Green Pricing and Net Metering Programs 2005

Background

Green pricing/marketing programs allow electricity customers to voluntarily pay the additional costs for renewable energy through direct payments on their monthly bills. In return, the electricity provider guarantees that it will provide either directly or by contract that amount of renewable-based electricity.

The Energy Information Administration (EIA) collects information about green pricing programs on the Form EIA-861, “Annual Electric Power Industry Report,” which is a survey of electric industry participants.^[1] All respondents, except independent power producers and qualifying facilities, were asked to report their number of customers in green pricing programs by state and customer class.

Net metering programs usually permit customers operating very small generators to purchase extra electricity when needed. Also, any excess power at the end of the month can be sold back to the utility. Provisions vary by state and utility and often apply to solar or wind energy. In addition, pricing schemes vary by individual utility and customer circumstance. This system facilitates the ease of operating intermittent generators, such as those using solar and wind energy, and improves their economics. The EIA collects information on net metering on the Form EIA-861 in much the same manner as it does green pricing.

2005 In Review

In 2005, the number of electric industry participants reporting customers in green pricing programs increased by 39 to 442 (Table H1). The total number of green pricing customers was nearly 943,000. Residential customers represented 92 percent of the total. Net gains of more than 102,000 customers in 33 states were largely offset by net losses of about 88,000 primarily in four states (Ohio, California, Pennsylvania, and Tennessee) (Table 63).

Of particular interest in reviewing these results is the status of one company, Green Mountain Energy, an Austin, Texas based green power marketer, which was a dominant player in the market during 2005. Early in 2006 the company reported that effective December 31, 2005, it had pulled out of the Ohio market, where it had some 450,000 green pricing customers; also, its customer base in Pennsylvania, where it once had 100,000 customers, was plunging due to rising energy prices.^[2]

Growth in the number of net metering customers has been rapid. In 2005, 188 electric industry participants reported 21,146 net metering customers, up by 5,320 or 34 percent from the previous year (Table H2). Ninety-one percent were residential customers. Thirty-two states reported net gains of net metering customers (Table 64). California accounted for a net gain of 3,921 customers, followed by New Jersey with 297. This is attributed in part to more aggressive support for renewable energy in these two states, particularly for energy sources like roof-top solar, which is a popular application for net metering.^[3]

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