Commentary: Bloom bill was ‘sweetheart deal’ that hasn’t paid off

By Delaware Senate Minority Leader Gerald Hocker and Sens. Anthony Delcollo, David Lawson, Ernie Lopez, Brian Pettyjohn, Bryant Richardson and David Wilson

Bloom Energy is, yet again, under the microscope and facing intense scrutiny for its lack of providing tangible results for Delaware and Delawareans. News articles published recently have brought the question of whether taxpayer funds are effectively being used to subsidize Bloom back to the forefront.

To fully understand what is going on, let’s revisit the passage of 2011’s Senate Bill 124. At the time, Bloom Energy was 10 years old, but the company’s electricity-generating box-like unit had been introduced about a year prior. The company was trying to find investors and interested suitors to subsidize their technology.

They approached then then-Gov. Jack Markell and former DNREC Secretary Collin O’Mara. Together, they, along with former Senate Pro Tempore Tony DeLuca and Speaker of the House Bob Gilligan, constructed SB124.

This bill classified the energy produced by Bloom’s fuel cells as renewable energy — despite the fact that it uses natural gas and has a toxic byproduct — and allowed the creation of a tariff by Delmarva Power and Light to help fund the manufacturing of Bloom Energy cells here in Delaware. This tariff appears as a single line on every electric bill issued to Delmarva Power ratepayers. This tariff very well may have been the single largest tax-and-spend program ever created in Delaware in which none of the money actually passes through the state’s coffers.

On July 7, 2011, SB124 was signed into law and in March of 2012, Director Levin approved Bloom’s grant application to DEDO of $16,500,000.

A portion of the agreement between the state and Bloom implemented an employment benchmark whereby Bloom had to meet a set number of employees by Sept. 30, 2014 (300), Sept. 30, 2015 (600) and Sept. 30, 2016 (900). The benchmark employment must hold steady at 900 employees until Sept. 30, 2023. Additionally, total compensation to full-time workers was set at $36,000,000 by the Sept. 30, 2016 deadline.

As of Oct. 30, 2019, Bloom Energy in Delaware employed 340 full-time workers, 78% of whom were Delaware residents, with a reported compensation between Oct. 1, 2018 and Sept, 30, 2019 of $27,827,166.

Because Bloom did not meet the employment and compensation deadlines, the company had to pay a recapture payment of $1,531,060 in 2017. The next recapture period is on Sept. 30, 2021 if they have not paid their full-time employees $144,000,000 in total compensation.

Not only has Bloom Energy not lived up to its obligations set forth in 2012’s grant agreement, but Delmarva Power ratepayers are paying more in their electric bills than what they should in order to fund Bloom’s operation here in Delaware, virtually ignoring the cost cap that was set in place in the original agreement.

The total amount of money Bloom has received from the state and its taxpayers through Delmarva Power is nearly impossible to quantify, but it measures in the hundreds of millions of dollars. And the tariff is set to continue until 2032.

After stocks stopped trading on Wednesday, Feb. 18, 2020, Bloom issued a statement to its investors that they had made an “accounting error” and had misreported the amount of money it had generated in recent years. This “accounting error” was less than 10%, but totals to nearly $200 million.

To make matters worse, Bloom admitted that they had to eliminate jobs at their Newark plant.

These problems and broken promises unfortunately confirm fears several of my colleagues and I shared in 2011 when SB124 was introduced. We believe in investing in renewable and clean energy, but not in an unproven technology in which many experts raised valid concerns, and certainly not in a sweetheart deal that enriches one company at the expense of even the poorest Delawareans.

Although we acknowledge that the way in which this sweetheart deal was constructed by the Markell administration virtually eliminates any legal method of ending this toxic arrangement, we are committed to finding a solution and ending this assault on the ratepayers of Delaware as quickly as possible.

Delaware Senate Minority Leader Gerald Hocker and Sens. Anthony Delcollo, David Lawson, Ernie Lopez, Brian Pettyjohn, Bryant Richardson and David Wilson are Republican state senators who serve in the Delaware General Assembly.