Delawareans rage against high utility bills. Blame the weather

Role of green energy and the region’s power grid operator

While some blame the skyrocketing utility bills on fees associated with renewable energy programs, Vavala argues that both those fees and rising natural gas prices contribute to only a small fraction of a person’s bill.

While Delmarva paid almost $13 million into the state’s renewable energy portfolio last year, charges related to renewable compliance makeup around 3% of a customer’s bill, according to those reviewed by WHYY.

“Yes, there is a component of the bill that’s related to transmission costs and supply costs. Yes, there’s a component of the bill that’s related to green energy and programs to support that,” Vavala said. “But it is not the key driver in what we’ve seen in terms of this phenomenon occurring for our customers.”

Adding to confusion among ratepayers, Delmarva last November began to include a breakdown of delivery and supply charges on its bills.

Customers have always paid these charges, but they weren’t previously explained on their bills. Delaware residents said they were shocked to learn for the first time that these distribution fees account for more than half of their bill.

Though customers have always paid for delivery and supply, Delmarva bills indicate Delaware residents paid slightly more for the supply of gas in January, which had nothing to do with green energy, but rather cold temperatures.

“Weather does cause increased demand, and so supply-demand crunch, price goes up. So, the reason that people’s bills are going up so high is that, in part, they’re using more, and, in part, the price that is set by the wholesale market, which is also increasing,” said Shelley Welton, presidential distinguished professor of law and energy policy at Penn Carey Law and the Kleinman Center for Energy Policy.

The supply price increase for Delmarva customers in January shows a hike of about 1 cent per 100 cubic feet over December’s bills.

A spokesperson for Delmarva Power said it purchases about half of what it projects it will need in the summer when prices are low.

“Locking in prices, also known as hedging, seeks to limit the impact of wholesale price volatility that may occur throughout the year,” said spokesperson Zach Chizar. “We also continue to make upgrades to our Liquefied Natural Gas Plant in Wilmington, replacing and upgrading systems that give customers a more predictable gas cost rate so that we can secure more natural gas and avoid challenges during peak periods.”

Adding to the shocking cost could be that some January bills encompassed 36 days, rather than the typical 30 days.

One of Meyer’s proposals includes working to expand the state’s renewable energy portfolio.

“The more we get — solar, offshore wind, various alternatives — will help us expand the diversity of energy sources, increase the supply of sustainable energy sources, and in many cases, sources that are good for the environment for the long term,” he said.

Welton said decreasing reliance on natural gas could help control prices. States that rely heavily on natural gas are facing greater energy costs than in areas that use more renewable energy, she said. Like many, she points to the region’s power grid operator, PJM Interconnection.

“You have tons of new resources lined up asking to connect to the grid — and these are mostly clean energy resources. And if you’ve got these resources online, if you’ve got a lot more capacity in the region, you would see prices start to come down. But PJM has been very slow to help these resources connect to the grid,” Welton said.

While freezing temperatures and the resulting usage drove up utility bills in January, costs of electricity are also determined by a complex pricing system overseen by PJM and are expected to climb for Delawareans starting in July, regardless of the weather. That’s because of an increase in certain electricity generation fees, called capacity costs, that the grid operator announced last year. The move will impact 65 million residents in the Mid-Atlantic and Great Lakes regions. In January, PJM agreed to a price cap after Pennsylvania Gov. Josh Shapiro sued.

Delmarva’s Vavala said it’s important PJM incentivizes and encourages all forms of generation — whether that’s renewables, nuclear or traditional forms of power such as natural gas. He also calls for improved transparency in the rate-making process and about investment portfolios.