SB 265

Abstract

The Delaware Energy Solutions Act of 2024 authorizes processes necessary to help meet the net zero goals of the Climate Change Solutions Act of 2023. The bill facilitates a transition to carbon-free energy sources by (i) preparing for offshore wind to be a significant element of Delaware’s energy future, if cost is competitive with other potential sources, and (ii) increasing options for interconnecting renewable energy resources to the transmission grid. The bill authorizes the State Energy Office (SEO), with the approval of the Public Service Commission (PSC), to issue solicitations to procure offshore wind. A solicitation can be for a project that serves only Delaware, or in coordination with other states, and authorizes procurement of at least 800 megawatts but not more than 1,200 megawatts of power to Delaware, in a single or multiple solicitations. Solicitations proceed through the following steps: The SEO drafts a solicitation for wind energy if it believes market conditions would result in a bid of no more than 110 percent of the “Delaware Benchmark Price,” defined as the average price that Delmarva Power has paid for power and renewable energy compliance over the prior three years. The Renewable Energy Task Force, an existing public body, must be consulted on the structure and factors of the proposed solicitation. The PSC evaluates the proposed solicitation and determines in a public process, with public comment, if issuing the solicitation would be in the public interest. If so, PSC issues a Preliminary Order allowing the solicitation to proceed. Municipal utilities and rural electric cooperatives are provided an option to participate in the potential project. Third-party “Qualified Purchasers,” such as those that currently purchase electricity for Delaware industries and utilities, could also participate. After preliminary PSC approval, SEO issues the solicitation. Pricing is the key factor, and the returned bids will also include information about avoided greenhouse gas emissions as well as environmental, economic, health and electric grid benefits to Delaware. The SEO cannot proceed to negotiate a contract unless a bid comes back with a price at or below 110 percent of the Delaware Benchmark Price. If contract negotiations occur, SEO confers with PSC staff in finalizing the terms of the contract. PSC reviews the proposed purchase contract to verify that the bid meets all statutory and solicitation requirements, including the examination of the bid price to ensure it is no more than 110 percent of the Delaware Benchmark Price, and is competitive with other new renewable or carbon-free energy projects in the region. If PSC approval is granted, Delmarva Power and any public utility that elected to participate would amend their rates to pass on the costs or savings of the project to their customers. In addition to allowing offshore wind procurement, the bill enhances the PSC’s current Certificate of Public Convenience and Necessity (CPCN) process by giving the Commission authority to issue a CPCN in connection with renewable energy interconnection facilities, such as the transmission lines from an offshore wind project to a nearby substation, or the lines connecting a utility scale solar project (over 30 MW) to a nearby substation. The bill outlines the factors PSC should consider when granting a CPCN for renewable energy interconnection facilities. Additionally, the bill provides separate authority to the Delaware Department of Transportation to permit such facilities in a State-owned Right of Way under Title 17, once a CPCN is issued by the PSC.