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Judge eyes challenge to Delaware Bloom Energy deal

Randall Chase, Associated Press

WILMINGTON, Del. (AP) -- Attorneys for Del. Gov. Jack Markell asked a federal judge on Wednesday to dismiss a lawsuit challenging a deal to draw California-based fuel cell manufacturer Bloom Energy to Delaware with millions in state taxpayer dollars and higher rates on Delmarva Power customers.

FuelCell Energy Inc., a Connecticut-based fuel cell manufacturer and potential Bloom competitor, argues that the Bloom Energy project amounts to economic protectionism and discrimination in violation of dormant commerce and equal protection clauses of the Constitution. The project is one of Markell's signature job creation efforts.

"What we're asking for is for the court to permit free competition," said Amber Abassi, a lawyer for Cause of Action, a Washington D.C.-based legal advocacy group. The group is representing FuelCell Energy and Delmarva ratepayer John Nichols.

Private attorneys hired by the state to represent Markell argued Wednesday that the suit should be dismissed because FuelCell has made no effort to conduct business in Delaware and thus cannot show that it has been harmed.

David McBride, an attorney representing Markell, told Magistrate Judge Christopher Burke that it would be a "travesty" for the court to blow up the Bloom Energy deal with no assurance that FuelCell Energy would step in.

McBride suggested that the lawsuit was really just "a forum for a political and ideological battle," saying FuelCell never tried to work with state officials or Delmarva Power before the lawsuit was filed.

Cause of Action bills itself as a nonprofit, nonpartisan organization that addresses threats to economic freedom and educates the public on how government accountability and transparency protects taxpayer interests and economic opportunity.

To persuade Bloom Energy to build a manufacturing facility at a former Chrysler plant in Newark, the Markell administration offered the company up to $16.5 million in strategic fund grants. It also offered the University of Delaware, which owns the site, $7 million to make it ready for Bloom's factory.

Lawmakers also fast-tracked legislation amending Delaware's renewable energy standards to include electricity supplied by a "qualified fuel cell provider." The criteria for meeting that definition — manufacturing fuel cells in Delaware and being designated as an "economic development opportunity," — are unique to Bloom.

The legislation also allows Delmarva Power to count 30 megawatts of electricity supplied by Bloom toward Delmarva's renewable energy requirements, even though the fuel cells will be powered by nonrenewable natural gas. The Public Service Commission, whose members also are defendants in the lawsuit, allowed Delmarva Power to impose a new tariff on its ratepayers to pay for the Bloom Energy deal.

FuelCell argues that the deal was structured to prevent it or any other company from competing for the 30MW project. FuelCell also says it would be willing to bid for a future 20 megawatt project contemplated under the Bloom deal as long as it could do so on an equal competitive footing and on commercially reasonable terms.

In rejecting FuelCell's arguments, defense attorneys also argued that Nichols has no standing to bring a claim under the dormant commerce clause. They also rejected his claim that the equal protection rights of Delmarva ratepayers are being violated because only they, and not customers of other utilities, are subject to the tariff subsidizing the Bloom project, even though the purported economic and environmental benefits of the project would apply to all Delawareans.

The judge gave no indication when he would rule.