Exelon opposes renewal of wind subsidy

Wind power advocates are expressing concern over Exelon Corp.’s proposed merger with the company that owns Delmarva Power, saying its opposition to the major subsidy for wind could hurt the development of onshore and offshore wind farms.

Exelon owns such distribution utilities as PECO in Pennsylvania and BGE in Baltimore. It has filed papers to merge with Pepco Holdings Inc., owner of Delmarva Power in Delaware and Maryland, Pepco in Maryland and the District of Columbia, and Atlantic City Electric in New Jersey.

Exelon, the largest operator of nuclear power plants in the United States, has been vocal in opposition to the Production Tax Credit, a subsidy to wind farm developers that drives down the cost of construction, and thus the cost of the power.

The tax credit expired at the end of 2013, causing a flurry of wind development to beat the deadline. Wind industry supporters say there’s still a chance it will be belatedly renewed, and are lobbying to make it so.

Exelon is the country’s 11th largest wind producer, with 1,300 megawatts of wind generation in 10 states. Still, this remains a small percentage of the company’s overall portfolio. It was a member of the American Wind Energy Association, but its opposition to the tax credit made Exelon the first member to be expelled from AWEA, according to the trade publication WindPower Monthly.

Paul Adams, spokesman for Exelon, said Friday the company supports wind, but “federal policies, including the now expired wind PTC, subsidize billions of dollars in inherently unreliable energy sources and severely distort energy markets, causing some otherwise profitable clean generators to operate at a loss.”

Observers say the way PJM, the regional grid manager, operates, as wind power is added to the regional electricity supply, other forms of fuel can be displaced or receive less money on the open market.

With respect to the wind tax credit, “it’s time to declare victory on moving wind energy from a nascent industry to a mature business and let the PTC remain expired,” Adams said.

Exelon’s opposition to the credit is a big cause for concern, said Bruce Burcat, executive director of the Mid-Atlantic Renewable Energy Coalition, an alliance of wind energy developers in nine Eastern states, turbine manufacturers, and a transmission company. The group works with states to promote the development of wind.

Burcat said his group is working hard, along with the American Wind Energy Association, to get the credit extended.

Delaware, Burcat said, has been a “very positive state for renewables,” especially wind energy, and Delmarva Power has been supportive of state laws that support renewables. If the merger is completed in its current form, Exelon would continue to work to oppose the credit, and it would be a much stronger position since it would control a wide swath of utilities in the region, he said.

Burcat said his organization has formally intervened in the merger case in Delaware, and is working to do so in other states. “We are very concerned,” he said.

Adams responded: “We have a solid track record of investing in clean energy in the Mid-Atlantic and look forward to working in partnership with the state of Delaware to bring energy to the market in ways that are sustainable for both the environment and the economy.”

Along with the Production Tax Credit, the Investment Tax Credit elapsed. It’s a similar incentive but structured in a way offshore wind developers prefer it. Burcat said the ITC was essential to keeping the price of offshore wind power at a cost that is acceptable to ratepayers.

Jim Lanard, the founder and former president of the Offshore Wind Development Coalition, said offshore wind is still a new industry in the United States. Until it becomes more mature here, the industry needs the advantage of the credit, Lanard said.

Lanard added fossil fuel industries have long benefited from their own subsidies, and the federal government provides insurance for nuclear power plant operators, which he said is a form of a subsidy.

It isn’t just wind; the abundant supply of low-priced natural gas is also driving down the money nuclear operators make, said Amy Grace, an analyst with Bloomberg New Energy Finance. But the wind credit “undoubtedly compounds it.”

Like other states, Delaware has a renewable portfolio standard law requiring utilities, including Delmarva, to purchase 25 percent of their power from renewable sources like wind and solar by 2025. Adams argued such requirements should instead be “clean energy standards,” which apply to nuclear energy as well.

Public comment sessions start next week at the Public Service Commission.

Contact Aaron Nathans at (302) 324-2786 or anathans@ delawareonline.com.

Hearings

The Public Service Commission will hold hearings on the merger and take testimony from members of the public:

• Wednesday, 7 p.m., Carvel State Office Building, Wilmington

• Sept. 9, 6 p.m., Public Service Commission, 861 Silver Lake Blvd., Dover

• Sept. 11, 7 p.m., Cape Henlopen High School Auditorium, Lewes