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Strong defence of economics of Oregon green power program
1 March 2007
A popular green power program in environmentally conscious Oregon caused a recent stir when the state's largest newspaper reported eye-popping cost allocations for renewable energy at Portland General Electric (PGE). Under a banner headline in the daily's business section, the story noted that 56% of customer dollars go toward marketing, administration, overhead and related expenses -- making PGE's green program one of the nation's costliest. The report was followed a few days later with a stinging editorial that recognised the need for investing in marketing, but added: "Still, 44 cents on the dollar doesn't pass the smell test." PGE, however, contends that the apples-to-oranges comparison was unfair -- and that PacifiCorp, Oregon's second largest utility, spends 43% on marketing, outreach and administration only when measured against different criteria. "The fact of the matter is that ours is a very cost-effective program," says PGE's Mark Fryburg. "When you actually do the math, our costs per kilowatt hour are below the national average. It takes a lot of consumer education and we think every penny is well spent." In 2002, Oregon became the first state to make programs offering green power to customers mandatory for regulated utilities. According to 2005 figures, PGE's Green Source was second in the nation for kilowatt hours sold and third for overall number of participants. Under state law the utilities cannot profit from the programs, but may recover administrative expenses. Meanwhile, Oregon's legislature appears on a fast track towards mandating a minimum requirement of green energy in the supply mix, with the cost of the renewables portfolio standard (RPS) shared by all customers. "But even with an RPS, there's still going to be a significant number of our customers that want to purchase 100% renewable power," adds Fryburg. "We have support from our customers and the environmental community. We're number one in the US in residential sales and we're not done yet. We're very proud of what we've accomplished."
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