A lawsuit filed against Delaware’s governor and utility commission seeks to undo Bloom’s big fuel cell deal in the state.
JEFF ST. JOHN: JUNE 20, 2012
Fuel cell maker Bloom Energy’s massive 30-megawatt project in Delaware is facing a lawsuit seeking to undo the project’s financial underpinnings, on the grounds that it represents a “crony” deal that will unfairly charge utility ratepayers millions of dollars and bar competitors from the state.
The lawsuit, filed in federal District Court in Delaware, accuses Delaware governor Jack Markell and the Delaware Public Service Commission of “unconstitutionally discriminating against Bloom’s competitors and taxing a segment of Delaware residents to subsidize the crony company,” according to a Wednesday announcement.
The lawsuit was filed by Cause of Action, which describes itself as a group dedicated to fighting waste, fraud and mismanagement in the federal government. The complaint (PDF) also names Fuel Cell Energy, a Danbury, Conn.-based fuel cell maker and competitor to Bloom Energy, as a plaintiff, Cause of Action spokeswoman Mary Beth Hutchins said in a Wednesday interview. It also names an individual, John Nichols, who is a customer of Delmarva Power & Light, the utility that’s working with Bloom.
“Our desire is that the court will issue a summary judgment” halting the Bloom deal from going forward, Hutchins said. “Our allegation is that the governor and the public service commission have essentially engaged in cronyism.”
Bloom Energy did not immediately respond to phone calls requesting comment on Wednesday.
Bloom has been working on its Delaware deal, one of its biggest, for more than a year. InOctober, Delmarva received approval from the state commission to bill customers for the financial support to install 30 megawatts of Bloom’s natural gas and biogas-powered fuel cells in the state. The deal included Bloom building a factory for its fuel cells, which Bloom broke ground on in April.
Cause of Action’s lawsuit accuses the state of creating a “system of discriminatory eligibility requirements, subsidies, and energy-portfolio-standards multipliers that benefit Bloom,” when it rewrote its renewable portfolio standards act in late 2011. Cause of Action has also filed two Freedom of Information Act requests to examine public comments and economic studies submitted in support of the tariff.
UPDATE: Amber Abbasi, chief counsel for regulatory affairs at Cause of Action, said in a Wednesday interview that Delaware’s law provides rules and incentives that provide an unfair level of assistance to fuel cells built inside the state, a violation of the Constitution’s Commerce Clause. Bloom will be the only fuel cell maker in the state when it opens its factory. Abbasi also said that the law’s financial impact falls unfairly on Delmarva ratepayers instead of all the state’s residents, violating the Equal Protection Clause.
Delmarva plans to raise more than $100 million over 20 years to help finance the project, which equates to a $1.34-per-month surcharge on customer bills. Delaware is also providing $18 million in state incentives, and the project is seeking a federal cash grant for renewable power projects. The total costs to Delmarva ratepayers is expected to be about $133 million.
Bloom has raised a massive amount of money to support its business of building solid-oxide fuel cells that run on natural gas or biogas to generate electricity. Earlier this month, thecompany raised a Series G round of $150 million to bring its total VC investment to about $800 million. Whether it’s business, along with the fuel cell industry at large, can thrive without generous government subsidies is another question.
Bloom has a long list of customers using its fuel cells, including Adobe and Google in California, and Apple, which is tapping Bloom for 4.8 megawatts of fuel cells. Fuel cell competitors include FuelCell Energy, United Technologies, ClearEdge and a host of other companies.