"Competitors will be marketing to our customers. We need to have a green marketing programme in place right away," says Anjali Sheffrin, SMUD's manager of resource planning. Since SMUD will offer 100 MW of load to enter into direct access transactions beginning on June 1 of this year, the municipal utility, under the terms of the California restructuring law passed last year, will also be able to compete for customers outside its service territory. However, once SMUD makes that move, other competitors can compete to serve SMUD loads, too.
"We need to think bold and have self-confidence. Enron and Northern California Power Agency (NCPA) will be competing for our customers. I think we can become the pre-eminent green utility in northern California if we play our cards right," stated SMUD board member Ed Smeloff.
A survey performed for SMUD early last month showed that roughly half of the 500 residential customers responding were willing to pay more for renewable energy. The most popular source was solar (67%), followed by hydroelectric (57%) and wind power (52%). Just over 40% of the survey respondents were willing to pay a $10/month premium; 17% were willing to pay a $20/month premium.
Given these survey results, SMUD is investigating the use of energy co-operatives and neighbourhood aggregation pools as vehicles for its green marketing campaign, designed to sign-up 10,000-15,000 customers or 3-3.5% of its customer base. SMUD will also offer two distinct "green" rates. The first is a solar rate designed to facilitate installations of photovoltaics. The charge will range between $0.01-0.02/kWh.
The second rate will range between $0.005-0.02/kWh for up to three blends of renewable energy that could still include wind power. Wind bids submitted some time ago to SMUD by FloWind and Energy Unlimited to develop as much as 38.5 MW will be considered until the end of this month, at which time SMUD will decide if it will proceed with any renewable development beyond landfill gas and photovoltaic projects (Windpower Monthly, March 1997).
According to Bob Wichert, SMUD's manager of renewable energy programmes, the municipal utility plans to aggressively promote its green marketing outside of its service territory in order to take advantage of state funded rebates to customers of investor-owned utilities. According to a proposal developed at the California Energy Commission, being forwarded to the California Legislature for approval this year (see story page 31), $81 million will be made available in the form of rebates for customers choosing to buy renewable energy through direct access deals. If SMUD sold green power to customers served by PG&E, these customers would be eligible for the state funded rebates.
SMUD is currently negotiating with Sacramento County to develop an 8.3 MW landfill gas project to come on-line in 1999 as the source of electricity for its green marketing programme. Meantime, the utility is looking to buy 3-5 MW of renewable energy from existing power plants to use in the interim to launch its green marketing programme.