The Clean Energy Shell Game

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Learn about the players and power sources that are part of the clean energy industry. Uncover the the possibilities of renewable energy.

For the first time in the history of the United States, electricity buyers have a choice. Now your power doesn’t have to come from coal-, gas- and other fossil fuel-burning plants that serve as the largest industrial contributors to air pollution in the country.

Across the United States, buyers may now purchase “clean”
kilowatt-hours from wind turbines perched atop ridges in
Wyoming and Colorado, solar panels that cap parking
structures in California, or geothermal power plants that
harvest 500-degree underground temperatures.

According to the American Wind Energy Association in
Washington, D.C., more than 140 utilities in the U.S. are
now offering “green” power from renewable energy sources,
while some unregulated energy companies are already
operating in some states. Just look for power labels like
Blue Sky, Wind for the Future and Salmon-Friendly Power,
whose names are intended to evoke images of pure air,
waste-free water, and rivers that nurture fish and
wildlife.

Let’s Make a Deal

Paul Komor, research director for E Source, a private
energy information provider in Boulder, Colorado, says that
the good news about the fledgling green power industry is
that renewable energy is being developed all over the
country. “Buying green power is the single best thing you
can do with your money to help the environment,” he adds.

Nevertheless, buyers may feel they need advanced degrees in
environmental studies and economics to wade through an
energy company’s befuddling list of electricity
alternatives, energy mixtures, pricing terms and sometime
questionable claims about which kinds of power are truly
“clean.”

In fact, Kirk Brown, assistant director of San Francisco’s
Center For Resource Solutions (CRS), one of a handful of
organizations that “certify”, or guarantee, that clean
power is truly clean through meeting given environmental
standards, says that blindly choosing any kind of green
power program isn’t the best thing to do. “A green power
program may not be delivering any renewable energy,” he
says. “That’s the tricky issue.”

Just look at GreenMountain.com , which is based in South
Burlington, Vermont, and is the largest green power
marketer in the United States. They offer a product that
includes renewable energy mixed in with more conventional
sources of power in an effort to keep the price down.
However, others do sell 100% renewable energy while
offering to build new clean power plants in the process.
The cost may be higher for the individual, though much
lower for the environment. For a price about 80% higher per
unit of energy than electricity from traditional sources,
PacifiCorp in Portland, Oregon, says it will build new wind
turbines to provide customers with 100% renewable energy.

That said, pricing terms vary from one company to another.
Some sellers offer green energy in “blocks,” others in
kilowatt-hours, still others for a monthly fee. In general,
green power costs 10% to 30% more than conventional sources
of electricity.

To further confuse buyers, companies haven’t been
completely honest about the sources of their power. In a
test program in the mid-1990s, Northeast Utilities in
Berlin, Connecticut, claimed that its environmentally
friendly energy was harnessed with the force of water. They
failed to mention that nuclear- and fossil fuel-fired
plants provided some of the muscle to move the water.

“If you say it’s green, it ought to be deep forest green,
not lime green or aqua,” says Angus Duncan, president of
the Bonneville Environmental Foundation in Portland,
Oregon. “Consumers need to comprehend where the
kilowatt-hours come from before color-coding their
electricity.”

Renewable Power Sources

Electricity flows to consumers from a large pool that
includes power from a variety of different sources. In the
Northwest, for example, some of the energy comes from
utility-owned facilities that feed pulverized coal into
steam boilers that produce electricity. The utilities
transfer the power onto 345,000-volt transmission lines,
where it becomes part of the regional pool of electricity.
Says Duncan: “We sit with our straws and suck electricity
out of that pool.”

The real problem, however, is that about 56% of electricity
in the U.S. is generated by coal-fired plants that produce
the world’s most notorious greenhouse gas: carbon dioxide.
According to the Natural Resources Defense Council (NRDC),
global concentrations of carbon dioxide have increased by
about 30% over the last century.

Much of the rest of the electricity mix comes from the
other unfriendly producers: gas-fired units, which also
release carbon dioxide; nuclear reactors, which spawn
nuclear waste; and hydroelectric plants, many of which are
ill-equipped to allow fish to pass unharmed through their
giant turbines.

“Our object, over time, is to change the mix so that there
are fewer and fewer coal and gas plants and more low-impact
hydroelectric, wind and solar plants creating the
electricity,” Duncan says.

Until recently, consumers had no choice but to purchase
“brown” power from regulated monopoly utilities. The
utilities sold nonrenewable power because these were the
least expensive options.

However, customers may now have more choices for two
reasons. First, prices for alternative sources of energy —
especially wind power — have dropped dramatically in recent
years because of technological improvements. In fact, in
some parts of the country like Colorado, wind power is
close in price to the cost of electricity generated by new
gas-fired units.

Second, consumers have more power purchase options.
Policy-makers are deregulating the electric industry, and
in the states that have embraced deregulation — including
California, Pennsylvania, New Jersey, Maryland, Delaware
and Massachusetts — competing energy companies offer a
broader array of services. In states that are not yet
deregulated, utilities are now offering clean power to
improve their images in anticipation of deregulation.

“The utility companies see green power as a way of keeping
the environmentalists off their backs,” says Eugene
Rosalie, director of Northwest Environmental Advocates’
program Renew 2000. “They want the customers to see them as
good guys.”

Still, it’s wise to keep an eye out for the regulated
utilities, which are most likely to deceive their
customers.

“In regulated regions, you don’t have that neverending,
pots-and-pans, bang-on-drums criticism you get in
unregulated markets,” says CRS’s Kirk Brown. “In regulated
states, utilities’ competitors won’t take out full-page ads
and say ‘Don’t buy this one.”‘

In states where policy-makers have deregulated the electric
industry, new companies believe that consumers are willing
to pay extra for clean kilowatts because they want to make
the world a little greener.

GreenMountain.com is one of those well-meaning start-ups,
despite its continued run-ins with environmental groups in
the wake of Chairman Sam Wyly’s highly publicized
contributions to the 2000 presidential election race. Wyly
used a loophole in IRS tax code to submit over $200,000 to
George W. Bush’s presidential campaign. Though Wyly — an
avowed environmental activist-may have his heart in the
right place, Bush has been pilloried of late for his clean
air and water record as governor of Texas.

Future Options for Clean Energy

Whether they want to burnish their images or improve the
environment, utilities and unregulated companies from
Boston to Seattle have unveiled a variety of green power
products with a mind-boggling number of price tags and
pricing schemes.

Public Service Company of Colorado, a regulated utility in
Denver, offers Windsource, a program that allows customers
to invest directly in the construction of new wind power
plants. Customers pay $2.50 per month for each
100-kilowatt-hour “block” of wind power in addition to the
$7 they’d normally pay for that much power. The utility
says that buying 100 kilowatt-hours of wind power reaps the
same environmental benefits as planting a half-acre of
trees or refraining from driving a car 2,400 miles.

In states like California, where the electric industry is
deregulated, GreenMountain.com offers Solar For The Future,
a product made up of 100% renewable energy, 5% of which is
from newly built solar plants. “For every 1,000 customers
that sign up for Solar For The Future, we will build new
solar generation,” says GreenMountain’s Woodbury. Average
customers in California, who use about 500 kilowatt-hours a
month, pay an extra $7 above their typical $50 bill. About
$15 of that bill is for electricity; the rest is for
transmission and other services.

Thomas H. Rawls, vice president and chief environmental
officer of GreenMountain.com, claims that different types
of power generation reflect different levels of virtue.

“The products are designed differently to suit different
pocketbooks,” he says. “I refer to it as different levels
of virtue in a product. Choose a level of virtue you are
comfortable with and match it up with a price you are
comfortable with. Some people say, ‘Hydro doesn’t do it for
me; wind is more virtuous.’ Then they agree to pay more.”

To determine which green power program suits your needs,
ask questions about what goes into the electricity, when
the product will be “delivered”, and whether the purchase
will lead to a tangible improvement in the environment.

“The most important thing is that people choose, and choose
something better than their standard power,” adds Peter
West, senior policy associate at Renewable Northwest in
Portland, Oregon.

If a company says its clean energy includes power from the
“traditional mix,” consumers should ask if coal, gas or nu
clear plants provide some of the power. If green energy is
combined with brown energy, consumers should be sure the
green product yields lower air emissions than their
traditional mix of electricity. To ensure green power is
truly cleaner, CRS and Renewable Northwest insist on a mix
made up of at least 50% renewable resources.

Soon, consumers will be able to rely on the advice of the
newly formed Low-Impact Hydroelectric Institute, which will
“certify” that hydro plants don’t harm fish. In the
meantime, if the hydroelectric facility is located on a
river that is or was once home to wild-fish runs, consumers
should confirm that the plant owner built fish ladders to
ensure fish are able to pass by turbines without being
drawn into them.

“Hydroelectric facilities should meet fish protection
standards proposed by American rivers,” says West.

Biomass energy, like hydroelectricity, is another form of
clean power that is not always forest green. Biomass plants
burn all kinds of waste to produce energy. Often generators
that burn solid waste generate too much air pollution. A
cleaner option is a biomass facility that combusts wood
waste from paper mills or farm waste such as cow manure.

“Typically that kind of biomass is left to rot, which
creates emissions or storage problems. It’s cleaner to
combust it,” says CRS’s Brown.

Once you find green power that is truly environmentally
friendly, ask when the utility will begin feeding it into
the grid. Brown suggests that some Northwest utilities
collect money from their customers, then don’t deliver the
power for two years. PacifiCorp, for instance, asks for
this buffer so it has time to collect enough money to build
new wind plants.

“A utility should not take money from a customer for
renewable energy unless the utility is delivering renewable
energy,” Brown says.

In addition to asking questions about when green power will
be delivered, you should be sure and understand how much
you will pay. Is the energy 10%, 20% or 30% more expensive
than traditional sources of power for each unit of energy?
When utilities sell power in blocks for a monthly premium,
it’s difficult to calculate the true price of the product.

E Source’s Komor says customers shouldn’t balk at the cost
if it seems high.

“You usually don’t have to supply all your electricity
needs with renewable energy,” he says. “Just decide how
much you can afford.” A higher price may reflect a
company’s plans to invest in marketing, which will allow
the company to reach more buyers.

Finally, it’s critical to determine how energy companies
will use the extra dollars. Will utilities funnel all the
money back to their shareholders? Or will they use it to
construct new renewable energy plants whose output will
replace polluting energy from coal-fired units?

“If customers pay a premium, they have a right to know the
world will be a little greener,” says Duncan. “They don’t
want to know that the profits will go to people’s back
pockets.”


Clean Energy Resources

Natural Resources Defense Council
New York, NY
www.nrdc.org

Center for Energy Efficiency and Renewable
Technologies (CEERT)

Sacramento, CA
www.cleanpower.org

Solstice
www.crest.org

Center for Resource Solutions
San Francisco, CA
www.green-e.org

Renewable Northwest Project
Portland, OR
www.rnp.org

Energy Efficiency and Renewable Energy Network
www.eren.doe.gov

E Source
www.esource.com

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