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NW Green Power Sales More Than Triple in Past Year, RNP Reports Mark Ohrenschall Con.Web, September 26, 2002

Retail green power programs continue to grow exponentially around the Pacific Northwest, although participation numbers and energy sales remain very small in regional percentages.

A new Renewable Northwest Project report shows that Northwest utility retail green power sales more than tripled in the past year, while the number of regional customers buying green power more than doubled. A similar RNP report released in September 2001 found a doubling in both sales and customer participants since 2000.

"Considering the lousy economy we are thrilled" with the green power sales increases, RNP director Rachel Shimshak told Con.WEB.

Washington and Oregon legislation "has had a dramatic and positive impact" on regional green power growth over the past year, according to RNP's "Powerful Choices III" report. Washington utilities with more than 25,000 meters were required to offer retail green power starting in January 2002, and the Evergreen State recorded the region's biggest upsurge in programs, with seven utilities launching ventures in 2002. Oregon's electric industry restructuring law led to new green power options for small customers of Portland General Electric and Pacific Power--the two utilities with the great majority of regional green power sales and customers.

In the wake of the energy crisis and associated rate increases a number of utilities reported declining green power program participation, but none drastic, RNP reported.

Yet, despite impressive gains in the past two years, retail green power is still very much a niche product. Average customer participation rates for the 27 surveyed utilities (including four outside the Northwest) is 1.6 percent. And the annual Northwest sales figure of 18.5 average megawatts represents 0.0007 percent of the Northwest Power Pool's 12-month average load for the year ending May 2002.

"When you sign people up one at a time it takes a long time to achieve significant penetration, especially because for 100 years people didn't have any choices" with their electricity, Shimshak said.

She hopes the steep upward trend for Northwest retail green power sends "a positive signal to the utilities about how their customers feel about renewable resources. We hope that translates into an increasing amount of renewables on behalf of customers."

Numbers
The RNP report prepared by Ned Harris surveyed 27 Western utilities, including Los Angeles Department of Water & Power and Sacramento Municipal Utility District in California, and Xcel Energy and Holy Cross Energy in Colorado. The 23 Northwest utilities are a mix of investor-owned and publicly owned, of varying sizes.

The report identifies green power resources as solar, wind, geothermal, landfill gas and low-impact hydro, and defines green power programs as those allowing customers to select an "environmentally preferred power source or otherwise contribute to the development of new renewable resources," by paying a premium.

Northwest programs collectively sell about 163 million kilowatt-hours annually. That's up from about 47 million KWh in 2001 and 23.5 million KWh in 2000, according to the report.

Meanwhile, the total number of participating Northwest customers rose from 18,675 in 2001 to 42,022 in this year's report. Among the 23 regional utilities participation numbers range from 6 customers at Umatilla Electric Cooperative to 14,117 customers at PacifiCorp (systemwide, including Utah and Wyoming territory).

Average participation rates at all 27 utilities is 1.6 percent, and 1.8 percent for residential customers. Twelve of the 23 Northwest utilities show residential participation rates below 1 percent. The highest such percentage regionally is Orcas Power and Light Cooperative in Washington's San Juan Islands, at 4.7 percent.

Northwest green power figures are dominated by IOU's PacifiCorp and PGE. Together they account for nearly 80 percent of retail green power sales in the region, according to the RNP report. They also represent roughly two-thirds of total participating customers. Seattle City Light (2,713 customers) and Eugene Water & Electric Board (2,400 customers) lead Northwest public-power utilities in green power program participation.

RNP's report, however, cautions that numbers tell only part of the story. "Clearly, participation rates should not be used as the only measure of success. Successful programs are those that generate enough customer demand to spur new renewable development, regardless of participation rate."

Six of the utilities buy environmentally preferred power from Bonneville Power Administration, which sends some of the premiums to Bonneville Environmental Foundation to support new renewables, the report noted. PGE and PacifiCorp also earmark a portion of green power revenues for new renewable resources.

Green Power Products, Pricing, Marketing
"Powerful Choices III" also examines green power products, pricing and marketing, along with individual utility program profiles.

Green power for these programs originates from sources including wind, solar, landfill gas and low-impact hydropower. Some resources are existing while others are newly built. "RNP believes that investment in new renewables is becoming an increasingly important characteristic as green power programs mature," the report said. Orcas and Chelan County PUD invest in locally generated resources, which RNP lauds as popular with customers and valuable for green power marketing and education.

The most widespread pricing option is the block, typically 100 KWh for a fixed monthly premium, ranging from $1 to $4 for the surveyed utilities, according to the report. This method is understandable and predictable for customers. Some utilities, notably EWEB, offer customers an opportunity to buy a percentage of their total electricity from green power, while a few others ask for sliding-scale contributions.

PacifiCorp's Blue Sky program showed accelerated growth after the 100-KWh block price dropped from $4.75 to $2.95. This "suggests that product pricing is a key element for green power programs and it is important to allow your customers to choose from various purchase levels," the report said.

Marketing techniques have included such avenues as bill stuffers, advertising and media mentions, with widely varying budgets. Direct mail sent to targeted groups and marketing at community events tend to be more successful, the report said, as are utility partnerships with local and environmental organizations. The 11 surveyed utilities with such collaborations have an average customer participation rate of 2.6 percent, compared to 0.9 percent for those without such associations.

"Surprisingly," the report noted, "only a small number of utilities have taken steps to target their commercial customers."

Lessons Learned
"Powerful Choices III" also shares lessons learned. One is the importance of understanding customer interests and attitudes, often through formal surveys. This enables programs to change as needed.

Persistence is vital to marketing efforts, the report said. "When utilities ease up on green power promotion, they often see a drop in participation. From this we can only conclude that the initial customer contact alone is not the recipe for a successful green power program."

The energy crisis generated mixed effects on green power programs, RNP found. Some utilities cut marketing in the aftermath of rate increases that have ranged as high as 60 percent, while others combined green power promotions with energy-saving campaigns.

"The final, and perhaps most important lesson is that attitude matters," the report said. "No matter what a utility is up against--political climate, rate increases, customer demographics, or size of the marketing budget--a successful program is one that is positive, persistent, consistent, and creative ... When consumers understand the benefits of choosing renewable power--cleaner air, diversified energy mix, infinite fuel supply, predictable long-term costs--many more will exercise the powerful choice to support clean power generation."

Related Links:
"Powerful Choices III: A Survey of Retail Green Power Programs in the Pacific Northwest and Beyond"