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Retail Green Power Continues Growth in Northwest,
RNP Report Finds, But Market Share Remains Small

Mark Ohrenschall
Con.Web, August 28, 2003

Numbers Up

Retail green power programs offered by Northwest utilities continued to grow over the past year, according to an annual report from Renewable Northwest Project.

"Powerful Choices IV: A Survey of Retail Green Power Programs in the Pacific Northwest" found the number of such utility ventures grew from 23 last year to 35 now, while total customer participants increased from about 42,000 to more than 59,000 and estimated green power sales climbed 88 percent.

Still, retail green power occupies a very small market niche regionwide. The 35 utilities surveyed for the report had a collective participation rate of 1.4 percent among residential customers eligible to choose green power, and 0.17 percent among commercial customers with a green power option. Total estimated green power sales of 305 million kilowatt-hours (about 35 average megawatts) amount to about 0.001 percent of the region's total load for 2002.

"The key findings are that the programs are still growing and we still have more of a market we can approach," said RNP's Natalie McIntire.

She found it "telling" that premium-priced green power still attracted many new customers despite the lackluster regional economy and many utility rate increases. "That's one of the things that we want to be able to use with policymakers and with the utilities: 'Look, your customers are telling you something. They are voting with their pocketbooks here,'" McIntire said.

Despite the overall rise in regional green power, seven utilities reported a decline in participant numbers from 2002 to 2003, and another eliminated its program. Meanwhile, the increase in green power kilowatt-hour sales, while substantial, also fell short of the percentage increases recorded the previous two years.

And, Northwest green power numbers remain dominated by two large investor-owned utilities, PacifiCorp and Portland General Electric, which together account for about 77 percent of regional green power sales and nearly two-thirds of total customer participants.

Green power products for the programs are diverse, the report outlines, although wind power is the predominant underlying resource, according to McIntire.

Northwest Green Power Numbers
The numbers keep trending upward for Northwest retail green power ventures, which RNP defines as "any program that allows customers to choose to purchase energy from an environmentally preferred power source or to contribute to the development of new renewable resources." Green power resources include wind, solar, geothermal, low-impact hydro and low-emission biomass.

A total of 35 Northwest utilities currently offer retail green power--12 more than in 2002, according to RNP. State legislation has spurred development of these programs. A 2001 Washington law requires all utilities with more than 25,000 meters to offer green power; all 16 such utilities now do so, the report said. Oregon's electric industry restructuring legislation mandated renewable energy options for PGE and PacifiCorp customers, and a 2003 Montana law obliged NorthWestern Energy to provide a green power program for its default customers.

All six major Northwest IOUs now offer green power, as do 29 publicly owned utilities ranging in size from large Puget Sound municipals to small Montana cooperatives.

"Powerful Choices" listed total Northwest customer participants at more than 59,000, a jump of more than 17,000 customers from 2002. McIntire cited expanded marketing by Washington utilities and a $1 per block price drop in PacifiCorp's Blue Sky program as notable contributors to this growth.

Portland General leads Northwest utilities in total participants, with 22,266, RNP found. PacifiCorp ranked second, with 15,505 Oregon and Washington green power customers. Puget Sound Energy is third, with 7,434. These three investor-owned utilities have enrolled about 75 percent of the region's total green power customers. Eugene Water & Electric Board ranks highest in Northwest public power, with 2,200 participants.

RNP also documented increased green power sign-ups in both the residential and commercial sectors since 2002--40 percent and 41 percent growth, respectively. McIntire thinks utilities are focusing more on selling green power to business customers.

Residential customer participation averages 1.4 percent among the 35 utilities, for those customers with a green power choice. Orcas Power & Light Cooperative leads the region in this category, at 4.9 percent, followed by Peninsula Light Co. (about 3.6 percent), PGE (3.3 percent) and Central Electric Cooperative (3.1 percent).

Pacific County PUD ranks highest in commercial customer participation, at slightly more than 1 percent. EWEB comes in second at 0.75 percent, while Orcas and Peninsula Light are both at 0.62 percent.

Estimated annual kilowatt-hours sold through Northwest retail green power programs have risen exponentially, from 23.5 million KWh in 2000 to 47.1 million KWh in 2001 to 162.9 million KWh in 2002 and 305.4 million KWh in 2003.

The 2002 introduction of 100-percent renewables products from PGE and PacifiCorp have boosted sales, McIntire said. "It adds a large amount of kilowatt-hours purchased," compared to utilities offering green power blocks.

As for the lower sales growth rate from 2002 to 2003, compared with the previous year, McIntire said there were fewer new programs introduced, many of them from smaller utilities.

Though growing, retail green power has yet to capture a sizable share of its potential Northwest market.

"We know that these programs don't have a huge participation rate at this point," said McIntire. Twenty-two programs had signed up fewer than 1 percent of their residential customers, the report found, while only four utilities exceeded 3 percent participation.

McIntire emphasized the growth rate as well the energy implications: regional green power sales roughly equal the output of 106 1-MW-capacity wind turbines.

"I think we're shooting to get above 5 percent [customer participation]; it would be great if we got to 10 percent on a program basis," she said. "We know that some of the key marketers have that as a goal." She acknowledged uncertainty over how long it might take to achieve those numbers.

More green power participation is likely as the economy picks up, McIntire predicted, particularly among those who are not strong environmentalists. The next frontier for green power marketing is connecting with more general audiences, she said, by focusing more on the economic benefits and rate stability of renewables, not just their environmental pluses.

Green Power Products, Resources
"Powerful Choices" includes a brief outline of each utility program, revealing some general regional trends.

Blocks--most commonly 100-KWh apiece--are by far the most popular green power product, sold by 27 of the 35 utilities. Other programs offer green power on a percentage usage basis or solicit donations/contributions of specified or unspecified amounts.

Premiums range from $1 to $5 per month for different sized blocks. Specified donations/contributions vary from $2.50 to $100 extra, and percentage usage programs charge according to differing criteria.

Green power for these programs comes from numerous sources, notably Bonneville Environmental Foundation, Bonneville Power Administration, Stateline and Nine Canyon wind projects, and regional landfill-gas plants.

Most of the programs ultimately derive most of their resources from wind, according to McIntire. "Wind tends to be the least expensive of the renewable resources," she said. "To get a number of people to sign up, it's helpful to keep the price low."

RNP Recommendations
"Powerful Choices", prepared by Daniel Etra, provides five recommendations for utilities:

  1. Initially purchase green power for all customers, "to demonstrate that the utility is committed to the reality of green power and to acting in an environmentally responsible manner."
  2. Invest in additional renewables with green power revenues.
  3. Develop local renewables, as Orcas Power & Light and Chelan County PUD have done through their programs.
  4. Keep marketing to customers, though such means as direct mail, newsletters and bill stuffers. "Research has shown that the average customer needs to have anywhere from 7-13 exposures before deciding to purchase a green power product," the report said.
  5. Collaborate with environmental organizations in marketing green power programs

      Mark Ohrenschall
      Retail Green Power Continues Growth in Northwest, RNP Report Finds, But Market Share Remains Small
      Con.Web - August 28, 2003

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