By Katie Fehrenbacher June 20, 2012: 05:43 PM ET
(gigaom.com) – A non-profit government watch dog group called Cause of Action has filed a lawsuit accusing Delaware Governor Jack Markell, and the Delaware regulatory agency Delaware Public Service Commission, of cronyism over a deal with fuel cell maker Bloom Energy. Bloom Energy is building a factory in Delaware to make its fuel cells, and also has one of the largest fuel cell contracts in the world with local Delaware utility, Delmarva Power & Light.
Fuel cells use natural gas or biogas combined with oxygen to create a chemical reaction to produce electricity. The electricity is generally more expensive than grid power, but can be cleaner (if it’s running on biogas) and is also a distributed system. Bloom Energy is an 11-year-old Silicon Valley company that has raised at least $650 million (and is closing another round of funding).
Cause of Action says the Governor and the Public Service Commission are “unconstitutionally discriminating against Bloom’s competitors and taxing a segment of Delaware residents to subsidize the crony company.” The suit is being delivered on behalf of a utility customer (named John Nichols) and one of Bloom Energy’s fuel cell maker competitors.
The Delaware utility customers will be covering the increase in price of electricity due to the utility’s Bloom Energy fuel cell project and Cause of Action says the cost through tariffs to ratepayers will be $133 million. Cause of Action says “the Delaware Renewable Energy Portfolio Standards Act (REPSA) was modified solely to accommodate the state’s deal with Bloom.”
The release states:
In return for Bloom’s promise to construct a manufacturing facility in Delaware, the state established a system of discriminatory eligibility requirements, subsidies, and energy-portfolio-standards multipliers that benefit Bloom. These requirements deny out-of-state companies equal competitive footing and increase costs for Delmarva ratepayers who might otherwise benefit from the competitive interstate market.
Bloom didn’t respond to request for comment, but I’ll update this post if I hear from them.