Beal: Energy supply costs driving higher bills

If we are going to get serious about solving the problem, then we need to address the root cause of the problem — that most recent bill increases for customers are being driven by supply costs.”

Marcus Beal is the vice president of governmental and external affairs, plus the region president, for Delmarva Power-Delaware.

In Delaware and across the country, the utility landscape is experiencing unprecedented change.

The demand for electricity is skyrocketing.

New power generation projects aren’t coming online fast enough to keep pace.

Extreme weather events are increasing, and our grid is being strained.

Delmarva Power customers are facing rising electric bills as a result. Energy affordability matters to everyone — especially older adults, working households and small businesses, which are already getting squeezed by other rising costs. Simply put, the status quo, and the trajectory we are currently on, is not acceptable.

If we are going to get serious about solving the problem, then we need to address the root cause of the problem — that most recent bill increases for customers are being driven by supply costs. And Delmarva Power does not control those costs. That’s because Delmarva Power doesn’t own power plants; we buy electricity through the PJM regional market and pass those prices directly to customers at cost. Those prices have climbed due to plant retirements, delays in new generation and surging demand from data centers, electrification and population growth. When supply tightens and demand jumps, prices rise for everyone.

Meanwhile, Delmarva Power must regularly maintain the poles, wires, substations and storm response systems that keep power reliable. Our investments go far beyond routine repairs. We need to replace equipment that can be up to 50 years old. These efforts have become more costly in recent years due to inflation, increased material and labor expenses, and the need to build a grid capable of handling higher demand and more severe storms. The good news is that customers benefit from these investments every day, through stronger grid reliability, fewer outages and a system positioned to meet surging energy demand.

With all that said, Delmarva Power is not standing by while prices soar. Our customers and communities are at the center of everything we do. That’s why we are pursuing an “all of the above” strategy to advance energy affordability. This shows up in multiple ways:

• On the supply challenge, our strategy includes support for renewables, battery storage, market reforms, demand response programs and more as part of a comprehensive approach to the single biggest cause of high utility costs — limited supply.
• For our customers, we provide comprehensive tools to help them manage their bills, like high-usage alerts, no-cost energy efficiency assessments and connection to financial assistance and energy assistance programs.
• We are advocating for policies in the state that would ensure that large energy users, like data centers, are required to equitably share the cost of maintaining and upgrading the grid. We are also pursuing agreements with data center companies to provide customer protections.
• As part of our ongoing electric rate review with the state, we have requested approval to temporarily adjust electric delivery rates. These interim rates would help cover investments we’ve already made to strengthen and maintain the local energy grid while the review is underway. To ease the impact on our customers, we are proposing a lower interim increase than could be allowed. This step is expected to provide about $11 million in relief for residential customers during the interim period, keeping near-term bill impacts more manageable.
• We are leveraging policies to advance affordability, as well. For example, we are attempting to expand energy efficiency programs that would help our customers manage costs. And we support new legislation that would pave the way for utility-scale battery storage in Delaware.

At the national level, Exelon, Delmarva Power’s parent company, is pursuing an aggressive affordability strategy, the Exelon Promise — a comprehensive, customer-first strategy focused on delivering immediate customer relief, strong protections amid growing demand and long-term solutions to address the energy supply shortage and other root causes driving higher costs. The program, which guides much of Delmarva Power’s own affordability strategy, has delivered a $60 million Customer Relief Fund, has kept costs below inflation over the last 10 years, has developed agreements with data centers and other large power users to shield communities from unfair cost impacts and has installed market price controls to address the energy supply crisis.

It’s time for all of us to focus on the root cause of soaring bills — the scarcity of supply. Delmarva Power is a partner in those efforts to address it.

Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.