2.5 million short tons of CO2.
“After meeting with stakeholders in the energy sector, it has become clear that Delaware’s green energy mandates, including its participation in the Regional Greenhouse Gas Initiative (RGGI), are a significant factor driving up costs. These policies, while well-intended, are having unintended consequences, forcing Delaware to import electricity at higher costs while discouraging traditional energy investments within our state," the statement read. "Rather than funneling millions of dollars into government-controlled programs, we should return these funds to the people who paid them, providing much-needed relief to families and businesses struggling with high energy bills."
While Sen. Hansen says returning money back to ratepayers is something she's looking into, she does not support Republican's position that green energy initiatives are spurring energy costs.
"The Regional Greenhouse Gas Initiatives are not causing these increases, and the fact that they came to the hearing with a bill already made up tells you that they came to this hearing with their eyes closed and their ears closed. They weren't interested in hearing anything about the facts. They weren't interested in looking at what's actually driving the cost on these bills. And so they've just picked something that's part of the political narrative, which is what you're seeing with the with the RGGI bills," Hansen told Delaware Public Media. "I think that there is value in talking about what we can do to bring some money back to the ratepayers, at least low-income ratepayers, maybe higher than that as well. I think there is value in that, and there are different pots of money that we can look to in order to do that. I don't know that RGGI is the right pot to be looking from."
Potential scams from third-party energy suppliers
At least two members of the public identified a new charge on their Delmarva Power January 2025 bill that appeared to be the energy cost from a third-party supplier.
State Sen Kyra Hoffner (D-Dover) looked into the matter for one of her constituents, finding that a company named Arbor promised the constituent lower energy costs by finding a cheaper energy supplier.
Her Delmarva Power bill then began to list a $180 charge from energy supplier Think Energy, but Hoffner attests her constituent never agreed to such a charge.
"It's going out on your bill, on your letterhead, and you're telling us that you're reviewing people's bills. This constituent uses wood to heat their house. Their bills really have not changed. I understand that this year is five degrees colder than last year, but still, they're using wood to heat their house. How much more energy are they actually using?" Hoffner told representatives from Delmarva Power. "My constituents — it's every other house. It's not [that] everyone's getting these rates. It's every other house. I have Delmarva. My bill has not gone up one penny. It's been the normal rate. So we've heard a lot of things over the last two hours on how you're going to look into this and look into that, but you're not giving us any real answers."
Another member of the public presented a similar bill that went up over $700 in January, and there was a new $500 charge under the energy supplier category.
Vavala said he can guarantee if these third-party energy suppliers were not approved by the customer, they will not have their energy cut off if they refuse to pay the charge.
Hansen said she intends to reach out to the Delaware Department of Justice’s Consumer Protection Unit for further investigation on these potential scams.
"The fact that it looks like there are third-party suppliers where they're not acting lawfully, perhaps there's certainly some consumer protection elements that we need to look a lot more closely at here. And I can tell you that is something that I'm going to be drilling down on now. That was not something that was on our radar before — now it has just bumped up much higher on that radar to make sure that it's part of the package that we're going to be putting together," Hansen said.
Potential legislative solutions
In addition to looking at how to return money to ratepayers and contacting the Consumer Protection Unit, Hansen says she intends to see if the standards for rate hike approvals can be changed.
"We heard from the Public Service Commission themselves that they feel hamstrung with what's called the business judgment rule. They don't feel that they can look as closely and carefully at the charges as they could under what's called the prudent standard. So we are looking into legislation to address that," Hansen said.
Hansen says she plans to have a package of legislation ready by March.
In their release, Republic legislators also noted if their bill to return RGGI revenues back to ratepayers fail, they will introduce legislation to withdraw Delaware from RGGI altogether.
“Additionally, we will revisit Senate Bill 33 from the 151st General Assembly, which significantly increased Delaware’s Renewable Energy Portfolio Standards (RPS). The current mandates require increasing percentages of Delaware’s electricity to come from renewable sources through 2035, while eliminating the previous cost cap protections that prevented excessive rate hikes. We will push to extend the compliance deadlines and lower the required percentages, allowing more time for Delaware to invest in the necessary energy infrastructure without overburdening ratepayers," the statement read.
As for Delmarva Power, it has stopped late payments fees for January and February of 2025, and it is extending the repayment period for up to 24 months for bills that are overdue, suspending disconnections for non-payment in February and it is waiving deposits for disconnected customers who are seeking to restore service.
