delmarva ie ae ‘Wimington, DE 19803, power eo ‘Wilrington, DE 19899-0231 ‘A PHI Company 202.428.3786 Telephone 3024293801 —Fcanie Todd L. Goodman to goadman@zepcolings com Associate General Counsel = August 2, 2010 Alisa Bentley, Secretary Delaware Public Service Commission 861 Silver Lake Boulevard, Suite 100 Dover, DE 19904 Re: Delmarva Power & Light Company Power Purchase Agreement with Blue Water Wind Delaware, LLC Dear Secretary Bentley: Enclosed please find a letter and five (5) exhibits from Delmarva Power & Light Company (“Delmarva”) to the Commission. The letter seeks Commission approval of certain amendments to the Purchase Power Agreement for offshore wind between Delmarva and Bluewater Wind Delaware, LLC (“NRG Bluewater”), With respect to the exhibits, Exhibit 3 consists of a letter agreement associated with the Proposed Amended PPA that is being filed separately and contemporaneously herewith as confidential pursuant to Public Service Commission Rule of Practice and Procedure 11 Should you have any questions, please feel free to contact me. Respectfully, Aejt—— Todd L. Goodman Enel cc: Regina A. Iorii, Esquire (via email, w/ene.) Kent Walker, Esquire (via email, wenc.)delmarva RR power ea P.0. Box231 Wigton, DE 19869-0281, ‘APHI Company 302.429.3786 ~ Telephone 302.429.3801 — Facsimile Todd L. Goodman ‘ede. goemaneenenbléngs.con Associate General Counsel * Oren a August 2, 2010 Ametta Mc Rae, Chair Jaymes B. Lester, Commissioner The Delaware Public Service Commission ‘The Delaware Public Service Commission 861 Silver Lake Boulevard, Suite 100 861 Silver Lake Boulevard, Suite 100 Cannon Building Cannon Building Dover, DE 19904 Dover, DE 19904 Joann Conaway, Commissioner Dallas J. Winslow ‘The Delaware Public Service Commission The Delaware Public Service Commission 861 Silver Lake Boulevard, Suite 100 861 Silver Lake Boulevard, Suite 100 Cannon Building Cannon Building Dover, DE 19904 Dover, DE 19904 Jeffrey Clark, Esquire Commissioner The Delaware Public Service Commission 861 Silver Lake Boulevard, Suite 100 ‘Cannon Building Dover, DE 19904 Re: Delmarva Power & Light Company Power Purchase Agreement with Blue Water Wind Delaware, LLC Dear Chair McRae and Commissioners: As you know, on June 23, 2008, Delmarva Power & Light Company (“Delmarva”) and Bluewater Wind Delaware LLC (“Bluewater*) executed a Purchase Power Agreement (the “Original PPA”) for the purchase and sale of energy and renewable energy credits (“RECs”) from an offshore wind farm to be built by Bluewater off the Delaware Coast (the “Project”). The Original PPA was approved by this Commission by Order No. 7440 in Docket No. 06241. On June 23, 2010, Delmarva and Bluewater executed a proposed Amended and Restated PowerChair McRae and Commissioners August 2, 2010 Page Two Purchase Agreement (the “Amended PPA”).' The proposed Amended PPA is intended to supersede the Original PPA, but will be effective only upon approval by this Commission. ‘The main purpose of the Amended PPA is to provide Bluewater with extensions to certain deadlines that Bluewater requested of Delmarva. The primary deadline that the Amended PPA seeks to address occurred on June 23, 2010, which was the same day that the Amended PPA was executed and the two-year anniversary of the signing of the Original PPA. You will recall from your analysis, review and ultimate approval of the Original PPA that it provided Bluewater with the right to terminate the PPA until June 23, 2010 if it is unable to find satisfactory purchasers for the rest of the energy and other products from the Bluewater Project or if Bluewater determines that itis otherwise not prudent to continue to develop the Project. ‘The Amended PPA extends this termination right for two additional years - from June 23, 2010 to Tune 23, 2012. In order to assist the Commission in its review of the Amended PPA, we have attached hereto as “Exhibit 1” a document entitled “Delmarva’s Summary of Key Changes in the Amended PPA,” which I will refer to herein as the “Key Changes Summary.” As you will see from the Key Changes Summary, the majority of subsequent deadlines from the Original PPA have been extended for the same 2 year period. Some deadlines, however, have not been extended for the entire 2 years, as addressed in the Key Changes Summary. Itis critical to make clear to the Commission, the Division of the Public Advocate (DPA) and Delmarva’s customers that the proposed Amended PPA contains various provisions designed to protect Delmarva’s customers from adverse implications that might arise from the extensions. While all of the significant proposed changes to the Original PPA are addressed in the attached Key Changes Summary (Exhibit 1), the key customer protection provisions are as follows: 1. Interim Period Price Protection: There will now be a period of time between the date when the offshore wind farm was required to be in service under the Original PPA and when it is required to be in service under the proposed Amended PPA (the “Interim Period”). Due to the two year extension(s) provided by the proposed Amended PPA, this Interim Period can be as long as two years. Delmarva wanted to make sure that its customers are protected from any increased costs of purchasing RECs) should REC prices during this Interim Period turn out to be higher than the price for RECs under the Original PPA. Accordingly, to protect Delmarva’s customers during the Interim Period, the Amended PPA requires Bluewater to ‘compensate Delmarva’s customers for any increased costs of purchasing RECs from another source over the REC costs contained in the Original PPA, ' A copy of the proposed Amended PPA and a marked copy of the Amended PPA showing the changes from the Original PPA are attached hereto as “Exhibits 4 and 5” respectively.