United States

United States

A challenge for the green pricing concept

The grassroots Colorado Land and Water Fund of the Rockies is using its experience in marketing green power to captive customers in its home state to help test whether the same approach could be just as successful in the deregulated market of Pennsylvania. The group is also helping to find out if door-to-door campaigning can pay for itself in a free market.

A grassroots group from Colorado is using its experience in marketing green power to captive customers in its home state to help test whether the same approach could be just as successful in the deregulated market of Pennsylvania, where customers shop for their electricity among a bewildering array of products.

What's more, the Colorado Land and Water Fund of the Rockies (LAW Fund) is also helping a Pennsylvania group to find out if door-to-door campaigning can pay for itself in a free market. If so, green power advocate groups could move into business as green power marketers -- and earn profits to fund more activities -- instead of merely surviving in a non profit category.

The LAW Fund has had success and gained national recognition for its co-operation with utility Public Service Company of Colorado (PSCo) in selling wind power to small businesses. In Coloardo's regulated power market, customers have two choices: the normal rate, or the premium rate under the Windsource program. Of the 45 MW of wind power in planning or in operation in Colorado, 20 MW is currently sold through Windsource.

On behalf of PSCo, the LAW Fund uses a street team "canvassing" approach to market Windsource to small businesses. "We just go around knocking on doors," says LAW Fund's John Halley. "We don't skip anybody." As a result, the campaign has helped to build up greater demand for wind than PSCo had originally expected, encouraging the utility to build all 20 MW of the Windsource portfolio, says Eric Blank of LAW Fund. Out of 1500 small businesses approached by LAW Fund's two to three full-time canvassers, 300 have signed up to receive all or a part of their electricity from wind turbines -- a 20% success rate, he says.

Overall, Windsource has 15,000 subscribers: about 70% are residential customers hooked through direct mail and advertising campaigns; 15% are commercial; and three small utilities are wholesale customers. PSCo's Andy Sulkko praises the LAW Fund's efforts. He notes that PSCo will build more wind turbines in 5 MW increments as customers demand it, stressing that PSCo is trying to keep sales and generation equal.

More difficult

In Pennsylvania, non-profit group Community Energy Inc has launched a marketing program fashioned after LAW Fund's efforts. "In the Colorado model, sign-ups drove the wind development," says Community Energy's Brent Alderfer, a commissioner from 1996-1999 at the Colorado Public Utility Commission. He moved to Philadelphia in May to head the pilot project. "We need to explore whether it works here in a competitive market. In ways it may be more difficult."

Power retailers in Pennsylvania already offer products with renewables that are already on the grid, Alderfer says. "Customers get the satisfaction, but they don't get the ability to bring new wind on directly." He adds that customers who sign up through Community Energy's program will directly influence wind development in Pennsylvania, where no utility scale wind projects exist today.

The different structures of the Colorado and Pennsylvania markets are posing a funding test. In Colorado, the LAW Fund covers its costs from contributions and grants. PSCo does not offer any compensation for marketing -- and that's the way the LAW Fund wants it. Blank says it lends credibility to the process and has encouraged more people, including politicians, to jump on board. On the other hand, he says, the arrangement has made it more difficult to sustain the group's activities.

That may not be the case in Pennsylvania. "The promise of a competitive market is that you can cover your costs from the market," says Blank. Alderfer adds that, due to the margin between the regulated price and market price of electricity in the Philadelphia market, Community Energy might be able to cover its costs with a package that includes at least 30% wind, at least for business customers in the area served by Philadelphia Electric Co.

"The business rate turns on both kilowatt hour and demand charges," Alderfer says. "So a good deal depends on the customer's load profile. It looks like small businesses will save money. We are testing whether that will give them room to pay for wind energy." The average regulated business class rate is just under $0.062/kWh, Alderfer says. That's for power and transmission -- the deregulated half of a power bill. "We're thinking about offering a rate of 8.2 cents for one hundred per cent wind and believe we could get twenty to thirty per cent wind without raising the price," Alderfer speculated in mid October, before the door-to-door marketing began.

Uncertain future

Community Energy has made some preliminary arrangements with Energy Unlimited, a wind developer in Pennsylvania. Community Energy is not a licensed power supplier, so it is discussing future arrangements with Conectiv, which does have a supply licence (Windpower Monthly, March 1999), and others, according to Alderfer. "We will only present our product on behalf of existing competitors already in the market," Alderfer says. "The product we offer will allow them to offer their customers a pure wind product." Someday Community Energy may become a competitor, too, and shed its non-profit status. But for now its core mission is to get wind into the market. Its success will drive which avenue it takes.

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