Green Pricing: Encouraging the Development of Renewables in a Deregulated Environment
"Green pricing" programs allow electricity customers to express their willingness to pay for renewable energy development through direct payments on their monthly utility bills. Green pricing represents a market solution to various problems associated with regulatory valuation of the nonmarket benefits of renewables. Under
green pricing programs, utilities can encourage the development of renewable energy while simultaneously measuring customer support for renewables under mi-competitive conditions. Customers willing to pay a price premium for renewable energy can do so by adding some incremental amount of money to their regular electricity bills. Such programs are currently available from several utilities, and they are under consideration at many more utilities across the Nation. Examples of some existing programs follow: a,b
Public Service Company of Colorado: Participants in the Renewable Energy Alternatives Program (REAP) support the accelerated growth of renewable generating resources through voluntary monthly pledges. Currently more than 6,000 customers participate, at an average monthly pledge of approximately $2.
Traverse City Light and Power: About 200 customers volunteered to pay a 3-year premium of 1.58 cents per kilowatthour to fund construction and operation of a 600-kilowatt wind turbine.
Sacramento Municipal Utility District: Participants in the Photovoltaic Pioneers Program pay a 15-percent premium (about $6 per month) over a 10-year period to have a 4-kilowatt, grid-connected photovoltaic panel attached to their roofs. The full
cost of the rooftop system is subsidized through other municipal income. Current participation is about 300 customers.
Portland General Electric: The "Penny Jar" program enables customers to þround upþ their monthly utility bills, at an average of 50 cents a month. This amount supports future renewable energy generation programs.
Detroit Edison: Participants in the "Solar Currents" program pay a monthly premium to help fund the development of a planned 28.4-kilowatt photovoltaic facility. The utility will use $113,600 in Federal funds to pay a portion of the construction
costs for the facility.
aK. Baugh et al., "Green Pricing: Removing the Guesswork," Public Utilities Fortnightly (August 1995).
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