Impact of Government Policies on Delaware Utility Costs

 By: Jane Brady, Chair, A Better Delaware

Sometimes politicians just don’t get that the tax revenue that they spend on government projects is our money. Recently, the budget for the next fiscal year was passed in the General Assembly. One of the provisions would direct $6.5 million to help pay the utility bills or provide energy efficient upgrades to residents who are not able to pay their energy bills.  Governor Meyer touted the benefit to those individuals while reportedly proclaiming that it would help those individuals “without shifting any of the cost burden onto customers “.

That $6.5 million came from somewhere, and that somewhere is from us. $6.5 million is $6.50 for every Individual who lives in Delaware, not all of whom pay taxes, but most of whom consume public utility services. While we at A Better Delaware think it is appropriate to help those who truly cannot keep the heat or air conditioning on and suffer from health or other conditions that make the situation dangerous, it is not accurate or fair to say that it’s not costing “customers “any money.

Many of us complained in January about the high cost of our utility bills. If you think you’re paying a lot for electricity, you are right, but the cost is not entirely reflected in your bill.

Legislation that has passed over the last two sessions, in particular, has increased the cost of construction of single-family and multi-family residential homes and the cost of the construction of commercial buildings, spent your tax dollars to support individuals who buy all electric or hybrid vehicles, and mandates the purchase of a certain number of electric school buses each year.

The construction of new residential homes now requires that electric vehicle charging infrastructure be included in that construction, and the General Assembly has given city and county government the authority to enforce those requirements. The cost of construction obviously is higher, which means the cost of buying a new home or condominium is higher, and the construction of an apartment building is more costly, so the rent is higher. You are paying for that infrastructure whether you have an electric vehicle or not.

The construction of commercial buildings now must include installation of a roof that is able to support solar energy infrastructure. That means that the cost of the construction of those buildings goes up, the companies either building or renting those buildings will have to pay more and the cost will be shared by you as a customer. You are paying for that infrastructure.

The cost of an all-electric or hybrid vehicle is in general, much more expensive than a gas-powered vehicle, so in a competitive market, the lower priced vehicle is favored, especially for those in a lower economic situation.  In order to provide incentives to consumers to purchase those vehicles, the government provides subsidies to those consumers. Purely at the state level (because there have been federal subsidies as well), a purchaser of an all-electric vehicle is entitled to up to $2500 toward the cost as an incentive and the purchaser of a hybrid vehicle is entitled to up to $1000. That money is coming from the state coffers. You are paying for that rebate.

We at A Better Delaware have written extensively about the intrusion of government into private businesses. It is a trend that continued in this session of the General Assembly. Legislation was passed this session that would cap or limit the amount of money that a Delmarva Power could spend on capital expenses – that is improvement of their buildings, infrastructure, transmission, trucks, and all of the attendant capital expenses required for them to do their job well. The bill further provides greater oversight in order, according to the General Assembly to “challenge unnecessary rate hikes “.

Government does not know how to run a business. Indeed, if government were a business, it would have a very poor credit rating and be unable to raise the money in a capital market that it takes from us as taxpayers to do the things it has chosen to do. For government to intrude into the future planning of infrastructure needs of a business and the capital required to both maintain and improve that infrastructure is poorly considered. Indeed, it will create an administrative quagmire and will stifle innovation.

Finally, looking forward, the General Assembly has expressed a clear preference for offshore wind power generation, and voted to override a county decision regarding zoning that would affect a particular project because they disagreed with the impact it would have on that preference.  That particular project won’t bring any energy to Delaware as a practical matter, but focusing on offshore wind as a source of energy is fraught with hazard. Offshore wind can be as much as four times as expensive as energy from coal or natural gas. It is intermittent and unreliable and must have backup sources to avoid brownouts, blackouts and breakdowns in service.  More choices and many diverse options for energy without the detrimental impact that offshore wind has on the environment are available, including nuclear and natural gas.

There are a lot of reasons why your utility bills are higher, and not all of them are evident in your bill. Delaware’s public policies are costing each one of us a great deal every month. Our leadership will choose the policies they prefer because majority does rule, but they should not pretend that the cost of those policies does not exist.  Governor Meyer, you can’t spend $6.5 million of State money and claim that it will not cost the customers anything. We are all customers of Delaware‘s government, and we are paying that bill.

Jane Brady serves as Chair of A Better Delaware. She previously served as Attorney General of Delaware and as a Judge of the Delaware Superior Court.