August 2, 2011 - green pricing programs grow

Tuesday, August 2, 2011

"Green pricing" energy programs are one way electricity consumers can choose the mix of resources making up their energy supply.  Under these programs, consumers can voluntarily pay for electricity sourced from renewable resources.  Green pricing programs, which often but not always come at a premium over default service, represent a free market solution to the question of who should pay for renewable power, and give customers control over their energy mix.

This is a different approach from renewable portfolio standards, which require utilities to source specified portions of their power from renewables.  These two strategies can work together, as the majority of states now use both RPS and green pricing programs.

The U.S. Energy Information Administration defines green pricing:

Green pricing:  In the case of renewable electricity, green pricing represents a market solution to the various problems associated with regulatory valuation of the nonmarket benefits of renewables. Green pricing programs allow electricity customers to express their willingness to pay for renewable energy development through direct payments on their monthly utility bills.
The EIA's July 2011 report on green pricing and net metering (9 page PDF) shows a record number of customers participating in green pricing programs.  Green pricing programs now exist in every state except Alaska, Hawaii, and New Hampshire, so it is no surprise that EIA's recent report documents an increase in green pricing participation.  EIA's most recent data, which covers 2009, shows a 6% increase in the number of electric industry participants (utilities, competitive suppliers) with customers in green pricing programs.

The number of customers participating in green pricing programs also increased for a third consecutive year to 1,123,778 customers.  This represents a 12% increase in customer participation  -- and yet green pricing has been chosen by less than 0.08% of the nation's total 143,497,0601 electricity customers.

What does the future hold for green pricing?

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