Bioenergy, Wind Power

Texas Power Company Argues for Electricity Deregulation

Price constraints have kept Connecticut energy customers resistant to new electric competition, but one new power company hopes people will look past cost and accept a more environmentally friendly option.

(Condensed from the Waterbury Republican-American, Dec 13) State regulators expect to draft a preliminary decision Tuesday on the electric supplier license application of Green Mountain Energy Co., a 3-year-old spin-off of Vermont’s public utility. The privately held Green Mountain, now based in Austin, Texas, sells electricity made primarily from renewable, clean resources, such as water, wind, solar energy and landfill methane. “Most people don’t know that energy generation is the single largest source of air pollution,” said Tom Rawls, chief operating officer of Green Mountain. “But as people become aware of the insults to the environment and the harm to human health that come with burning fossil fuels for electric production, then many people will be willing to pay to make sure they get clean power.” Green Mountain has targeted Connecticut as one of just four states that is both open to electric competition and likely to offer an environmentally conscious customer base, Rawls said. It has already opened an office in Hartford and expects to actively pursue some 25,000 Connecticut customers as soon as it receives its license, which Rawls expects in January. He admits that Green Mountain’s cleaner “green power” will cost about 10 percent more than the regulated standard offer, but with the state’s median income well above the national average, Connecticut just might be the perfect proving grounds. The company is the nation’s largest marketer of green power. It has collected 100,000 customers over three years in three states that tested the waters of electric deregulation early — California, Pennsylvania and New Jersey. That’s not many in comparison to the millions who, in deference to their wallets or simple convenience, have chosen to stay with their old regulated utilities. But it is significantly higher than what any of the licensed suppliers in Connecticut have been able to draw away from utility companies Connecticut Light & Power Co. and United Illuminating Co. over the state’s first year of deregulation. The most popular new marketer, the Connecticut Energy Cooperative, has convinced only about 500 customers to leave CL&P or UI by hawking its Co-op ValueWatt and green power Co-op EcoWatt service plans. EcoWatt costs almost 23 percent more than ValueWatt, but Green Mountain and the state’s environmentalists were heartened to discover that two-thirds of the Co-op’s members chose the green-power option. John Anderson, chief technology officer of the nonprofit Connecticut Clean Energy Fund, said that amounts to about $5 a month more, a pittance for people who want to take an active role in protecting the environment. Green Mountain’s task of finding those motivated customers won’t be easy, however. Consumers and suppliers alike have been largely unmoved by the new options placed before them by deregulation. That’s because, if customers don’t want to change suppliers, they can stick with CL&P or UI under a state-ordered standard price until Dec. 31, 2003. Without lifting a finger, they were ensured a 10-percent rate cut for four years. Meanwhile, suppliers have had no incentive to force customers’ hands. They have little hope of setting competitive prices when a volatile electricity market is keeping wholesale prices well above the standard residential price of 5.5 cents per kilowatt-hour. But if green-power marketers like Green Mountain and the Cooperative can distinguish their product from that of the utilities, Anderson said they may have a better chance of convincing residents to pay 6.5 cents per kilowatt-hour, the initial distribution rates for the Co-op EcoWatt plan. “If you think about what could possibly distinguish one electric service from another, it’s three things: Price, which there’s not a lot of variation in right now; bundled services, like tying in energy and telecom; and then there’s environmental impact,” Anderson said. “Green Mountain wants to make people conscious of that here. They were already particularly successful in Pennsylvania.” Anderson said the options for green-power generation in Connecticut lag behind Pennsylvania. The Clean Energy Fund invests in developers who can build more hydroelectric, biomass or wind generation to compete with more popular oil, nuclear and natural gas plants. Beryl Lyons, spokeswoman for the state Department of Public Utility Control, said Connecticut does not offer many good sites for wind turbines and lacks the necessary sun exposure for solar stations. But Anderson and Rawls said power doesn’t have to be generated in the state to be used here. Wind can be harvested on the crests of New York and northern New England mountain ranges or off-shore on the continental shelf, they said. The problem is that marketers like Green Mountain have to show developers that demand is there before Connecticut’s generation market can grow, Anderson said. Also, residents have to agree to allow development in the typically fragile highland environments ideal for wind stations, although Rawls notes they can be “quite handsome and artistic.” And then there are the customers. As Lyons bluntly points out, “an electron is an electron is an electron.” But Green Mountain spokeswoman Eleanor Scott refuses to be discouraged. “We’ve been pleased with our success, and we’re excited about the future prospects as the markets develop in states like Connecticut and as people make the connection between clean air and clean energy,” she said. “But we realize we have to educate people.” Anderson said the “education” technique of choice for Green Mountain and the Connecticut Energy Cooperative will be “affinity marketing.” In all likelihood, they will try to reach out to rural residents of eastern Connecticut and Litchfield County, who tend to be concerned about such environmental issues as open-space conservation, and to coastal communities that have confronted nuclear power plants. Environmental organizations, such as the Sierra Club, and faith-based groups, such as Boston’s Episcopal Power & Light, can be important partners for a green-power marketer. In fact, the Sierra Club signed up this year as a member of the Cooperative. Rawls doesn’t know how much will be spent on marketing green power to Connecticut residents, but he did say that “historically, we’ve been willing to commit millions of dollars to education and alerting people to the problems of power generation.” He thinks the message will ring true. “You can sometimes get commodity power that is relatively low-priced, but you have to remember that higher costs might be borne by others — those who have asthma, the waterways and wildlife, all choked by pollution.”