Governors Carney and Hogan, Delaware’s Federal Delegation Issue Statements on FERC Artificial Island Ruling

Ruling will significantly reduce cost of project for Delaware businesses and residential ratepayers

WILMINGTON, Del. – The Federal Energy Regulatory Commission has denied a rehearing request on the cost allocation for the $278 million Artificial Island transmission line project, and established a fair allocation that will significantly reduce future costs for businesses and residential electric ratepayers on Delmarva.

As previously calculated, businesses and families in Delaware and Maryland would have funded more than 90 percent of the costs of the project, while receiving a fraction of the benefits. The adjusted allocation will reduce Delmarva’s share of the cost to just over 10 percent – resulting in more than $200 million in savings to families and businesses on the peninsula.

Governor Carney and Maryland Governor Larry Hogan issued the following statements on FERC’s ruling:

“All Delaware families and businesses who pay electric bills every month had a stake in this issue. This decision means Delawareans won’t unfairly bear the cost of this project in their electric bills, and everyone will pay their fair share,” said Governor Carney. “We understand there may be appeals, but this is a real win for Delawareans and our neighbors across the Delmarva Peninsula. We worked closely with Governor Hogan, members of our federal delegation, the Delaware Public Service Commission, and Delaware’s Public Advocate to achieve a fair outcome for Delawareans. I want to thank the members of the Federal Energy Regulatory Commission for their consideration of this important issue, and for their fair decision on behalf of the people of Delaware.”

“Since the beginning of this process, our administration has worked tirelessly to ensure that Delmarva Peninsula ratepayers and taxpayers did not have to disproportionately pay hundreds of millions of dollars associated with this project,” said Governor Hogan.”The decision from the Federal Energy Regulatory Commission, to significantly reduce future costs to just over 10 percent, is a win for both Maryland and Delaware citizens. We will continue to work with all parties to ensure an equitable solution is reached for our citizens, and we thank Governor Carney for his partnership as well as the commission for their important work on this issue.”

Previously, Governor Hogan and Governor Carney sent a joint letter opposing the cost allocation and urged the commission to expedite their review of the project.

Delaware’s federal delegation – Senators Tom Carper and Chris Coons, and Congresswoman Lisa Blunt Rochester – also issued the following statement on FERC’s ruling:

“The Federal Energy Regulatory Commission’s decision is one that we’ve been working toward for a long time now. Our Delaware and Maryland ratepayers were being asked to pay an unfair share of this project, and we went to work to prove this. FERC’s corrected course is just the outcome we hoped to deliver to ratepayers on Delmarva, and was a great team effort on behalf of all of our constituents.”

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Governors Carney and Hogan on FERC Grants Rehearing for Cost Allocation on Artificial Island Transmission Line

WILMINGTON, Del. – Governors John Carney of Delaware and Larry Hogan of Maryland released the following statement today in response to action by the Federal Energy Regulatory Commission (FERC) to grant a rehearing to consider a lower cost allocation for Delaware and Maryland ratepayers related to the $278-million Artificial Island transmission line project:

“Almost two years to the day since grid operator PJM approved the building of the Artificial Island transmission line, FERC has agreed with our request to grant a rehearing to consider more fairly allocating the costs of the project. Under the current cost allocation, residents and businesses in Delaware and Maryland would fund the vast majority of the project through higher electric bills, while receiving few direct benefits. As we have said all along, that is a bad deal for the residents of our states. We are pleased FERC has granted a rehearing.

“Last summer, PJM published a report detailing two alternative methodologies for identifying the beneficiaries of the Artificial Island project. These methods produced a result that better represented the regional benefits to be obtained, and we are thankful to FERC for recognizing the validity of these alternatives and granted this paper rehearing.

“Over the past several years, we repeatedly expressed our concerns over the previous cost allocation methodology, which put more than 90 percent of the cost of the transmission line on Delmarva Zone ratepayers. As we have stated many times, most recently in our November 27, 2017 letter to FERC, we are not opposed to the Artificial Island project itself, but object to unfair and unreasonable costs for our residents and businesses.”

The order from FERC approving the request for rehearing stated, “[they] find that it is unjust and unreasonable to apply PJM’s solution-based DFAX (previous methodology) cost allocation method to Regional Facilities, Necessary Lower Voltage Facilities, and Lower Voltage Facilities that address stability-related reliability issues, including the Artificial Island Project. To determine the just and reasonable rate to be applied, we are establishing a paper hearing procedure.” This procedure is due within 60 days.

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Governor Carney to FERC: Utility Customers Should Receive Benefit of Tax Savings

Governor petitions FERC to require that utilities pass along savings of tax cuts to Delaware residents, businesses

WILMINGTON, Del. – Governor John Carney sent a letter to the Federal Energy Regulatory Commission, urging FERC Commissioners to require utilities to pass along savings of recent federal income tax reductions to their customers – the residents and businesses paying electric bills. The following are excerpts from the letter:

“Since the last major tax bill in 1986, public utilities’ rates have included a federal income tax allowance of 35 percent, and they have accrued deferred income tax at that 35 percent rate, among other tax incentives. Unless rates are reduced to reflect the new lower income tax rates, transmission and natural gas utilities and their shareholders will reap the entirety of this benefit, resulting in unjust and unreasonable rates for their customers, our Delaware residents.”

“As you know, transmission and natural gas pipeline projects are expensive for Delawareans. To the extent that savings are available, they should be provided directly to consumers to reduce the costs of these projects. I ask that you open a proceeding to investigate whether the corporate tax rate reduction has resulted in unjust and unreasonable rates for the wholesale natural gas and electric transmission providers that serve the State of Delaware.”

Read the full letter here.

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Governor Carney, Governor Hogan Urge FERC to Expedite Review of Artificial Island Cost Allocation

As currently funded, $278 million project would unfairly burden electric ratepayers on Delmarva

WILMINGTON, Del. – Delaware Governor John Carney and Maryland Governor Larry Hogan on Tuesday sent a letter to members of the Federal Energy Regulatory Commission, urging commissioners to expedite their review of the $278 million Artificial Island transmission line project and consider a financing model that does not unfairly burden electric ratepayers on the Delmarva Peninsula.

Governors Carney and Hogan urged FERC to consider alternative cost methodologies presented in June by PJM’s Board of Managers. Under PJM’s alternative methods for cost allocation, Delmarva ratepayers would fund approximately 7-10 percent of the project costs.

As currently financed, residential and commercial electric ratepayers on Delmarva would fund more than 90 percent of the cost of the project through higher electric bills, while receiving few of the project’s direct benefits. Governors Carney and Hogan previously appealed the cost allocation to FERC, and urged PJM to support a more equitable solution for ratepayers on Delmarva.

“We remain optimistic that FERC will consider a financing plan for this project that will not unfairly burden businesses and families on the Delmarva Peninsula,” said Governor Carney. “As we’ve said all along, as currently financed, this is a bad deal for Delaware ratepayers, who would be asked to finance this project, while receiving few direct benefits. Thank you to FERC commissioners for considering our request to expedite their review. And thank you to Governor Hogan for his continued partnership and leadership on this issue.”

“Our administration has expressed our repeated opposition to any proposal that unfairly and inequitably allocates the costs associated with this project,” said Governor Hogan. “Maryland will continue to stand with Delaware to protect our citizens from disproportionately paying hundreds millions of dollars in rate increases, and we will continue to work with all stakeholders to reach a speedy, reasonable, and equitable solution to this process.”

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