Delaware to appeal cost of Artificial Island power line

State officials are asking federal regulators to reconsider a recent decision requiring Delaware electricity customers to cover the cost of installing a transmission line that will largely benefit New Jersey residents.

Last month, the Federal Energy Regulatory Commission ruled Delaware's residential and commercial ratepayers must pay the majority of the cost to build a $272 million power line to connect the Artificial Island nuclear complex to the state. The site is in New Jersey.

Delaware's Public Service Commission, along with Gov. Jack Markell and the state's congressional delegation, charge it is unfair for residents to bear that burden because they will only receive 10 percent of the gains created by the transmission line. The line, which is expected to increase the nuclear plant's output and improve reliability, will largely benefit New Jersey customers.

Last week those officials submitted a formal request for a rehearing to plead their case once again.

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"I think the arguments for a re-hearing are good arguments," said Bob Howatt, executive director of the Delaware Public Service Commission. "I think FERC erred in at least two or three different areas, but your guess is as good as mine as to what they will do."

PJM, an Audubon, Pennsylvania, power system operator, is overseeing the transmission line's construction. The line will stretch across the Delaware River from Artificial Island – home to the Salem and Hope Creek nuclear plants – to a substation near Silver Run.

Initially, PJM estimated the transmission line's price tag would be around $137 million. In March, a company executive told the Transmission Expansion Advisory Committee the project would now total $272 million, increasing the project's overall cost to more than $400 million. The executive said the initial estimate did not include items such as environmental mitigation.

Costs for the overall, project, including the transmission line, will be added to electricity bills for customers of Delmarva Power & Light, the municipal electric providers and the Delaware Electric Cooperative. Residential customers could see their bills increase by as much as $3 month, but large industrial companies might see increases totaling hundreds of thousands of dollars.

Customers in the first state must bear these costs because Delaware is among states that are part of PJM's grid. A grid provider can allocate costs to its members for various projects, sometimes causing situations in which the member who doesn't receive the bulk of the benefit must foot the bill.

The commission, in conjunction with its Maryland counterpart, filed a complaint with FERC alleging the cost burden is "unjust, unreasonable, unduly discriminatory and preferential." However, the agency rejected that bid to restructure the project's costs. State officials are hoping they will have better luck with an appeal.

Markell and the congressional delegation separately authored letters accompanying the commission's appeal. A letter signed by United States Sens. Tom Carper and Chris Coons and Rep. John Carney said, if approved, the project will "seriously impact the state's ability to recruit and retain industry."

Delaware Public Advocate David Bonar said if FERC doesn't reconsider their ruling, the state could file suit in the District of Columbia Court of Appeals, which has jurisdiction over federal agencies.

"If they don't agree to reconsider, then we have to move it through the court," he said.

Paula DuPont, a spokeswoman for PJM, declined to comment because the rehearing motion was filed with FERC, not PJM.

The state has pursued other, non-legal options.

Bonar was among the public advocates who met with PJM executives about reevaluating the entire Artificial Island Project. He described the executives as "receptive" to Delaware's position, but a final decision was not reached. PJM spokeswoman DuPont confirmed the meeting.

"Artificial Island was among several topics covered during this informational meeting," she said.

As for the FERC appeal, it is unclear when regulators will rule. Howatt said he is hopeful a decision will be announced in late summer.

"We don't have a timeframe," he said. "It all depends on their schedule."

Contact Jeff Mordock at (302) 324-2786, on Twitter @JeffMordockTNJ or jmordock@delawareonline.com.