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State PBF/USF History, Legislation, Implementation

Delaware
Last Updated: September 2011
Summary

Restructuring legislation, signed March 1999, provides funding for low-income energy assistance and weatherization through a systems benefit charge (SBC) on Delmarva Power & Light Company (DP&L) customers.

Beginning October 1, 1999, a customer charge of 0.178 mills/kWh has been collected to fund environmental incentive programs for conservation, energy efficiency, and renewable energy. This money is distributed through the Green Energy Fund for DP&L electric customers or persons in Delaware receiving services from a non-regulated electric supplier which is contributing to the Green Energy Fund.

Senate Bill 35, signed by Governor Minner on July 24, 2007, doubles the funding for Delaware's Green Energy Fund. The bill increases the SBC on the utility bills of residential customers from $0.178 mills/kWh to $0.356 mills/kWh of electricity used. The increased charge adds about 18 cents per month to the average residential customer’s electricity bill.

The Department of Health and Social Services, Division of State Service Centers, the LIHEAP grantee, administers the Fund as a program that is separate from LIHEAP, mostly for clients at or above 150 percent of federal poverty guidelines. In 2010, SBC funds provided $800,000 in energy assistance benefits that was split evenly between LIHEAP and the Weatherization Assistance Program (WAP).

On March 22, 2005, the Commission signed PSC Order No. 6598, which approved DP&L as the Standard Offer Service (SOS) supplier after May 1, 2006, with no specified termination date.

Currently only two competitive electric suppliers are actively promoting services to residential customers. As of April 29, 2011, 7,883 residential customers, about 3 percent, have switched suppliers.

Retail choice for residential customers of Delaware Electric, a subscriber-owned cooperative, began April 1, 2001. No rate cut was provided since the Coop's customers received a 5 percent rate cut during the five years prior to 2001. Rate caps for residential customers of the Delaware Electric Cooperative ended March 31, 2005. A 7.9 percent rate increase was approved in April 2011 — rates will increase 4.1 percent July 2011 and another 3.8 percent July 2012. The last increase in electric rates occurred in August 2006.

History

Electric restructuring legislation, drafted by the state's two major power providers, Delmarva Power & Light (DP&L) and Delaware Electric Cooperative, allowed for a transition period for customers to choose their power supplier by March 31, 2005.

DP&L, the state's largest power provider, opened competition to residential customers on October 1, 2000. Residential customers received a 7.5 percent rate cut until September 30, 2003. As part of a DP&L-Pepco merger settlement that was completed in August 2002, the residential electric rate increased by less than 1 percent after September 30, 2003 and was frozen until May 2006.

After May 1, 2006, DP&L's electric rates for residential customers increased approximately 59 percent. For a typical customer who uses about 1000 kWh of electricity a month, this resulted in an increase of about $54 per month.

The General Assembly passed legislation that automatically enrolled all of DP&L's residential customers in an Electric Rate Phase-In Plan which allows customers to spread the higher electricity rates over a period of time. Under the Phase-In Plan, rates increased 15 percent on May 1, 2006, 25 percent on January 1, 2007 and another 17 percent on June 1, 2007. Starting January 1, 2008, customers were to begin paying back the amount deferred (about $415) over a 17-month period in monthly installments. Customers could opt-out of the rate phase plan.

Other Issues

Starting in 2008, Delaware has participated in the Regional Greenhouse Gas Initiative (RGGI), a coalition working to limit carbon dioxide pollution through a cap and trade system. Participating states limit the amount of CO₂ that can be emitted by their power plants and auctions of CO₂ emissions allowances are conducted quarterly.

Approximately 65 percent of Delaware’s auction proceeds is directed to the Delaware Sustainable Energy Utility (SEU), the entity tasked with providing energy efficiency and renewable energy programs for households and businesses.

Of the 65 percent, 15 percent of the CO₂ allowance proceeds is directed to low-income consumers — 10 percent goes to the WAP, and up to 5 percent is directed to LIHEAP. In 2010, the WAP received $735,214 in RGGI funds that were administered by the Department of Health and Social Services, the LIHEAP grantee.

The State Green Energy Program, established under the 1999 restructuring legislation and funded by the Green Energy Fund, began in January 2002 for DP&L customers. Under the program, the Delaware Energy Office offers rebates for the cost and installation of residential and nonresidential photovoltaic, solar water heating, wind turbine, and geothermal heat pump systems. Information on qualifying systems, rebate reservations, payment procedures and regulations can be found at the Delaware Energy Office website.

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Page last updated: December 9, 2011