Lori Bird

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Best Practices for Utility Green Pricing
Lori Bird Senior Energy Analyst National
Renewable Energy Lab lori_bird_at_nrel.gov
Minnesota Green Pricing Workshop October 24,
2001 St. Paul, MN
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(No Transcript)
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Annual Growth in Utility Green Pricing Programs
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Comparison of Green Pricing Premiums
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Response to Green Pricing Programs

• Participation rates generally 1, with most
  successful programs achieving rates of 4-7
• Nearly 200,000 participants nationally
• A dozen programs fully subscribed currently
• Most have targeted residential customers, but
  businesses represent 25 of sales
• Median price premium 2.5/kWh
• Average customer spends about 5/month

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Who is Buying Green Power?

• Households
• Small, medium, and large businesses
• Business chains
• Business organizations
• Health organizations
• Faith-based groups
• Colleges and universities
• State and municipal governments
• Federal agencies

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Renewables Installed and Planned to Serve Green
Pricing Customers
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Creating a Successful Program

• What is a successful program?
• Maximizing both new renewable resource
  development and customer participation
• Wide variation in achieving these goals
• ¾ of the 172 MW of new renewable resources now
  planned will serve only 3 utilities
• Leading programs have achieved 4-7 participation
  rates, while many have achieved only 1
• The following best practices are based on utility
  green pricing experience to date

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Program Design

• Energy-based programs
• Block products (100 kWh blocks)
• Percent of use products
• Fixed cost offering (LADWP)
• Contribution programs
• Multiple products can appeal to different market
  segments

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Creating Value for Customers

• Tax deductibility (ex. PSCO, WPS)
• Visibility (develop renewables locally)
• Many utilities invite participants to project
  dedications and site tours
• Educational benefits (solar schools)
• Some programs include curriculums, audiovisual
  materials, lab equipment along with solar system
• Protect customers from fuel price increases
• Growing number of utilities exempt green power
  customers from fuel cost increases

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Creating Value for Customers (cont)

• Exemption from environmental mitigation costs
• Xcel exempts Windsource customers from paying fee
  for emissions control equipment
• Civic Pride/Link Program with the Community
• LADWP has sponsored a student art contest, a
  5k/10k run, and an Interfaith Environmental
  Summit
• Recognize Participants
• with plaques or list names in newsletters
• provide decals that can be displayed in windows
• run local ads recognizing business customers

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Selecting Resources

• Offer power from new renewable resources
• customers need to see environmental benefit
• Survey locally available resources
• Find out what resources customers prefer
• Minimize price premiums
• Blend high-cost and lower-cost resources
• Leverage grants and subsidies

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Tailoring the Message

• Keep the message clear and simple
• Customers are not used to thinking about
  electricity
• Customers must be convinced to purchase green
  power and pay more
• What motivates customers to participate?
• Concerns over health and the environment
• Providing for future generations
• Interest in promoting new technologies
• Price stability
• Doing the right thing
• Tailor messages to meet needs/concerns

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Business Customer Motivations

• (Source National Wind Coordinating Committee,
  Understanding Non-Residential Demand for Green
  Power)

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Marketing Strategies

• Most utilities report that bill inserts and
  targeted mailings are most effective
• Telemarketing works, but is expensive
• Free media can be effective if used creatively
• Seek out civic champions
• Partner with environmental and community groups

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Program Implementation

• Make it easy for customers to participate
• Educate customer service reps
• Respond quickly and effectively to inquiries
• Offer the program when initiating service
• Retain customers in program when they move
• Allow customers to sign up via the Internet
• Too many restrictions may turn off customers
• Customer retention rates are generally high,
  contractual requirements arent necessary
• Allow all customers to participate and purchase
  100 of their power from renewable sources

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Summary of Best Practices

• Seek out the best renewable resources
• Offer power from new renewables
• Keep the message simple
• Create value
• Look for opportunities to reduce the premium
• Make it easy for customers to participate

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Best Practices (cont.)

• Make program information readily available
• Partner with environmental and community groups
• Include non-residential customers
• Seek out civic and business champions
• Take advantage of free advertising
• Keep track of customers