A Delaware resident and a Connecticut fuel cell manufacturer filed suit in a U.S. district court last week, claiming that Delaware Democratic Governor Jack Markell’s “sweetheart deal” with Bloom Energy Inc. is unconstitutional and amounts to nothing more than “crony capitalism.”
The Washington, D.C.,-based government accountability group, Cause of Action, will represent the plaintiffs, John Nichols and FuelCell Energy Inc. The suit challenges amendments made to Delaware’s Renewable Energy Portfolio Standards Act, asserting that the changes made in late 2011 violate the Commerce Clause of the U.S. Constitution and the 14th Amendment’s Equal Protection Clause.
CoA’s Chief Counsel for Regulatory Affairs, Amber Abbasi, told The Daily Caller that Gov. Markell and the state of Delaware have “crossed the line between trying to help promote in-state business and blatantly discriminating against out-of-state businesses.”
“Delaware has unconstitutionally undermined competitive markets to subsidize one favored company [Bloom] and forced a specific group of Delaware residents [Delmarva ratepayers] to pick up the tab,” she said in a press release.
In exchange for Bloom’s promise to build a fuel cell factory in Newark, Del., lawmakers used REPSA to construct a system of “discriminatory eligibility requirements,” according to Cause of Action.
The requirements allow Delmarva Power to count purchases from Bloom Energy’s solid-oxide fuel cell servers toward its “state renewable energy purchase requirements.” However, the offer for Delmarva to make such purchases only applies to companies that manufacture fuel cells in Delaware and receive “economic development opportunity” status.
CoA alleges that such requirements exclude out-of-state energy companies, like FuelCell, from gaining full access to the bidding process and denies equal competitive footing, which excessively burdens interstate commerce.
Furthermore, CoA’s complaint argues that REPSA unfairly burdens the plaintiff, Nichols, and other Delmarva ratepayers by forcing them to pay a “tariff-subsidy,” which covers the inflated costs of energy provided by Bloom’s fuel cell plants.
According to a report submitted to the Public Service Commission, the tariff-subsidies will cost Delmarva ratepayers an estimated $133 million over time.
A FuelCell spokesperson told The Daily Caller that “the cost to ratepayers is approximately 22 cents per kilowatt hour before renewable energy credits,” and that, “FuelCell Energy’s stationary fuel cell power plants provide power for substantially less cost.”
In addition to arguing that the exclusion of companies like FuelCell violates the dormant Commerce Clause, Abbasi of CoA asserted that “ there is no rational basis for this particular subset of Delaware residents to bear the cost of this subsidy.”
“Delmarva customers constitute only half the state’s population, but they will bear the bulk of the costs to attract Bloom,” as noted by Delaware Public Service Commission’s report. Abbasi explained that REPSA’s disproportionate financial burden on Delmarva ratepayers amounts to a violation of the citizens’ rights to equal protection under the 14th Amendment.
While The Daily Caller received no comment from Governor’s office, the plaintiff’s attorney and FuelCell Energy made it clear that Gov. Markell’s and the Public Service Commission’s alleged “cronyism” would not go unnoticed.
“Our interest is in protecting the citizens of Delaware from the costs of cronyism, by state officials” said Abbasi. “Cause of Action is exposing this burden on taxpayers and businesses and is holding the Governor and the Public Service Commission accountable for violating the Commerce Clause and the rights of the people of Delaware.”
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